UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 12, 2015
BG Medicine, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
001-33827
(Commission File Number)
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| Delaware |
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04-3506204 |
| (State or Other Jurisdiction Of Incorporation) |
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(IRS Employer Identification No.) |
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| 303 Wyman Street, Suite 300, Waltham, Massachusetts |
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02451 |
| (Address of Principal Executive Offices) |
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(Zip Code) |
(781) 890-1199
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. |
Entry into a Material Definitive Agreement. |
On August 13, 2015, BG Medicine, Inc.
(the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC (the “Underwriter”), pursuant to which the Company agreed to sell to the Underwriter in a firm
commitment underwritten public offering (the “Offering”) an aggregate of 2,315,654 Series A units (the “Series A units”), each consisting of one share of the Company’s common stock, $0.001 par value per share (the
“Common Stock”), and one half of a Common Stock Purchase Warrant (the “Warrants”) to purchase one share of Common Stock, at a purchase price of $1.00 per Series A unit. The Company also agreed to sell to the Underwriter in the
Offering 184,346 Series B units (the “Series B units”), in lieu of Series A units, at a purchase price of $1.00 per Series B unit to those purchasers whose purchase of additional Series A units in the Offering would result in the purchaser
beneficially owning more than 9.99% of the Company’s outstanding Common Stock following the completion of the Offering. Each Series B unit consists of one fully Prefunded Common Stock Purchase Warrant (the “Pre-funded Warrants”, and
together with the shares of Common Stock and Warrants issued in the Offering, the “Securities”) to purchase one share of Common Stock and one half of a Warrant to purchase one share of Common Stock. The Warrants (other than the fully
Pre-funded Warrants) will have an exercise price of $1.00 per share. The Pre-funded Warrants and the Warrants will be exercisable for a period of five years from the date of issuance.
The net proceeds to the Company from the Offering are expected to be approximately $2.1 million, after deducting underwriting discounts and
commissions and estimated expenses payable by the Company. The transactions contemplated by the Underwriting Agreement closed on August 18, 2015.
As disclosed in a separate Current Report on Form 8-K filed earlier on August 18, 2015 (the “Opinion Form 8-K”), the Offering
was registered pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-204307) (the “Registration Statement”) and the related base prospectus included in the Registration Statement, as
supplemented by the prospectus supplement dated August 13, 2015 (the “Prospectus Supplement”). The legal opinion and consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. addressing the validity of the Securities was filed as
Exhibit 5.1 to the Opinion Form 8-K and is incorporated into the Registration Statement.
The Underwriting Agreement contains customary
representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriter, including for liabilities under the Securities Act, other obligations of the parties and
termination provisions.
Copies of the Underwriting Agreement, the form of Pre-funded Warrant and the form of Warrant are filed as Exhibit
1.1, Exhibit 4.1, and Exhibit 4.2, respectively, to this Current Report on Form 8-K and are incorporated into this Item 1.01 by reference. The Underwriting Agreement has been included to provide investors and security holders with information
regarding its terms. It is not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Underwriting Agreement were made only for purposes of such agreement and as of
specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection
with the execution of the Underwriting Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. The foregoing description of the terms of the Underwriting Agreement does not purport to be complete and is qualified in its
entirety by reference to the Underwriting Agreement. Investors should review that document as well as the Registration Statement and Prospectus Supplement for a complete understanding of the terms and conditions associated with the Offering.
This Current Report contains forward-looking statements that involve risk and uncertainties, such as statements related to the amount of net
proceeds expected from the Offering. The risks and uncertainties involved include various risks detailed in the Company’s SEC filings from time to time.
The information in Item 5.03 below is incorporated by reference into this Item 1.01.
| Item 5.03. |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
In connection
with the Offering referenced in Item 1.01 above, on August 18, 2015, the Company filed an Amended and Restated Certificate of Designations of Series A Preferred Stock (the “Restated Certificate of Designations”) with the
Secretary of State of the State of Delaware. The Restated Certificate of Designations amends and restates the Certificate of Designations of Series A Preferred Stock that was filed in connection with the original issuance of shares of the
Company’s Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), on July 14, 2015, to provide that certain anti-dilution protections of the Series
A Preferred Stock, and the right of the holders of Series A Preferred Stock to redeem the Series A Preferred Stock upon a change of control, expire upon the consummation of the Offering. The
Restated Certificate of Designations was approved by the Board of Directors of the Company and the holders of Series A Preferred Stock (the “Series A Holders”) as of August 7, 2015 and August 12, 2015, respectively.
The rights, preferences and privileges of the Series A Preferred Stock following the consummation of the Offering, as set forth in the
Restated Certificate of Designations, are summarized below:
Conversion: each share of Series A Preferred Stock is convertible into
one share of Common Stock at any time at the option of each holder and automatically upon the written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock. The conversion price will be subject to adjustment in
connection with stock splits, combinations, dividends and other corporate transactions affecting the Common Stock. All other anti-dilution protections that had been provided to the Series A Preferred Stock upon issuance terminated following the
closing of the Offering.
No Redemption Rights: All redemption rights that had been provided to the Series A Preferred Stock upon
issuance terminated following the closing of the Offering.
Ranking: the Series A Preferred Stock will rank senior in preference
and priority to the Company’s Common Stock and each other class or series of capital stock of the Company, except for any class or series of capital stock issued in compliance with the terms of the Restated Certificate of Designations.
Dividends: the holders of Series A Preferred Stock will be entitled to receive, out of funds legally available for the payment of
dividends under Delaware law, cumulative dividends that accrue daily at an annual rate of 8%, compounded and payable quarterly in cash or in additional shares of Series A Preferred Stock at the election of each holder. The holders of Series A
Preferred Stock will also be entitled to participate in cash dividends and in-kind distributions made on shares of Common Stock.
Liquidation Preference: Upon liquidation, including deemed liquidations pursuant to a merger, consolidation or a sale of all or
substantially all of the Company’s assets, the holders of Series A Preferred Stock will be entitled to be paid first out of any proceeds in an amount per share equal to the price at which shares of Series A Preferred Stock were sold in the
Series A Preferred Stock financing, plus all accrued but unpaid dividends on each share of Series A Preferred Stock, and prior to payment of any amounts on the Company’s Common Stock. Thereafter, the holders of Series A Preferred Stock will
also share pro rata on an as converted to Common Stock basis in payments made to the holders the Company’s Common Stock. Accordingly, the holders of the Series A Preferred Stock will be entitled to receive the proceeds out of any sale or
liquidation of the Company before any such proceeds are paid to holders of the Company’s Common Stock and then share in any proceeds paid to holders of the Company’s Common Stock. As a result, only the sale or liquidation proceeds in
excess of the liquidation preference plus accrued but unpaid dividends would be available for distribution to holders of the Company’s Common Stock.
Voting Rights: holders of Series A Preferred Stock will be entitled to vote with the holders of the Common Stock on an as-converted
basis, except that no holder of Series A Preferred Stock will be entitled to cast votes for the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock held by such holder that exceeds (subject to a proportionate
adjustment in the event of a stock split, stock dividend, combination or other proportionate recapitalization) the quotient of (A) the aggregate purchase price paid by such holder for its Series A Preferred Stock, divided by (B) the
greater of (i) $3.20 and (ii) the closing price of the Common Stock on the trading day immediately prior to the date its Series A Preferred Stock is issued, which was $1.40. In addition, prior to the conversion of the Series A Preferred
Stock, the consent of the holders of at least a majority of the Series A Preferred Stock then outstanding, voting together as a single class, will be required for the Company to take certain actions, including, among other things: liquidating,
dissolving or winding up the business and affairs of the Company or effecting any merger, consolidation or other liquidation event; amending, altering or repealing any provision of the Certificate of Incorporation, the Certificate of Designations or
the Bylaws of the Company; creating or authorizing any class or series of capital stock ranking senior to or on parity with the Series A Preferred Stock or increasing the number of authorized shares of Series A Preferred Stock; purchasing,
redeeming, paying or declaring dividends on any shares of capital stock of the Company, with certain exceptions; increasing or decreasing the size of the Board of Directors of the Company (the “Board”); and certain other actions.
Board of Directors: the holders of Series A Preferred Stock will be entitled to nominate one director to the Board (the “Series A
Director”). Subject to applicable law and stock exchange requirements, the Series A Director will be entitled to serve as a member of each committee of the Board. The rights to nominate a Series A Director will terminate if less than 20% of the
shares of Series A Preferred Stock issued under the Securities Purchase Agreement dated May 12, 2015, as amended, by and between the Company and the Series A Holders are no longer outstanding.
The foregoing description of the terms of the Restated Certificate of Designations is not complete and is qualified in its
entirety by the full text of the Restated Certificate of Designations, which is filed herewith as Exhibit 3.1, and incorporated into this Item 5.03 by reference.
On August 12, 2015, the Company issued a press release announcing
the commencement of the then-proposed Offering. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On August 13, 2015, the Company issued a press release announcing the pricing of the Offering. A copy of the press release is filed as
Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01 |
Financial Statements and Exhibits. |
| 1.1 |
Underwriting Agreement, dated August 13, 2015, between the Company and Roth Capital Partners, LLC. |
| 3.1 |
Amended and Restated Certificate of Designations of Series A Preferred Stock of BG Medicine, Inc. filed with the Secretary of State of the State of Delaware on August 18, 2015. |
| 4.1 |
Form of Prefunded Common Stock Purchase Warrant issued to certain purchasers in the Offering. |
| 4.2 |
Form of Common Stock Purchase Warrant issued to the purchasers in the Offering. |
| 99.1 |
Press Release, dated August 12, 2015. |
| 99.2 |
Press Release, dated August 13, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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BG MEDICINE, INC. |
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| Date: August 18, 2015 |
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/s/ Stephen P. Hall |
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Stephen P. Hall Executive Vice President &
Chief Financial Officer |
Exhibit 1.1
2,315,654 Shares of Common Stock
par value $0.001
Pre-Funded Warrants exercisable into 184,346 Shares of Common Stock
Warrants to purchase 1,250,000 Shares of Common Stock
BG MEDICINE, INC.
UNDERWRITING AGREEMENT
August 13, 2015
ROTH CAPITAL PARTNERS, LLC
888 San Clemente Drive, Suite 400
Newport Beach, CA 92660
Dear Sirs:
BG Medicine, Inc., a Delaware corporation (the
“Company”), proposes to issue and sell to Roth Capital Partners, LLC (the “Underwriter”), pursuant to the terms and conditions of this Underwriting Agreement (this “Agreement”), an aggregate of
2,315,654 shares of common stock, $0.001 par value per share (the “Common Stock”) of the Company (the “Shares”), 184,346 pre-funded Common Stock warrants (the “Pre-Funded Warrants”) exercisable for
an aggregate of 184,346 shares of Common Stock (the “Pre-Funded Warrant Shares”) and Common Stock purchase warrants (the “Traditional Warrants” collectively with the Pre-Funded Warrants, the
“Warrants” and the Warrants collectively with the Shares, the “Closing Securities”) to purchase an aggregate of 1,250,000 shares of Common Stock (the “Traditional Warrant Shares” collectively with
the Pre-Funded Warrant Shares, the “Warrant Shares” and the Warrants Shares collectively with the Closing Securities, the “Securities”). The Traditional Warrants shall have an exercise price of $1.00, subject to
adjustment therein, in the form of Exhibit A-1 attached hereto. The Pre-Funded Warrant shall not require any additional consideration to be paid in order to exercise and is in the form of Exhibit A-2 attached hereto. The Company hereby
confirms that the Underwriter has acted, and will act, as the Underwriter in accordance with the terms and conditions hereof. The Underwriter may retain other brokers, dealers, agents or underwriters on its behalf in connection with this Offering
(as defined below).
On the basis of the
representations, warranties and agreements of the Company herein contained, and subject to the terms and conditions set forth in this Agreement:
2.1 The Company agrees to issue and sell and the Underwriter agrees to purchase from the Company an aggregate of 2,315,654
Shares, 184,346 Pre-Funded Warrants and 1,250,000 Traditional Warrants at (i) a purchase price of $0.93 per Share and Traditional Warrant to purchase one-half of one Traditional Warrant Share (the “Share Purchase Price”) and
(ii) a purchase price of $0.93 per Pre-funded Warrant and Traditional Warrant to purchase one-half of one Traditional Warrant Share (the “Pre-Funded Warrant Purchase Price”). The Company has been advised by you that you propose
to make a registered underwritten offering of the Closing Securities (the “Offering”) as soon after this Agreement has become effective as in your judgment is advisable. The Company is further advised by you that the Closing
Securities are to be offered initially at (i) a price of $1.00 per Share and Traditional Warrant to purchase one-half of one Traditional Warrant Share and (ii) a price of $1.00 per Pre-funded Warrant and Traditional Warrant to purchase
one-half of one Traditional Warrant Share.
2.2 Payment of the Share Purchase Price and the Pre-Funded Warrant Purchase
Price for, and delivery of, the Closing Securities shall be made at the time and date of closing and delivery of the documents required to be delivered to the Underwriter pursuant to Sections 4 and 6 hereof, which delivery shall take
place at 11:00 A.M., New York time, on August 18, 2015 (the “Closing Date”) at the office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C, One Financial Center, Boston, MA 02111 or at such other time and date as the
Underwriter and the Company determine pursuant to Rule 15c6-1(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company shall deliver (i) the Shares, which shall be registered in the name or
names and shall be in such denominations as the Underwriter may request at least one (1) business day before the Closing Date, to the Underwriter, which delivery shall be made through the facilities of the Depository Trust Company’s DWAC
system and (ii) the Warrants in certificated form registered in the name or names and in such authorized denominations as the Underwriter may request in writing at least two full business days prior to the Closing Date.
| 3. |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. |
The Company represents and warrants to the Underwriter, and agrees with the Underwriter, that:
(a) The Company has prepared and filed in conformity with the requirements of the Securities Act of 1933, as amended (the
“Securities Act”), and published rules and regulations thereunder (the “Rules and Regulations”) adopted by the Securities and Exchange Commission (the “Commission”) a “shelf” Registration
Statement (as hereinafter defined) on Form S-3 (File No. 333-204307), which was filed on May 19, 2015 and became effective as of June 5, 2015 (the “Effective Date”), including a base prospectus relating to the Shares
and Warrant Shares (the “Base Prospectus”), and such amendments and supplements thereto as may have been required to the date of this Agreement. The term “Registration Statement” as used in this Agreement means the
registration statement (including all exhibits, financial schedules and all documents and information deemed to be a part of the Registration Statement
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pursuant to Rule 430A and 430B of the Rules and Regulations), as amended and/or supplemented to the date of this Agreement, including the Base Prospectus. The Registration Statement is effective
under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been
instituted or, to the knowledge of the Company, are threatened by the Commission. The Company, if required by the Rules and Regulations of the Commission, will file the Prospectus (as defined below), with the Commission pursuant to Rule 424(b) of
the Rules and Regulations. The term “Prospectus” as used in this Agreement means the Prospectus, in the form in which it is to be filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations, or, if the Prospectus
is not to be filed with the Commission pursuant to Rule 424(b), the Prospectus in the form included as part of the Registration Statement as of the Effective Date, except that if any revised prospectus or prospectus supplement shall be provided to
the Underwriter by the Company for use in connection with the Offering which differs from the Prospectus (whether or not such revised prospectus or prospectus supplement is required to be filed by the Company pursuant to Rule 424(b) of the Rules and
Regulations), the term “Prospectus” shall refer to such revised prospectus or prospectus supplement, as the case may be, from and after the time it is first provided to the Underwriter for such use (or in the form first made
available to the Underwriter by the Company to meet requests of prospective purchasers pursuant to Rule 173 of the Rules and Regulations). Any preliminary prospectus or prospectus subject to completion included in the Registration Statement or filed
with the Commission pursuant to Rule 424 of the Rules and Regulations is hereafter called a “Preliminary Prospectus.” Any reference herein to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act, on or before the last to occur of the Effective Date, the date of the Preliminary Prospectus, or
the date of the Prospectus, and any reference herein to the terms “amend,” “amendment,” or “supplement” with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include (i) the filing of any document under the Exchange Act after the Effective Date, the date of such Preliminary Prospectus or the date of the Prospectus, as the case may be, which is incorporated by reference and (ii) any such
document so filed.
(b) As of the Applicable Time (as defined below) and as of the Closing Date, none of (i) any
General Use Free Writing Prospectus (as defined below) issued at or prior to the Applicable Time, and the Pricing Prospectus (as defined below) and the information included on Schedule A hereto, all considered together (collectively, the
“General Disclosure Package”), (ii) any individual Limited Use Free Writing Prospectus (as defined below), or (iii) the bona fide electronic road show (as defined in Rule 433(h)(5) of the Rules and Regulations), if any,
that has been made available without restriction to any person, when considered together with the General Disclosure Package, included or will
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include, any untrue statement of a material fact or omitted or as of the Closing Date will omit, to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Issuer Free Writing Prospectus, in reliance upon, and in
conformity with, written information furnished to the Company by the Underwriter specifically for inclusion therein, which information the parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17).
As used in this paragraph (b) and elsewhere in this Agreement:
“Applicable Time” means 8:15 A.M., New
York time, on the date of this Agreement.
“General Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is identified on Schedule A to this Agreement.
“Issuer Free Writing Prospectus” means any
“issuer free writing prospectus,” as defined in Rule 433 of the Rules and Regulations relating to the Shares in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) of the Rules and Regulations.
“Limited Use Free Writing
Prospectuses” means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.
“Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base Prospectus, each as amended and
supplemented immediately prior to the Applicable Time, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof.
(c) No order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus relating to the Offering has been issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act has been instituted or, to the Company’s knowledge, threatened by the Commission, and
each Preliminary Prospectus (if any), at the time of filing thereof, conformed in all material respects to the requirements of the Securities Act and the Rules and Regulations, and did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from any Preliminary Prospectus, in reliance upon, and in conformity with, written information furnished to the Company by the Underwriter specifically for inclusion therein, which information the
parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17).
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(d) At the time the Registration Statement became or becomes effective with
respect to the Underwriter, at the date of this Agreement and at the Closing Date, the Registration Statement conformed and will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and did not and
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 not misleading; the Prospectus, at the time the Prospectus was issued and at the
Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and did not and will not contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this paragraph (d) shall not
apply to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the Underwriter specifically for inclusion therein, which
information the parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17).
(e) Each Issuer Free Writing Prospectus, if any, as of its issue date and at all subsequent times through the completion of the
offer and sale of the Closing Securities or until any earlier date that the Company notified or notifies the Underwriter as described in Section 4(e), did not, does not and will not include any information that conflicted, conflicts or
will conflict with the information contained in the Registration Statement, Pricing Prospectus or the Prospectus, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof that has not been
superseded or modified, or includes an untrue statement of a material fact or omitted or would omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the
Underwriter specifically for inclusion therein, which information the parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17).
(f) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as
the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and none of such documents contained any untrue statement of
a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all
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material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(g) The Company is not an “ineligible issuer” in connection with the Offering pursuant to Rules 164, 405 and 433
under the Securities Act. The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the Offering other than any Preliminary Prospectus, the Prospectus and other materials, if any,
permitted under the Securities Act and consistent with Section 4(b) below. The Company will file with the Commission all Issuer Free Writing Prospectuses (other than a “road show,” as described in Rule 433(d)(8) of the Rules and
Regulations), if any, in the time and manner required under Rules 163(b)(2) and 433(d) of the Rules and Regulations.
(h)
The Company and each of its subsidiaries (as defined in Section 15) have been duly organized and are validly existing as corporations or other legal entities in good standing (or the foreign equivalent thereof) under the laws of their
respective jurisdictions of incorporation or organization, as applicable. The Company and each of its subsidiaries are duly qualified to do business and are in good standing or validly existing, as the case may be, as foreign corporations or other
legal entities in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification and have all power and authority (corporate or other) necessary to own or hold
their respective properties and to conduct the businesses in which they are engaged, except where the failure to so qualify or have such power or authority would not (i) have, singly or in the aggregate, a material adverse effect on the
condition (financial or otherwise), results of operations, assets, properties, business or prospects of the Company and its subsidiaries taken as a whole, or (ii) impair in any material respect the ability of the Company to perform its
obligations under this Agreement or to consummate any transactions contemplated by this Agreement, the General Disclosure Package or the Prospectus (any such effect as described in clauses (i) or (ii), a “Material Adverse
Effect”). The Company’s only subsidiary is BG Medicine N.V., a Netherlands company.
(i) The Company has the
corporate power and authority to enter into this Agreement, the Warrants, the Lock-Up Agreements, and any other documents or agreements executed in connection with the transactions contemplated hereunder (such documents collectively referred to as
the “Transaction Documents”), and to perform and discharge its obligations hereunder; and the Transaction Documents have been duly authorized, executed and delivered by the Company.
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(j) The Securities have been duly and validly authorized and, when issued and
delivered by the Company against payment therefor as provided herein, will be duly and validly issued, fully paid and nonassessable and free of any preemptive rights, rights of first refusal, registration rights or similar rights and will conform to
the description thereof contained in the General Disclosure Package and the Prospectus. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of any
preemptive rights, rights of first refusal, registration rights or similar rights. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants.
(k) The Company has an authorized capitalization as set forth in the Pricing Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable, have been issued in compliance with federal and state securities laws, and conform to the description thereof contained in the General
Disclosure Package and the Prospectus. As of July 31, 2015, there were 8,742,638 shares of Common Stock issued and outstanding and 1,474,443 shares of Series A Preferred Stock, par value $0.001, of the Company issued and outstanding, and there
were 2,463,471 shares of Common Stock issuable upon the exercise of all shares of Series A Preferred Stock, options, warrants and convertible securities outstanding as of such date. Since such date, the Company has not issued any securities, other
than Common Stock of the Company issued pursuant to (i) the exercise of stock options previously outstanding under the Company’s equity incentive plans and under other stock option agreements or the issuance of options or restricted Common
Stock pursuant to the Company’s equity incentive plans or under other stock option agreements, (ii) the exercise of previously outstanding warrants to purchase shares of Common Stock or (iii) the Company’s 2010 employee stock
purchase plan. All of the stock options, warrants and other rights to purchase or exchange any securities for shares of the Company’s capital stock have been duly authorized and validly issued, and were issued in compliance with U.S. federal
and applicable state securities laws. None of the outstanding shares of Common Stock was issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. The
description of the Company’s equity incentive plans and stock options or other rights granted thereunder or pursuant to other stock option agreements, as described in the General Disclosure Package and the Prospectus, accurately and fairly
present in all material respects the information required to be shown with respect to the equity incentive plans and such other stock option agreements, stock options and rights.
(l) All the outstanding shares of capital stock or other equity interests of each subsidiary of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and are owned by the Company directly or indirectly through one or more wholly-owned subsidiaries, free and clear of any claim, lien, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party.
7
(m) The execution, delivery and performance of the Transaction Documents by the
Company, the issuance and sale of the Securities by the Company and the consummation of the transactions contemplated hereby and thereby will not (with or without notice or lapse of time or both) (i) conflict with or result in a breach or
violation of any of the terms or provisions of, constitute a default or Debt Repayment Triggering Event (as defined below) under, give rise to any right of termination or other right or the cancellation or acceleration of any right or obligation or
loss of a benefit under, or give rise to the creation or imposition of any lien, encumbrance, security interest, claim or charge upon any property or assets of the Company or any subsidiary pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the certificate of incorporation or bylaws (or analogous governing instruments, as applicable) of the Company or any of its subsidiaries or (iii) result in any violation of any
law, statute, rule, regulation, judgment, order or decree of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets, except, in the case of
clause (i) and (iii) of this paragraph (m), such as would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect. A “Debt Repayment Triggering Event” means any event or condition
that gives, or with the giving of notice or lapse of time would give the holder of any note, debenture or other evidence of material indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.
(n) Except for the
registration of the Securities under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws, the Financial Industry
Regulatory Authority (“FINRA”) and the Nasdaq Capital Market (the “Nasdaq CM”) in connection with the Offering, no consent, approval, authorization or order of, or filing, qualification or registration with, any
court or governmental agency or body, foreign or domestic, which has not been made, obtained or taken and is not in full force and effect, is required for the execution, delivery and performance of this Agreement by the Company, the offer or sale of
the Securities or the consummation of the transactions contemplated hereby or thereby.
(o) Deloitte & Touche LLP,
who have certified certain financial statements and related schedules included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, is an independent registered public accounting firm as
required by the Securities Act
8
and the Rules and Regulations and the Public Company Accounting Oversight Board (United States) (the “PCAOB”). Except as pre-approved in accordance with the requirements set
forth in Section 10A of the Exchange Act, Deloitte & Touche LLP has not been engaged by the Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).
(p) The Company’s financial statements, together with the related notes and schedules, included or incorporated by
reference in the General Disclosure Package, the Prospectus and in the Registration Statement fairly present in all material respects the financial position and the results of operations and changes in financial position, shareholders’ equity
and cash flows of the Company and its consolidated subsidiaries and other consolidated entities as of the respective dates or for the respective periods therein specified. Such statements and related notes and schedules have been prepared in all
material respects in accordance with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis throughout the periods involved except as may be set forth in the related notes included or
incorporated by reference in the General Disclosure Package, and except that unaudited financial statements may not contain the footnotes required by GAAP. The Company’s financial statements, together with the related notes and schedules,
included or incorporated by reference in the General Disclosure Package and the Prospectus comply in all material respects with the Securities Act, the Exchange Act, and the Rules and Regulations and the rules and regulations under the Exchange Act.
No other financial statements or supporting schedules or exhibits are required by the Securities Act or the Rules and Regulations to be described, or included or incorporated by reference in the Registration Statement, the General Disclosure Package
or the Prospectus. There is no pro forma or as-adjusted financial information which is required to be included in the Registration Statement, the General Disclosure Package, or the Prospectus or any document incorporated by reference therein in
accordance with the Securities Act and the Rules and Regulations which has not been included or incorporated as so required.
(q) Neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements
included or incorporated by reference in the General Disclosure Package, any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or contemplated in the General Disclosure Package or would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Effect; and, since such date, there
has not been any material change in the capital stock (other than Common Stock of the Company issued pursuant to (i) the exercise of stock options previously outstanding under the Company’s equity incentive plans and under other stock
option agreements or the issuance of options or restricted Common Stock pursuant to the Company’s equity incentive plans or under other stock option agreements, (ii) the exercise of previously outstanding warrants to purchase
9
shares of Common Stock or (iii) the Company’s 2010 employee stock purchase plan or long-term debt of the Company or any of its subsidiaries or any material adverse changes, or any
development involving a prospective material adverse change, in or affecting the business, assets, general affairs, management, financial position, prospects, shareholders’ equity or results of operations of the Company and its subsidiaries
taken as a whole, otherwise than as set forth or contemplated in the General Disclosure Package.
(r) Except as set forth
in the General Disclosure Package, there is no legal or governmental action, suit, claim or proceeding pending to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is
the subject which is required to be described in the Registration Statement, the General Disclosure Package or the Prospectus or a document incorporated by reference therein and is not described therein, or which, singly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, would reasonably be expected to result in a Material Adverse Effect or prevent the consummation of the transactions contemplated hereby; and, to the Company’s knowledge, no such
proceedings are threatened or contemplated by governmental authorities or threatened by others.
(s) Neither the Company
nor any of its subsidiaries is in (i) violation of its certificate of incorporation or bylaws (or analogous governing instrument, as applicable), (ii) default in any respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance of any term, covenant, obligation, agreement or condition contained in any indenture, mortgage, deed of trust, loan or credit agreement, other evidence of indebtedness, or
any license, lease, contract or other agreement or instrument to which it is a party or by which the Company or its subsidiaries are bound or to which any of its property or assets is subject or (iii) violation in any respect of any statute,
law, ordinance, governmental rule, regulation, ordinance, or court order, decree or judgment to which it or its property or assets may be subject except, in the case of clauses (ii) and (iii) of this paragraph (s), for any violations or
defaults which would not, singly or in the aggregate, have a Material Adverse Effect.
(t) The Company and each of its
subsidiaries have made all filings, applications, declarations and submissions required by, and owns or possess all approvals, licenses, certificates, clearances, consents, exemptions, marks, notifications, orders, authorizations and permits issued
by the appropriate local, state, federal or foreign regulatory agencies or bodies, including, without limitation, the Food and Drug Administration of the U.S. Department of Health and Human Services (the “FDA”) and any agency of any
foreign government and any other foreign regulatory authority exercising authority comparable to that of the FDA (including any non-governmental entity whose approval or authorization is required under foreign law comparable to that administered by
the FDA), which are required for the ownership of their respective properties or the conduct of their current respective businesses as described in the General Disclosure Package and
10
the Prospectus (collectively, the “Governmental Permits”) and is in compliance with the terms and conditions of all such Governmental Permits, except where any failures to
possess or make the same would not, singly or in the aggregate, have a Material Adverse Effect. All such Governmental Permits are valid and in full force and effect, except where the validity or failure to be in full force and effect would not,
singly or in the aggregate, have a Material Adverse Effect. Except as set forth in the General Disclosure Package, neither the Company nor any of its subsidiaries has received any written notice of any revocation, modification or cancellation of,
any such Governmental Permit, which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect.
(u) The preclinical tests and clinical trials that are described in, or the results of which are referred to in, the
Registration Statement, the General Disclosure Package and the Prospectus were and, if still pending, are being conducted in all material respects in accordance with protocols filed with the appropriate regulatory authorities for each such test or
trial, as the case may be, and with standard medical and scientific research procedures; each description of the results of such tests and trials contained in the Registration Statement, the General Disclosure Package and the Prospectus is accurate
and complete in all material respects and fairly presents in all material respects the data derived from such tests and trials, and the Company and its subsidiary have no knowledge of any other studies or tests the results of which are inconsistent
with, or otherwise call into question, the results described or referred to in the Registration Statement, the General Disclosure Package and the Prospectus; except as described in the Registration Statement, the General Disclosure Package or the
Prospectus, neither the Company nor its subsidiary has received any notices or other correspondence from the FDA or any committee thereof or from any other U.S. or foreign government or drug or medical device regulatory agency (collectively, the
“Regulatory Agencies”) requiring the termination, suspension or material modification of any clinical trials that are described or referred to in the Registration Statement, the General Disclosure Package and the Prospectus; and the
Company and its subsidiary have each operated and currently are in compliance in all material respects with all applicable rules, regulations and policies of the Regulatory Agencies.
(v) The Company has made available to counsel to the Underwriter, FDA and regulatory correspondence logs containing all
material correspondence between the Company on the one hand and the FDA on the other hand, relating to the clinical trials of the Company’s product candidates under development.
(w) Neither the Company nor any of its subsidiaries is or, after giving effect to the Offering and the application of the
proceeds thereof as described in the General Disclosure Package and the Prospectus, will be required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder.
11
(x) Neither the Company, its subsidiaries nor, to the Company’s knowledge,
any of the Company’s or its subsidiaries’ officers, directors or affiliates has taken or will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which
caused or resulted in, or which could in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company.
(y) The Company and its subsidiaries own, or have obtained valid and enforceable licenses for, or other rights to use, the
patent applications, patents, trademarks (both registered and unregistered), trade names, service names, copyrights, trade secrets and other proprietary information described in the Registration Statement, the General Disclosure Package and the
Prospectus as being owned or licensed by them or which are necessary for the conduct of their respective businesses as currently conducted or, to the knowledge of the Company, as proposed to be conducted (with respect to the commercialization of
products and product candidates described in the Registration Statement, the General Disclosure Package and the Prospectus), except where the failure to own, license or have such rights would not, individually or in the aggregate, have a Material
Adverse Effect (collectively, “Intellectual Property”); (i) to the knowledge of the Company, there are no third parties who have or will be able to establish rights to any Intellectual Property, except for, and to the extent
of, the ownership rights of the owners (or their licensees) of Intellectual Property disclosed in the Registration Statement, the General Disclosure Package and the Prospectus as licensed (or sublicensed) to the Company or to which the Company has
been granted other rights; (ii) to the Company’s knowledge, there is no infringement by third parties of any Intellectual Property; (iii) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by any third party challenging the Company’s rights in or to any Intellectual Property, and the Company is unaware of any reasonable basis for any such action, suit, proceeding or claim; (iv) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any Intellectual Property, and the Company is unaware of any reasonable basis for any such action, suit, proceeding
or claim; (v) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by any third party that the Company or any subsidiary infringes or otherwise violates, or would, upon the commercialization of
any product or product candidate described in the Registration Statement, the General Disclosure Package and the Prospectus, infringe or violate, any patent, trademark, trade name, service name, copyright, trade secret or other proprietary rights of
any third party, and the Company is unaware of any reasonable basis for any such action, suit, proceeding or claim; (vi) the Company and its subsidiary have complied in all material respects with the terms of each agreement pursuant to which
Intellectual Property has been licensed to the Company or any subsidiary, and all such agreements are in full force and effect; (vii) to the Company’s knowledge, there is no patent or patent application that contains claims that interfere
in any material respect with the issued or pending claims of any of the
12
Intellectual Property or that challenges the validity, enforceability or scope of any of the Intellectual Property; (viii) to the Company’s knowledge, there is no prior art that may
render any material claim in any U.S. patent application within the Intellectual Property unpatentable that has not been disclosed to the U.S. Patent and Trademark Office as required; and (ix) the product and product candidates described in the
Registration Statement, the General Disclosure Package and the Prospectus, fall within the scope of the pending claims in one or more patents owned by, or patent applications filed by or licensed to, the Company or its subsidiary.
(z) The Company and each of its subsidiaries have valid title in fee simple to, or have valid rights to lease or otherwise use,
all items of real or personal property which are material to the business of the Company and its subsidiaries taken as a whole, in each case free and clear of all liens, encumbrances, security interests, claims and defects that do not, singly or in
the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its subsidiaries, except for those liens, encumbrances, security interests, claims
and defects that would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect; and all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise, and
under which the Company or any of its subsidiaries holds properties described in the General Disclosure Package and the Prospectus, are in full force and effect.
(aa) No labor disturbance or dispute with the employees of the Company or any of the Company’s subsidiaries exists or, to
the Company’s knowledge, is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or its subsidiaries’ principal suppliers, manufacturers, customers or
contractors, that would reasonably be expected, singly or in the aggregate, to have a Material Adverse Effect. The Company is not aware that any key employee or significant group of employees of the Company or any of the Company’s subsidiaries
plans to terminate employment with the Company or any of the Company’s subsidiaries.
(bb) No “prohibited
transaction” (as defined in Section 406 of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”), or Section 4975 of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”)) or “accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than
events with respect to which the thirty (30)-day notice requirement under Section 4043 of ERISA has been waived) has occurred or could reasonably be expected to occur with respect to any employee benefit plan of the Company or any of its
subsidiaries which could, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each employee benefit plan of the Company or any of its subsidiaries is in compliance in all material respects with applicable
13
law, including ERISA and the Code. The Company and its subsidiaries have not incurred and could not reasonably be expected to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan (as defined in ERISA). Each pension plan for which the Company or any of its subsidiaries would have any liability that is intended to be qualified under Section 401(a) of the Code is so
qualified, and nothing has occurred, whether by action or by failure to act, which could, singly or in the aggregate, cause the loss of such qualification.
(cc) Except as would not reasonably be expected to, singly or in the aggregate, result in a Material Adverse Effect, the
Company and its subsidiaries are in compliance in all respects with all applicable foreign, federal, state and local statutes, laws, including the regulations, codes, ordinances, orders, judgments or decrees relating to the use, treatment, storage
and disposal of hazardous or toxic substances or wastes and the protection of health and safety or the environment that are applicable to their business, including without limitation, natural resources (“Environmental Laws”). There
has been no use, storage, generation, transportation, handling, treatment, disposal, discharge, emission, or other release of any kind of hazardous or toxic substances or wastes by, due to, or caused by the Company or any of its subsidiaries (or, to
the Company’s knowledge, any other entity for whose acts or omissions the Company or any of its subsidiaries is or may otherwise be liable) upon under, at or from any of the property now or previously owned, leased or operated by the Company or
any of its subsidiaries, or upon any other property, in violation of any Environmental Law, or Governmental Permit issued thereunder or which would, give rise to any liability, except for any violation or liability which would not have, singly or in
the aggregate with all such violations and liabilities, a Material Adverse Effect; and there has been no disposal, discharge, emission or other release of any kind onto under, at or from such property or into the environment of any toxic hazardous
substances or wastes with respect to which the Company has knowledge, except for any such disposal, discharge, emission, or other release of any kind which would not have, singly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect. In the ordinary course of business, the Company and its subsidiaries conduct periodic reviews of the effect of Environmental Laws on their business and assets, in the course of which they identify and evaluate any associated
material costs and liabilities (including, without limitation, any capital or operating expenditures required for any environmental remediation or compliance with Environmental Laws or Governmental Permits issued thereunder, any related material
constraints on operating activities and any potential material liabilities to third parties). On the basis of such reviews, the Company and its subsidiaries have reasonably concluded that such associated costs and liabilities would not have, singly
or in the aggregate, a Material Adverse Effect.
(dd) The Company and its subsidiaries are in compliance in all respects
with all applicable provisions of the Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder, except for such noncompliance as would not, singly or in the aggregate, have a Material Adverse Effect.
14
(ee) Each of the Company and its subsidiaries (i) has timely filed all
necessary federal, state, local and foreign tax returns (or timely filed applicable extensions therefor) that have been required to be filed, and all such returns were true, complete and correct, (ii) has paid all federal, state, local and
foreign taxes, assessments, governmental or other charges that are due and payable for which it is liable, including, without limitation, all sales and use taxes and all taxes which the Company or any of its subsidiaries is obligated to withhold
from amounts owing to employees, creditors and third parties, and (iii) does not have any tax deficiency or claims outstanding or assessed or, to its knowledge, proposed against any of them, except those, in each of the cases described in
clauses (i), (ii) and (iii) of this paragraph (ee), that would not, singly or in the aggregate, have a Material Adverse Effect. Neither the Company nor any of its subsidiaries has engaged in any transaction which is a corporate tax
shelter or which could be characterized as such by the Internal Revenue Service or any other taxing authority. The accruals and reserves on the books and records of the Company and its subsidiaries in respect of tax liabilities for any taxable
period not yet finally determined are adequate to meet any assessments and related liabilities for any such period, and since December 31, 2012 the Company and its subsidiaries each has not incurred any liability for taxes other than in the
ordinary course.
(ff) The Company and each of its subsidiaries carries, or is covered by insurance provided by recognized,
financially sound and reputable institutions with policies in such amounts and covering such risks as is adequate for the conduct of the businesses of the Company and its subsidiaries taken as a whole, and the value of their properties, taken as a
whole, as is customary for companies engaged in similar businesses in similar industries. The Company has no reason to believe that it and its subsidiaries will not be able to renew their existing insurance coverage as and when such coverage expires
or to obtain comparable coverage from similar insurers as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not have a Material Adverse Effect.
(gg) The Company and each of its subsidiaries maintains a system of internal accounting and other controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP 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. Except as described in the General Disclosure Package, since the end of the Company’s most recent audited fiscal year, there has been
(A) no material weakness in the Company’s internal control over financial reporting (whether or not remediated)
15
and (B) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
(hh) The minute books of the Company have been made available to the Underwriter and
counsel for the Underwriter, and, to the Company’s knowledge, such books (i) contain a complete summary of all meetings and actions of the board of directors (including each board committee) since January 31, 2013 through the date of
the latest meeting and action, and (ii) accurately in all material respects reflect all transactions referred to in such minutes.
(ii) There is no material franchise, lease, contract, agreement or document required by the Securities Act or by the Rules and
Regulations to be described in the General Disclosure Package and in the Prospectus or a document incorporated by reference therein or to be filed as an exhibit to the Registration Statement or a document incorporated by reference therein which is
not described or filed therein as required; and all descriptions of any such franchises, leases, contracts, agreements or documents contained in the Registration Statement or in a document incorporated by reference therein are accurate and complete
descriptions of such documents in all material respects. Other than as described in the General Disclosure Package, no such franchise, lease, contract or agreement has been suspended or terminated for convenience or default by the Company or any of
its subsidiaries or any of the other parties thereto, and neither the Company nor any of its subsidiaries has received notice nor does the Company have any other knowledge of any such pending or threatened suspension or termination, except for such
pending or threatened suspensions or terminations that would not reasonably be expected to, singly or in the aggregate, have a Material Adverse Effect.
(jj) No relationship, direct or indirect, exists between or among the Company and any of its subsidiaries on the one hand, and
the directors, officers and shareholders (or analogous interest holders) of the Company or any of its subsidiaries or any of their affiliates on the other hand, which is required to be described in the General Disclosure Package and the Prospectus
or a document incorporated by reference therein and which is not so described.
(kk) No person or entity has the right to
require registration of shares of Common Stock or other securities of the Company or any of its subsidiaries because of the filing or effectiveness of the Registration Statement or otherwise, except for persons and entities who have expressly waived
such right in writing or who have been given timely and proper written notice and have failed to exercise such right within the time or times required under the terms and conditions of such right. Except as described in the General Disclosure
Package, there are no persons with registration rights or similar rights to have any securities registered by the Company or any of its subsidiaries under the Securities Act.
16
(ll) Neither the Company nor any of its subsidiaries owns any “margin
securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of the sale of any of the Shares will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any
of the Shares to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve Board.
(mm) Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person
(other than this Agreement) that would give rise to a valid claim against the Company or the Underwriter for a brokerage commission, finder’s fee or like payment in connection with the Offering or any transaction contemplated by this Agreement,
the Registration Statement, the General Disclosure Package or the Prospectus.
(nn) No forward-looking statement (within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in either the General Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
(oo) The Company was at the time of the filing of the Registration Statement eligible to use Form S-3.
As of the date of this Agreement, the Company is eligible to use Form S-3, including the transaction requirements with respect to the aggregate market value of securities being sold pursuant to this offering and during the twelve (12) months
prior to this offering, in accordance with Instruction I.B.6 of Form S-3. The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, and has
timely filed all reports required to be filed pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the preceding twelve (12) months. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act and is listed on the NASDAQ CM, and the Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NASDAQ
CM, nor has the Company received any notification that the Commission, FINRA or the NASDAQ Stock Market LLC is currently contemplating terminating such registration or listing, except as set forth in the General Disclosure Package. No consent,
approval, authorization or order of, or filing, notification or registration with, the NASDAQ CM is required for the listing and trading of the shares of Common Stock on the NASDAQ CM, except for (i) a Notification Form: Listing of Additional
Shares; and, if applicable, (ii) a Notification Form: Change in the Number of Shares Outstanding.
(pp) The Company is
in material compliance with all applicable effective provisions of the Sarbanes-Oxley Act of 2002 and any related rules and regulations promulgated by the Commission thereunder (the “Sarbanes-Oxley Act”).
17
(qq) The Company is in material compliance with all applicable corporate
governance requirements set forth in the NASDAQ Marketplace Rules.
(rr) Neither the Company nor any of its subsidiaries
nor, to the Company’s knowledge, any employee or agent of the Company or any subsidiary, has made any contribution or other payment to any official of, or candidate for, any federal, state, local or foreign office in violation of any law
(including the Foreign Corrupt Practices Act of 1977, as amended) or of the character required to be disclosed in the Registration Statement, the General Disclosure Package or the Prospectus or a document incorporated by reference therein.
(ss) Any statistical, industry-related or market-related data included or incorporated by reference in the Registration
Statement, the Prospectus or the General Disclosure Package, are based on or derived from sources that the Company believes in good faith to be reliable and accurate, and such data are consistent in all material respects with the sources from which
they are derived.
(tt) The operations of the Company and its subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the USA PATRIOT Act, applicable money laundering statutes of all jurisdictions and the
applicable rules, related rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending, or to the knowledge of the Company, threatened against the Company or any of its subsidiaries.
(uu) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee or controlled affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the Offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, which, to the Company’s knowledge, will be used
for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
(vv) Neither the Company nor any subsidiary nor any of their affiliates (within the meaning of FINRA’s NASD Conduct Rule
5121(f)(1)) directly or indirectly controls, is controlled by, or is under common control with, or is an associated person (within the meaning of Article I, Section 1(ee) of the By-laws of FINRA) of, any member firm of FINRA.
(ww) To the Company’s knowledge, no approval of the shareholders of the Company under the rules and regulations of Nasdaq
(including Rule 5635 of the Nasdaq Marketplace Rules) is required for the Company to issue and deliver to the Underwriter the Shares.
18
Any certificate signed by or on behalf of the Company and delivered to the
Underwriter or to counsel for the Underwriter shall be deemed to be a representation and warranty by the Company to the Underwriter as to the matters covered thereby.
| 4. |
FURTHER AGREEMENTS OF THE COMPANY. |
The Company agrees with the Underwriter:
(a) To prepare the Prospectus in a form approved by the Underwriter containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rules 430A, 430B and 430C of the Rules and Regulations and to file such Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later than the second (2nd) business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A of the Rules and Regulations; to promptly notify the
Underwriter of the Company’s intention to file or prepare any supplement or amendment to the Registration Statement or to the Prospectus in connection with this Offering and to make no amendment or supplement to the Registration Statement, the
General Disclosure Package or to the Prospectus to which the Underwriter shall reasonably object by notice to the Company after a reasonable period to review; to advise the Underwriter, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or any supplement to the General Disclosure Package or the Prospectus or any amended Prospectus has been filed and to furnish the Underwriter copies thereof; to file
promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) or 163(b)(2), as the case may be, of the Rules and Regulations; to file promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) of the Rules and Regulations) is required in connection with the Offering or sale of the Shares; to advise the Underwriter, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement, the General Disclosure Package or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or suspending any such qualification, and promptly to use its best efforts
to obtain the withdrawal of such order.
19
(b) The Company represents and agrees that, it has not made, and unless it
obtains the prior consent of the Underwriter, it will not, make any offer relating to the Closing Securities that would constitute a “free writing prospectus” as defined in Rule 405 of the Rules and Regulations (each, a “Permitted
Free Writing Prospectus”); provided that the prior written consent of the Underwriter hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectus(es) included in Schedule A hereto. The Company
represents that it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, comply with the requirements of Rules 164 and 433 of the Rules and Regulations applicable to any Issuer Free
Writing Prospectus, including the requirements relating to timely filing with the Commission, legending and record keeping and will not take any action that would result in the Underwriter or the Company being required to file with the Commission
pursuant to Rule 433(d) of the Rules and Regulations a free writing prospectus prepared by or on behalf of the Underwriter that it otherwise would not have been required to file thereunder.
(c) If at any time when a Prospectus relating to the Closing Securities is required to be delivered under the Securities Act,
any event occurs or condition exists as a result of which the Prospectus, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or the Registration Statement, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein not misleading, or if for any other reason it is necessary at any time to amend or supplement any Registration Statement or the Prospectus to comply with the Securities Act or the Exchange Act, the Company will promptly notify the
Underwriter, and upon the Underwriter’s request, the Company will promptly prepare and file with the Commission, at the Company’s expense, an amendment to the Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance and will deliver to the Underwriter, without charge, such number of copies thereof as the Underwriter may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Underwriter.
(d) If the General Disclosure Package is being used to solicit offers
to buy the Closing Securities at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriter, it becomes
necessary to amend or supplement the General Disclosure Package in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or to make the statements therein not conflict with the
information contained or incorporated by reference in the
20
Registration Statement then on file and not superseded or modified, or if it is necessary at any time to amend or supplement the General Disclosure Package to comply with any law, the Company
promptly will either (i) prepare, file with the Commission (if required) and furnish to the Underwriter and any dealers an appropriate amendment or supplement to the General Disclosure Package or (ii) prepare and file with the Commission
an appropriate filing under the Exchange Act which shall be incorporated by reference in the General Disclosure Package so that the General Disclosure Package as so amended or supplemented will not, in the light of the circumstances under which they
were made, be misleading or conflict with the Registration Statement then on file, or so that the General Disclosure Package will comply with law.
(e) If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as
a result of which such Issuer Free Writing Prospectus conflicted or will conflict with the information contained in the Registration Statement, Pricing Prospectus or Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof and not superseded or modified or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company has promptly notified or will promptly notify the Underwriter so that any use of the Issuer Free Writing Prospectus may
cease until it is amended or supplemented and has promptly amended or will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing
sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the Underwriter specifically for inclusion therein, which
information the parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17).
(f) To the extent not available on the Commission’s EDGAR system or any successor system, to furnish promptly to the
Underwriter and to counsel for the Underwriter a signed copy of the Registration Statement as originally filed with the Commission, and of each amendment thereto filed with the Commission, including all consents and exhibits filed therewith.
(g) To the extent not available on the Commission’s EDGAR system or any successor system, to deliver promptly to the
Underwriter in New York City such number of the following documents as the Underwriter shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission (in each case excluding exhibits),
(ii) each Preliminary Prospectus (if any), (iii) any Issuer Free Writing Prospectus, (iv) the Prospectus (the delivery of the documents referred to in clauses (i), (ii), (iii) and (iv) of this paragraph (g) to be
made not later than 10:00 A.M., New York time, on the business day following the execution and delivery of this Agreement), (v)
21
conformed copies of any amendment to the Registration Statement (excluding exhibits), (vi) any amendment or supplement to the General Disclosure Package or the Prospectus (the delivery of
the documents referred to in clauses (v) and (vi) of this paragraph (g) to be made not later than 10:00 A.M., New York City time, on the business day following the date of such amendment or supplement) and (vii) any
document incorporated by reference in the General Disclosure Package or the Prospectus (excluding exhibits thereto) (the delivery of the documents referred to in clause (vii) of this paragraph (g) to be made not later than 10:00
A.M., New York City time, on the business day following the date of such document).
(h) To make generally available to its
shareholders as soon as practicable, but in any event not later than eighteen (18) months after the effective date of each Registration Statement (as defined in Rule 158(c) of the Rules and Regulations), an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158).
(i) To take promptly from time to time such actions as the Underwriter may reasonably request to qualify the Securities for
offering and sale under the securities or blue sky laws of such jurisdictions (domestic or foreign) as the Underwriter may designate and to continue such qualifications in effect, and to comply with such laws, for so long as required to permit the
offer and sale of Securities in such jurisdictions; provided that the Company and its subsidiaries shall not be obligated to qualify as foreign corporations in any jurisdiction in which they are not so qualified or to file a general consent
to service of process in any jurisdiction.
(j) Upon request, during the period of four (4) years from the date
hereof, to the extent not available on the Commission’s EDGAR system or any successor system, to deliver to the Underwriter, as soon as they are available (i) copies of all reports or other communications furnished to shareholders, and
(ii) copies of any reports and financial statements furnished or filed with the Commission or any national securities exchange or automatic quotation system on which the Common Stock is listed or quoted.
(k) That the Company will not, for a period of ninety (90) days from the date of the Prospectus, (the “Lock-Up
Period”) without the prior written consent of the Underwriter, directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, other than (i) the Company’s sale of the Securities hereunder or the Warrant Shares pursuant to the exercise of the Warrants, (ii) the issuance of equity awards pursuant to the
Company’s benefit plans, qualified equity incentive plans or other compensation plans as such plans are in existence on the date hereof and described in the Prospectus or as hereafter approved by the shareholders of the Company, (iii) the
issuance of Common Stock pursuant to the valid exercises or
22
conversions of options, warrants or rights outstanding on the date hereof or granted after the date hereof under the plans described in clause (ii) of this Section 4(k); (iv) the
issuance of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock in connection with any arm’s-length, bona fide joint ventures, commercial relationships or other strategic transactions not involving
any affiliates of the Company not to exceed 5% of the total outstanding shares immediately following the completion of the Offering; and (v) the issuance of Common Stock or any securities convertible into or exercisable or exchangeable for
Common Stock at a price per share above the public offering price of the Closing Securities, except during the thirty (30) day period following the date of the Prospectus. The Company will cause each executive officer and director listed in
Schedule B to furnish to the Underwriter, prior to the Closing Date, a letter, substantially in the form of Exhibit B hereto (the “Lock-Up Agreements”). The Company also agrees that during such period, the Company will
not file any registration statement, preliminary prospectus or prospectus, or any amendment or supplement thereto, under the Securities Act for any such transaction or which registers, or offers for sale, Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, except for (i) registration statement(s) on Form S-8 in respect of any transaction or plan described in clause (k)(ii) or (k)(iii) above and (ii) a registration statement on Form S-3
registering shares of common stock issuable upon the exercise of currently outstanding warrants, if any. The Company hereby agrees that (A) if it issues an earnings release or material news, or if a material event relating to the Company
occurs, during the last seventeen (17) days of the Lock-Up Period, or (B) if prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the
last day of the Lock-Up Period, the restrictions imposed by this paragraph (k) or the letter shall continue to apply until the expiration of the eighteen (18)-day period beginning on the issuance of the earnings release or the occurrence
of the material news or material event.
(l) To the extent not available on EDGAR, to supply the Underwriter with copies of
all correspondence to and from, and all documents issued to and by, the Commission in connection with the registration of the Securities under the Securities Act or the Registration Statement, any Preliminary Prospectus or the Prospectus, or any
amendment or supplement thereto or document incorporated by reference therein.
(m) Prior to the Closing Date, to furnish
to the Underwriter, promptly after they have been prepared, copies of any unaudited interim consolidated financial statements of the Company for any periods subsequent to the periods covered by the financial statements appearing in the Registration
Statement and the Prospectus.
(n) At the request of the Underwriter, by 9:00 a.m. (New York City time) on the trading day
following the date hereof (unless this Agreement is executed prior to 8:30 a.m. New York City time on a trading day, in which case
23
such press release shall be issued prior to market open on such trading day), the Company shall issue a press release disclosing the material terms of the Offering. The Company and the
Underwriter shall consult with each other in issuing any other press releases with respect to the Offering, and neither the Company nor the Underwriter shall issue any such press release nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of such Underwriter, or without the prior consent of the Underwriter, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.
(o) Until the Underwriter shall have notified the Company of the completion of the Offering, that the Company will not, and
will cause its affiliated purchasers (as defined in Regulation M under the Exchange Act) not to, either alone or with one or more other persons, bid for or purchase, for any account in which it or any of its affiliated purchasers has a beneficial
interest, any Securities, or attempt to induce any person to purchase any Securities; and not to, and to cause its affiliated purchasers not to, make bids or purchases for the purpose of creating actual, or apparent, active trading in or of raising
the price of the Securities. The Underwriter hereby agrees to promptly notify the Company of the completion of the Offering.
(p) As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times,
free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Warrant Shares pursuant to any exercise of the Warrants.
(q) To apply the net proceeds from the sale of the Securities as set forth in the Registration Statement, the General
Disclosure Package and the Prospectus under the heading “Use of Proceeds.”
(r) To use its best efforts to assist
the Underwriter and its counsel with any filings with, and to obtain clearance from, FINRA.
(s) To use its commercially
reasonable efforts to list, subject to notice of issuance, effect and maintain the quotation and listing of the Shares and Warrant Shares on the NASDAQ CM.
(t) To use its commercially reasonable efforts to do and perform all things required to be done or performed under this
Agreement by the Company prior to the Closing Date, and to satisfy all conditions precedent to the delivery of the Closing Securities.
24
The Company
agrees to pay, or reimburse if paid by the Underwriter, upon consummation of the transactions contemplated hereby: (a) the costs incident to the authorization, issuance, sale, preparation and delivery of the Closing Securities to the
Underwriter and any taxes payable in that connection; (b) the costs incident to the registration of the Securities under the Securities Act; (c) the costs incident to the preparation, printing and distribution of the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package, the Prospectus, any amendments, supplements and exhibits thereto or any document incorporated by reference therein and
the costs of printing, reproducing and distributing any transaction document by mail or other means of communications; (d) the fees and expenses (including reasonable related fees and expenses of counsel for the Underwriter) incurred in
connection with securing any required review by FINRA of the terms of the sale of the Securities and any filings made with FINRA; (e) any applicable listing, quotation or other fees; (f) the reasonable fees and expenses (including related
fees and expenses of counsel to the Underwriter) of qualifying the Securities under the securities laws of the several jurisdictions as provided in Section 4(i) and of preparing, printing and distributing wrappers, “Blue Sky
Memoranda” and “Legal Investment Surveys”, if any; (g) the cost of preparing and printing stock certificates, if any; (h) all fees and expenses of the registrar and transfer agent of the Securities; (i) the reasonable
fees, disbursements and expenses of counsel to the Underwriter; and (j) all other costs and expenses incident to the Offering or the performance of the obligations of the Company under this Agreement (including, without limitation, the fees and
expenses of the Company’s counsel and the Company’s independent accountants and the travel and other reasonable expenses incurred by the Company’s and Underwriter’s personnel in connection with any “road show”
including, without limitation, any expenses advanced by the Underwriter on the Company’s behalf (which will be promptly reimbursed)); provided, however, that except to the extent otherwise provided in Sections 5, 7 and 9, the Company
shall not be obligated to pay any fees, disbursements and expenses of counsel to the Underwriter pursuant to clauses (d), (f), (i) and, with respect to expenses incurred by the Underwriter’s personnel pursuant to clause (j) of this
Section 5 in excess of $75,000 in the aggregate.
| 6. |
CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITER, AND THE SALE
OF THE SHARES. |
The obligations of the Underwriter hereunder, and the
closing of the sale of the Closing Securities, are subject to the accuracy, when made and as of the Applicable Time and on the Closing Date, of the representations and warranties of the Company contained herein, to the accuracy of the statements of
the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, and to each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of the Registration Statement or any part thereof, preventing or suspending the
use of any Base Prospectus, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part thereof shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Securities Act
shall have been initiated or threatened by the Commission, and all requests for additional
25
information on the part of the Commission (to be included or incorporated by reference in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Underwriter; each Issuer Free Writing Prospectus, if any, and the Prospectus shall have been filed with the Commission within the applicable time period prescribed for such filing by, and in compliance with, the Rules
and Regulations and in accordance with Section 4(a); and FINRA shall have raised no objection to the fairness and reasonableness of the terms of this Agreement or the transactions contemplated hereby.
(b) The Underwriter shall not have discovered and disclosed to the Company on or prior to the Closing Date that the
Registration Statement or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for the Underwriter, is material or omits to state any fact which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary to make the statements therein not misleading, or that the General Disclosure Package, any Issuer Free Writing Prospectus or the Prospectus or any amendment or supplement thereto contains an untrue
statement of fact which, in the opinion of such counsel, is material or omits to state any fact which, in the opinion of such counsel, is material and is necessary in order to make the statements, in the light of the circumstances in which they were
made, not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization, form and
validity of each of the Transaction Documents, the Securites, the Registration Statement, the General Disclosure Package, each Issuer Free Writing Prospectus, if any, and the Prospectus and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory to counsel for the Underwriter, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such
matters.
(d) Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C shall have furnished to the Underwriter such
counsel’s written opinion and negative assurances statement, as counsel to the Company, addressed to the Underwriter and dated the Closing Date, in form and substance satisfactory to the Underwriter.
(e) Burns & Levinson LLP, special counsel for the Company with respect to patents and proprietary rights, shall have
furnished to the Underwriter its opinion and negative assurance letter, dated the Closing Date and addressed to the Underwriter, in form and substance satisfactory to the Underwriter.
(f) Goodwin Procter LLP, special counsel for the Company with respect to patents and proprietary rights, shall have furnished
to the Underwriter its opinion and negative assurance letter, dated the Closing Date and addressed to the Underwriter, in form and substance satisfactory to the Underwriter.
26
(g) At the time of the execution of this Agreement, the Underwriter shall have
received from Deloitte & Touche LLP a letter, addressed to the Underwriter, executed and dated such date, in form and substance satisfactory to the Underwriter (A) confirming that they are an independent registered accounting firm with
respect to the Company and its subsidiaries within the meaning of the Securities Act and the Rules and Regulations and PCAOB and (B) stating the conclusions and findings of such firm, of the type ordinarily included in accountants’
“comfort letters” to Underwriter, with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus.
(h) On the effective date of any post-effective amendment to any Registration Statement and on the Closing Date, the
Underwriter shall have received a letter (the “Bring-Down Letter”) from Deloitte & Touche LLP addressed to the Underwriter and dated the Closing Date confirming, as of the date of the Bring-Down Letter (or, with
respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the General Disclosure Package and the Prospectus, as the case may be, as of a date not more than three
(3) business days prior to the date of the Bring-Down Letter), the conclusions and findings of such firm, of the type ordinarily included in accountants’ “comfort letters” to Underwriter, with respect to the financial information
and other matters covered by its letter delivered to the Underwriter concurrently with the execution of this Agreement pursuant to paragraph (h) of this Section 6.
(i) The Company shall have furnished to the Underwriter a certificate, dated the Closing Date, of its Chairman of the Board,
Chief Executive Officer or its President and its Chief Financial Officer or a Vice President of Finance, each in his or her capacity as an officer of the Company, stating that (i) such officers have carefully examined the Registration
Statement, the General Disclosure Package, any Permitted Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, at the Applicable Time and as of the date of this Agreement and as of
the Closing Date did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the General Disclosure Package, as of
the Applicable Time and as of the Closing Date, any Permitted Free Writing Prospectus as of its date and as of the Closing Date, the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date,
did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading, (ii) since the
effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the General Disclosure Package or the Prospectus that has not been so set forth therein,
(iii) to the best of their knowledge after reasonable investigation, as of the Closing Date, the representations and warranties of the Company in this Agreement are true and
27
correct, and the Company has complied in all material respects with all agreements and satisfied in all material respects all conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, and (iv) there has not been, subsequent to the date of the most recent audited financial statements included or incorporated by reference in the General Disclosure Package, any material adverse change in the financial
position or results of operations of the Company and its subsidiaries or any change or development that, singly or in the aggregate, would involve a material adverse change or a prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business, assets or prospects of the Company and its subsidiaries taken as a whole, except as set forth in the Prospectus.
(j) Since the date of the latest audited financial statements included in the General Disclosure Package or incorporated by
reference in the General Disclosure Package as of the date hereof, (i) neither the Company nor any of its subsidiaries shall have sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute, otherwise than as set forth in the General Disclosure Package, and (ii) there shall not have been any change in the capital stock (other than pursuant to the exercise of options or warrants to
purchase shares of Common Stock that are outstanding at the date hereof; pursuant to the Company’s 2010 employee stock purchase plan or short-term or long-term debt of the Company or any of its subsidiaries, or any change, or any development
involving a prospective change, in or affecting the business, general affairs, management, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries otherwise than as set forth in the General
Disclosure Package, the effect of which, in any such case described in clause (i) or (ii) of this paragraph (k), is, in the judgment of the Underwriter, so material and adverse as to make it impracticable or inadvisable to proceed
with the sale or delivery of the Shares on the terms and in the manner contemplated in the General Disclosure Package.
(k)
No action shall have been taken and no law, statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would prevent the issuance or sale of the Shares or materially and adversely affect or
potentially materially and adversely affect the business or operations of the Company or its subsidiaries and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been
issued which would prevent the issuance or sale of the Securities or materially and adversely affect or potentially materially and adversely affect the business or operations of the Company or its subsidiaries.
(l) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i)(A)
trading in securities generally on the New York Stock Exchange, NASDAQ CM or the American Stock Exchange or in the over-the-counter market, or (B) trading in any securities of the
28
Company on any exchange or in the over-the-counter market, shall have been suspended or materially limited, or minimum or maximum prices or maximum range for prices shall have been established on
any such exchange or such market by the Commission, by such exchange or market or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities or
a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, (iii) the United States shall have become engaged in hostilities, or the subject of an act of terrorism, or there
shall have been an outbreak of or escalation in hostilities involving the United States, or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of the Underwriter, impracticable or inadvisable to proceed
with the sale or delivery of the Shares on the terms and in the manner contemplated in the General Disclosure Package and the Prospectus.
(m) The Company shall have filed a Notification: Listing of Additional Shares with the NASDAQ CM and shall have received no
objection thereto from the NASDAQ CM.
(n) FINRA shall have provided a Conditional No Objection letter and a 415 Takedown
No Objections letter, and the Underwriter shall have not received a written notification from FINRA which prevents the consummation of the Offering.
(o) The Underwriter shall have received the Lock-Up Agreements of the executive officers and directors of the Company listed in
Schedule B to this Agreement.
(p) Prior to the Closing Date, the Company shall have furnished to the Underwriter
such good standing certificates, secretary and officers’ certificates, or such other documents as the Underwriter shall have reasonably requested.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriter.
| 7. |
INDEMNIFICATION AND CONTRIBUTION. |
(a) The Company shall indemnify and hold harmless the Underwriter, each of its affiliates and each of its and their
respective directors, officers, members, employees, representatives and agents and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively,
the “Underwriter Indemnified Parties,” and each a “Underwriter Indemnified Party”) against any loss, claim,
29
damage, expense or liability whatsoever (or any action, investigation or proceeding in respect thereof), joint or several, to which such Underwriter Indemnified Party may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or proceeding arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained
in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein or (ii) the omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or
required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto or document incorporated by reference therein, a material fact required to be stated
therein or necessary to make the statements therein (with respect to any Preliminary Prospectus, any Issuer Free Writing Prospectus, and “issuer information” or the Prospectus, in light of the circumstances under which they were made) not
misleading, and shall reimburse the Underwriter Indemnified Party promptly upon demand for any legal fees or other expenses reasonably incurred by that Underwriter Indemnified Party in connection with investigating, or preparing to defend, or
defending against, settling, compromising, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding, as such fees and
expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon an untrue statement or alleged untrue
statement in, or omission or alleged omission from any Preliminary Prospectus, any Registration Statement or the Prospectus, or any such amendment or supplement thereto, or any Issuer Free Writing Prospectus made in reliance upon and in conformity
with written information furnished to the Company by the Underwriter specifically for use therein, which information the parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17). This indemnity
agreement is not exclusive and will be in addition to any liability which the Company might otherwise have and shall not limit any rights or remedies which may otherwise be available at law or in equity to each Underwriter Indemnified Party.
(b) The Underwriter shall indemnify and hold harmless the Company and its directors, its officers who signed
the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Company Indemnified Parties,” and
each a “Company Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any action, investigation or proceeding in respect thereof), to which such Company Indemnified Party may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or proceeding arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact
30
contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations,
any Registration Statement or the Prospectus, or in any amendment or supplement thereto, or (ii) the omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information”
filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein, which information the parties hereto agree is limited to the Underwriter’s Information as defined in Section 17, and shall reimburse the Company Indemnified Party for any
legal or other expenses reasonably incurred by such party in connection with investigating or preparing to defend or defending against or appearing as third party witness in connection with any such loss, claim, damage, liability, action,
investigation or proceeding, as such fees and expenses are incurred. This indemnity agreement is not exclusive and will be in addition to any liability which the Underwriter might otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to each Company Indemnified Party. Notwithstanding the provisions of this Section 7(b), in no event shall any indemnity by the Underwriter under this Section 7(b) exceed the total
discount and commission received by the Underwriter in connection with the Offering.
(c) Promptly after receipt by
an indemnified party under this Section 7 of notice of the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under this Section 7, notify such
indemnifying party in writing of the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 7 except to the
extent it has been materially prejudiced by such failure; and, provided, further, that the failure to notify an indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this
Section 7. If any such action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense of such action with counsel reasonably satisfactory to the indemnified party (which counsel shall not, except with the written consent of the indemnified party, be counsel
to the indemnifying party). After notice from the indemnifying party to the indemnified party of its election to assume the defense of such action, except as provided herein, the indemnifying party shall not be liable to the indemnified party under
Section 7 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense of such action other than reasonable costs of investigation; provided, however, that any indemnified party
31
shall have the right to employ separate counsel in any such action and to participate in the defense of such action but the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized in writing by the Company in the case of a claim for indemnification under Section 7(a) or the
Underwriter in the case of a claim for indemnification under Section 7(b), (ii) such indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party, or (iii) the indemnifying party has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party within a reasonable period of time
after notice of the commencement of the action or the indemnifying party does not diligently defend the action after assumption of the defense, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of (or, in the case of a failure to diligently defend the action after assumption of the defense, to continue to
defend) such action on behalf of such indemnified party and the indemnifying party shall be responsible for legal or other expenses subsequently incurred by such indemnified party in connection with the defense of such action; provided,
however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such indemnified parties (in addition to any local counsel), which firm shall be designated in writing by the Underwriter if the indemnified parties
under this Section 7 consist of any Underwriter Indemnified Party or by the Company if the indemnified parties under this Section 7 consist of any Company Indemnified Parties. Subject to this Section 7 (c), the
amount payable by an indemnifying party under Section 7 shall include, but not be limited to, (x) reasonable legal fees and expenses of counsel to the indemnified party and any other expenses in investigating, or preparing to defend
or defending against, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any action, investigation, proceeding or claim, and (y) all amounts paid in settlement of any of the foregoing. No indemnifying
party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of judgment with respect to any pending or threatened action or any claim whatsoever, in respect of which indemnification or
contribution could be sought under this Section 7 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each
indemnified party in form and substance reasonably satisfactory to such indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party. Subject to the provisions of the following sentence, no indemnifying party shall be liable for settlement of
32
any pending or threatened action or any claim whatsoever that is effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with its
written consent, if its consent has been unreasonably withheld or delayed or if there be a judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment. In addition, if at any time an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees
that it shall be liable for any settlement of the nature contemplated herein effected without its written consent if (i) such settlement is entered into more than ninety (90) days after receipt by such indemnifying party of the request for
reimbursement, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such settlement, unless the indemnifying party is objecting in good faith to the amount of such fees and expenses.
(d) If the indemnification provided for in this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under Section 7(a) or Section 7(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid, payable or otherwise incurred by such indemnified party
as a result of such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof), as incurred, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company
on the one hand and the Underwriter on the other hand from the Offering, or (ii) if the allocation provided by clause (i) of this Section 7(d) is not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) of this Section 7(d) but also the relative fault of the Company on the one hand and the Underwriter on the other with respect to the statements, omissions, acts or failures to
act which resulted in such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof) as well as any other relevant equitable considerations. The relative benefits received by the Company on the one
hand and the Underwriter on the other with respect to the Offering shall be deemed to be in the same proportion as the total net proceeds from the Offering under this Agreement (before deducting expenses) received by the Company bear to the total
underwriting discount and commission received by the Underwriter in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriter on
the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the
one hand or the Underwriter on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; provided that the parties
hereto agree that the written information furnished to
33
the Company by the Underwriter specifically for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the
Underwriter’s Information as defined in Section 17. The Company and the Underwriter agree that it would not be just and equitable if contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage, expense, liability, action,
investigation or proceeding referred to above in this Section 7(d) shall be deemed to include, for purposes of this Section 7(d), any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding.
Notwithstanding the provisions of this Section 7(d), the Underwriter shall not be required to contribute any amount in excess of the total discount and commission received by the Underwriter in connection with the Offering, less the
amount of any damages which the Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement, omission or alleged omission, act or alleged act or failure to act or alleged failure to act. 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 obligations of the Underwriter hereunder may be
terminated by the Underwriter, in its absolute discretion by notice given to the Company prior to delivery of and payment for the Closing Securities if, prior to that time, any of the events described in Sections 6(j), 6(k), or
6(l) have occurred or if the Underwriter shall decline to purchase the Shares for any reason permitted under this Agreement.
| 9. |
REIMBURSEMENT OF UNDERWRITER’S EXPENSES. |
Notwithstanding anything to the contrary in this Agreement, if (a) this Agreement shall have been terminated pursuant to
Section 8, as a result of an event described in Sections 6(j), 6(k) or 6(l)(i)(B), (b) the Company shall fail to tender the Closing Securities for delivery to the Underwriter for any reason not permitted under
this Agreement, or (c) the sale of the Closing Securities is not consummated because any condition to the obligations of the Underwriter set forth herein is not satisfied or because of the refusal, inability or failure on the part of the
Company to perform any agreement herein or to satisfy any condition or to comply with the provisions hereof, then, the Company shall reimburse the Underwriter’s reasonable out-of-pocket expenses in accordance with Section 5 and, in
addition, the Company shall reimburse the Underwriter for the reasonable fees and expenses of the Underwriter’s counsel and for all other accountable out-of-pocket expenses as shall have been reasonably incurred by them in connection with this
Agreement and the proposed Offering, and promptly upon demand the Company shall pay the full amount thereof to the Underwriter on behalf of the Underwriter.
34
10. Effectiveness. This Agreement shall become effective upon the execution and delivery hereof by the parties
hereto.
| 11. |
ABSENCE OF FIDUCIARY RELATIONSHIP. |
The Company acknowledges and agrees that:
(a) The Underwriter’s responsibility to the Company is solely contractual in nature, the Underwriter has been retained
solely to act as an underwriter in connection with the Offering and no fiduciary, advisory or agency relationship between the Company and the Underwriter has been created in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Underwriter has advised or is advising the Company on other matters;
(b) the price of the
Closing Securities set forth in this Agreement was established by the Company following discussions and arms-length negotiations with the Underwriter, and the Company is capable of evaluating and understanding, and understands and accepts, the
terms, risks and conditions of the transactions contemplated by this Agreement;
(c) it has been advised that the
Underwriter and each of its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Underwriter has no obligation to disclose such interests and transactions to the
Company by virtue of any fiduciary, advisory or agency relationship; and
(d) it waives, to the fullest extent permitted by
law, any claims it may have against the Underwriter for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Underwriter shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary
duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including shareholders, employees or creditors of the Company.
| 12. |
SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. |
This Agreement shall inure to the benefit of and be binding upon the Underwriter, the Company, and their respective successors and assigns.
Notwithstanding the foregoing, the determination as to whether any condition in Section 6 hereof shall have been satisfied, and the waiver of any condition in Section 6 hereof, may be made by the Underwriter in its sole
discretion. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, other than the persons mentioned in the preceding sentences, any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person; except that the
indemnities of the Company contained in this Agreement shall also be for the benefit of the Underwriter Indemnified Parties and the indemnities of the Underwriter shall be for the benefit of the Company Indemnified Parties. It is understood that the
Underwriter’s responsibility to the Company is solely contractual in nature and the Underwriter does not owe the Company, or any other party, any fiduciary duty as a result of this Agreement.
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| 13. |
SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. |
The respective indemnities, covenants, agreements, representations, warranties and other statements of the Company and the Underwriter, as set
forth in this Agreement or made by them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation made by or on behalf of the Underwriter, the Company or any person controlling any of them and
shall survive delivery of and payment for the Closing Securities. Notwithstanding any termination of this Agreement, including without limitation any termination pursuant to Section 8, the indemnity and contribution and reimbursement
agreements contained in Sections 7 and 9 and the covenants, representations, warranties set forth in this Agreement shall not terminate and shall remain in full force and effect at all times.
All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) if to the Underwriter, shall be delivered or sent by mail, facsimile transmission or email
to Roth Capital Partners, LLC, 888 San Clemente Drive, Newport Beach, CA 92660, Attention: Roth Equity Capital Markets, Email: RothECM@roth.com;
(b) if to the Company, shall be delivered or sent by mail, facsimile transmission or email to: BG Medicine, Inc., 880 Winter
Street, Suite 210, Waltham, Massachusetts 02451, Attention: Chief Financial Officer, Fax: (781) 895-1119;
provided, however, that any notice
to the Underwriter pursuant to Section 7 shall be delivered or sent by mail or facsimile transmission to Roth Capital Partners, LLC at the address set forth above in this Section 14. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof, except that any such statement, request, notice or agreement delivered or sent by email shall take effect at the time of confirmation of receipt thereof by the recipient thereof.
| 15. |
DEFINITION OF CERTAIN TERMS. |
For purposes of this Agreement, (a) “business day” means any day on which the Nasdaq CM is open for trading,
(b) “knowledge” means the knowledge of the executive officers of the Company after reasonable inquiry and (c) “subsidiary” has the meaning set forth in Rule 405 of the Rules and Regulations.
| 16. |
GOVERNING LAW, AGENT FOR SERVICE AND JURISDICTION. |
This Agreement shall be governed by and construed in accordance with the laws of the State of New York, including without limitation
Section 5-1401 of the New York
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General Obligations Law. No legal proceeding may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York
or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Company and the Underwriter each hereby consent to the jurisdiction of such courts and
personal service with respect thereto. The Company and the Underwriter each hereby waive all right to trial by jury in any legal proceeding (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement. The
Company agrees that a final judgment in any such legal proceeding brought in any such court shall be conclusive and binding upon the Company and the Underwriter and may be enforced in any other courts in the jurisdiction of which the Company is or
may be subject, by suit upon such judgment.
| 17. |
UNDERWRITER’S INFORMATION. |
The
parties hereto acknowledge and agree that, for all purposes of this Agreement, the “Underwriter’s Information” consists solely of the following information in the Prospectus: (i) the Underwriter’s name and title as set forth
on the front cover page; and (ii) the statements concerning the Underwriter contained in the first paragraph, in the fourth paragraph concerning the terms of the Offering, concerning the Underwriter in the seventh paragraph, concerning
stabilization by the Underwriter in the tenth paragraph, in the eleventh paragraph concerning the Offering and the paragraphs under the heading “Notice to Investors,” in each case under the heading “Underwriting.”
Notwithstanding any termination of this
Agreement, other than by the Underwriter, the Underwriter shall be entitled to a cash fee of 7% of the gross proceeds, with respect to any offering of the Company’s securities to the extent that such financing or capital is provided to the
Company or its affiliates by investors to which the Underwriter introduced the Company or with which the Underwriter conducted substantive discussions on behalf of the Company, and such offering is consummated or an agreement for sale of securities
is entered into within the 6 month period following the earlier of the termination or expiration of this Agreement (the “Fee Tail”). A list of the investors covered in the Fee Tail will be set forth in Exhibit II upon termination or
expiration of this Agreement. Such cash fee shall be paid upon the consummation of such offering.
| 19. |
PARTIAL UNENFORCEABILITY. |
The invalidity or
unenforceability of any section, paragraph, clause or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph, clause or provision hereof. If any section, paragraph, clause or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
37
This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this Agreement are for the convenience of the parties only and will not affect the construction or interpretation of this Agreement. This Agreement may be amended or modified, and
the observance of any term of this Agreement may be waived, only by a writing signed by the Company and the Underwriter.
| 21. |
RESEARCH ANALYST INDEPENDENCE. |
The Company
acknowledges that the Underwriter’s research analysts and research departments are required to be independent from its investment banking division and are subject to certain regulations and internal policies, and that the Underwriter’s
research analysts may hold views and make statements or investment recommendations and/or publish research reports with respect to the Company and/or the Offering that differ from the views of its investment banking division. The Company hereby
waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriter with respect to any conflict of interest that may arise from the fact that the views expressed by its independent research
analysts and research departments may be different from or inconsistent with the views or advice communicated to the Company by the Underwriter’s investment banking division. The Company acknowledges that the Underwriter is a full service
securities firm and as such from time to time, subject to applicable securities laws, rules and regulations, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of
the Company; provided, however, that nothing in this Section 20 shall relieve the Underwriter of any responsibility or liability it may otherwise bear in connection with activities in violation of applicable securities laws, rules or
regulations.
This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument and such signatures may be delivered by facsimile or by email delivery of a “pdf” format data
file.
[Signature page follows]
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If the foregoing is in accordance with your understanding of the agreement between the Company
and the Underwriter, kindly indicate your acceptance in the space provided for that purpose below.
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| Very truly yours, |
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| BG MEDICINE, INC. |
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By: |
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/s/ Paul R. Sohmer, M.D. |
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Name: |
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Paul R. Sohmer, M.D. |
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Title: |
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President & Chief Executive Officer |
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| Confirmed as of the date first above mentioned: |
| ROTH CAPITAL PARTNERS,
LLC |
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| By: |
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/s/ Aaron M. Gurewitz |
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Name: |
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Aaron M. Gurewitz |
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Title: |
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Head of Equity Capital Markets |
39
SCHEDULE A
Time of Sale Information: 8:15AM
Number of Shares: 2,315,654
Number of Pre-Funded Warrants: 184,346
Number of
Traditional Warrants: 1,250,000
SCHEDULE B
List of Directors, Executive Officers subject to Section 4
Directors
Noubar Afeyan, Ph.D.
Harrison M. Bains
Timothy Harris, Ph.D.
Stelios Papadopoulos, Ph.D.
Paul R. Sohmer, M.D.
Harry Wilcox
Executive Officers
Paul R. Sohmer, M.D.
Stephen P. Hall
Aram Adourian, Ph.D.
Exhibit 3.1
Filing Copy
AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED
STOCK
OF
BG
MEDICINE, INC.
BG Medicine, Inc., a Delaware corporation (the “Company”), does hereby certify, pursuant to
authority conferred on the Board of Directors of the Company (the “Board”) by the Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”), and pursuant to the provisions of Sections
103 and 151 of Title 8 of the General Corporation Law of the State of Delaware (the “DGCL”):
1. That by resolution of
the Board dated July 14, 2015, and by a Certificate of Designations filed in the office of the Secretary of State of the State of Delaware on July 14, 2015, the Company authorized a series of 1,474,443 shares of Series A Preferred Stock
(defined below), and established the powers, designations, preferences and relative, participating, optional and other rights of the Series A Preferred Stock and the qualifications, limitations or restrictions thereof.
2. Pursuant to and in compliance with Section 4(b) of the Certificate of Designations filed on July 14, 2015, all of the holders of
Series A Preferred Stock have consented to the amendment and restatement of the Certificate of Designations of the Series A Preferred Stock.
3. That at a meeting of the Board of Directors duly held on August 7, 2015, the Board adopted the following resolutions amending in their
entirety the powers, designations, preferences, and relative, participating, optional and other rights of shares of the Series A Preferred Stock, and the qualifications, limitations or restrictions thereof as set forth in the form of the
Amended and Restated Certificate of Designations approved by the Board:
NOW, THEREFORE, BE IT RESOLVED, that the Board hereby approves
the amendment and restatement of the Certificate of Designations of Series A Preferred Stock filed on July 14, 2015 to read as follows:
SECTION 1. Number; Designation; Rank.
(a) This series of convertible participating preferred stock is designated as the “Series A Preferred Stock” (the “Series A
Preferred Stock”). The number of shares constituting the Series A Preferred Stock is 1,474,443 shares, par value $0.001 per share.
1
(b) The Series A Preferred Stock ranks, with respect to the payment of dividends, redemption
payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding-up of the Company or otherwise:
(i) senior in preference and priority to the Common Stock and each other class or series of Capital Stock of the Company, except for any
class or series of Capital Stock hereafter issued in compliance with the terms hereof and the terms of which expressly provide that it will rank senior to or on parity, without preference or priority, with the Series A Preferred Stock with respect
to the payment of dividends, redemption payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding-up of the Company, or otherwise (collectively with the Common Stock, the “Junior
Securities”);
(ii) on parity, without preference and priority, with each other class or series of Capital Stock of the Company
hereafter issued in compliance with the terms hereof and the terms of which expressly provide that it will rank on parity, without preference or priority, with the Series A Preferred Stock with respect to the payment of dividends, redemption
payments, rights (including as to the distribution of assets) upon liquidation, dissolution or winding-up of the Company, or otherwise (collectively, the “Parity Securities”); and
(iii) junior in preference and priority to each other class or series of Preferred Stock or any other Capital Stock of the Company hereafter
issued in compliance with the terms hereof and the terms of which expressly provide that it will rank senior in preference or priority to the Series A Preferred Stock with respect to the payment of dividends, redemption payments, rights (including
as to the distribution of assets) upon liquidation, dissolution or winding-up of the Company or otherwise (collectively, “Senior Securities”).
SECTION 2. Dividends.
(a) Cumulative Dividends. Holders shall be entitled to receive, out of funds legally available for the payment of dividends to the
Company’s stockholders under Delaware law, on each Preferred Share, cumulative dividends which accrue daily at a per annum rate of 8.00% on the Accrued Value of such Preferred Share (“Cumulative Dividends”). Such Cumulative
Dividends shall begin to accrue and be cumulative from the Issue Date. Cumulative Dividends shall be compounded quarterly and payable quarterly with respect to each Dividend Period in arrears on the first Dividend Payment Date after such Dividend
Period, at the option of each such Holder of Series A Preferred Stock, (i) in cash or (ii) by the issuance of such number of additional shares of Series A Preferred Stock equal to the Stock Dividend Amount.
(b) Participating Cash Dividends. If the Company declares, makes or pays any cash dividend or distribution in respect of the Common
Stock (a “Common Dividend”), each Holder shall receive a dividend (in addition to the Dividends provided for by SECTION 2(a)) in respect of each Preferred Share held thereby, in an amount equal to the product of (x) the amount
of such Common Dividend paid per share of Common Stock, multiplied by (y) the number of shares of Common Stock issuable if such Preferred Share had been converted into shares of Common Stock immediately prior to the record date for such Common
Dividend (such amount per share of Preferred Stock, the “Participating Cash Dividend”). Participating Cash Dividends shall be payable to Holders on the record date for such Common Dividend at the same time and in the same manner as
the Common Dividend triggering such Participating Cash Dividend is paid.
(c) In-Kind Participating Dividends. If the Company
distributes shares of its Capital Stock, evidences of its indebtedness or other assets, securities or property, in respect of the
2
Common Stock (an “In-Kind Common Dividend”), including without limitation any spin-off of one or more subsidiaries or businesses of the Company but excluding: (I) dividends
or distributions referred to in SECTIONS 5(f)(i)(B) and 5(f)(i)(C); and (II) cash dividends with respect to which Holders are entitled to Participating Cash Dividends, then the Holders shall receive in such distribution or other transaction, at the
same time and in the same manner as holders of Common Stock, the same type and amount of consideration (the “In-Kind Participating Dividend” and, collectively with the Participating Cash Dividend, the “Participating
Dividends”) as Holders would have received if, immediately prior to the record date of such In-Kind Common Dividend, they had held the number of shares of Common Stock issuable upon conversion of the Preferred Shares. To the extent that the
Company establishes or adopts a stockholder rights plan or agreement (i.e., a “poison pill”), the Company shall ensure that the Holders will receive, as an In-Kind Participating Dividend, rights under the stockholder rights plan or
agreement with respect to any shares of Common Stock that at the time of such distribution would be issuable upon conversion of the Preferred Shares.
(d) Dividends (other than Participating Dividends) payable on the Series A Preferred Stock in respect of any Dividend Period shall be
computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of Dividends (other than Participating Dividends) payable on the Series A Preferred Stock on any date prior to the end of a Dividend Period, and for the initial
Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month.
(e) Cumulative Dividends that are payable on Series A Preferred Stock on any Dividend Payment Date will be payable to Holders of record on
the applicable record date, which shall be the fifteenth (15th) calendar day before the applicable Dividend Payment Date, or, with respect to any Cumulative Dividends not paid on the
scheduled Dividend Payment Date therefor, such record date fixed by the Board (or a duly authorized committee of the Board) that is not more than sixty (60) nor less than ten (10) days prior to such date on which such accrued and unpaid
Cumulative Dividends are to be paid (each such record date, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
(f) The quarterly dividend periods with respect to Cumulative Dividends shall commence on and include
January 1, April 1, July 1 and October 1 (other than the initial Dividend Period, which shall commence on and include the Issue Date) and shall end on and include the last calendar day of the calendar quarter ending
March 31, June 30, September 30 and December 31 preceding the next Dividend Payment Date (a “Dividend Period”).
SECTION 3. Liquidation Preference.
(a) Upon any Liquidation Event, each Preferred Share entitles the Holder thereof to receive and to be paid out of the assets of the Company
legally available for distribution to the Company’s stockholders, before any distribution or payment may be made to a holder of any Junior Securities, an amount in cash per share equal to the sum of (A) the Accrued Value, plus (B) all
accrued and unpaid Dividends (including, without limitation, accrued and unpaid Cumulative Dividends for the then current Dividend Period) (“Liquidation Preference”).
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(b) If upon any such Liquidation Event, the assets of the Company legally available for
distribution to the Company’s stockholders are insufficient to pay the Holders the full Liquidation Preference and the holders of all Parity Securities the full liquidation preferences to which they are entitled, the Holders and the holders of
such Parity Securities will share ratably in any such distribution of the assets of the Company in proportion to the full respective amounts to which they are entitled.
(c) After payment to the Holders of the full Liquidation Preference to which they are entitled, the Holders will additionally receive such
per share amount distributed to each holder of Common Stock, treating for this purpose all shares of Series A Preferred Stock as if they had been converted to Common Stock pursuant to the terms hereof.
(d) The value of any property not consisting of cash that is distributed by the Company to the Holders will equal the Fair Market Value
thereof on the date of distribution.
(e) No holder of Junior Securities shall receive any cash upon a Liquidation Event unless the
entire Liquidation Preference in respect of the Preferred Shares has been paid in cash. To the extent that there is insufficient cash available to pay the entire Liquidation Preference in respect of the Preferred Shares and any liquidation
preference in respect of Parity Securities in full in cash upon a Liquidation Event, the Holders and the holders of such Parity Securities will share ratably in any cash available for distribution in proportion to the full respective amounts to
which they are entitled upon such Liquidation Event.
SECTION 4. As-Converted Voting Rights; Certain Consent Rights.
(a) The Holders are entitled to vote on all matters on which the holders of shares of Common Stock are entitled to vote and, except as
otherwise provided herein (including under SECTION 7 below) or by law, the Holders shall vote together with the holders of shares of Common Stock as a single class. As of any record date or other determination date, each Holder shall be entitled to
the number of votes such Holder would have had if all Preferred Shares held by such Holder on such date had been converted into shares of Common Stock immediately prior thereto; (i) provided, however, that no Holder shall be entitled to cast
votes for the number of shares of Common Stock issuable upon conversion of such Preferred Shares held by such Holder that exceeds (subject to a proportionate adjustment in the event of a stock split, stock dividend, combination or other
proportionate recapitalization) the quotient of (A) the aggregate purchase price paid by such Holder for its Preferred Shares, divided by (B) the greater of (i) $3.20 and (ii) the Closing Price of the Common Stock on the Trading
Day immediately prior to the Issue Date of such Holder’s Preferred Shares, and (ii) provided, further, that in the event that any Holder would be required to file any Notification and Report Form pursuant to the HSR Act as a result of the
receipt of any Cumulative Dividends by such Holder, the voting rights of such Holder pursuant to this SECTION 4(a) shall not be increased as a result of such Holder’s receipt of such Cumulative Dividends unless and until such Holder and the
Company shall have made their respective filings under the HSR Act and the applicable waiting period shall have expired or been terminated in connection with such filings. At the request of a Holder in the case of clause (ii) of this SECTION
4(a), the Company shall make all required filings and reasonably cooperate with and assist such Holder in connection with the making of such filing and obtaining the expiration or termination of such waiting period and shall be reimbursed by such
Holder for any reasonable and documented out-of-pocket costs incurred by the Company in connection with such filings and cooperation.
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(b) In addition to the voting rights provided for by SECTION 4(a) and SECTION 7 and any voting
rights to which the Holders may be entitled to under law, for so long as any Preferred Shares are outstanding, the Company may not, directly or indirectly, take any of the following actions (including by means of merger, consolidation,
reorganization, recapitalization or otherwise) without the prior written consent of the Requisite Holders and any such actions entered into without such consent or vote shall be null and void ab initio, and of no force or effect:
(i) liquidate, dissolve or wind-up the business and affairs of the Company, effect any merger or consolidation or any other Liquidation
Event;
(ii) amend, alter or repeal any provision of the Certificate of Incorporation, including this Certificate of Designations, or
Bylaws of the Company;
(iii) create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class
or series of capital stock unless the same ranks junior to the Series A Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption, or
increase the authorized number of shares of Series A Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock with respect to the
distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption;
(iv) purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any
shares of capital stock of the Company other than (i) redemptions of or dividends or distributions on the Series A Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in
the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of
such employment or service at the lower of the original purchase price or the then-current Fair Market Value thereof;
(v) sell, assign,
license, pledge or encumber technology or intellectual property or other assets of the Company or any Subsidiary;
(vi) create, or hold
capital stock in, any subsidiary that is not a Wholly Owned Subsidiary, or sell, transfer or otherwise dispose of any capital stock of any Subsidiary of the Company, or permit any Subsidiary to sell, lease, transfer, exclusively license or otherwise
dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such Subsidiary;
(vii)
cease to maintain a directors and officers liability insurance policy in an amount of at least $15 million from financially sound and reputable insurers;
(viii) increase or decrease the size of the Board;
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(ix) make, or permit any Subsidiary to make, any loan or advance to, or own any stock or other
securities of, any Subsidiary or other corporation, partnership or other entity unless it is a Wholly Owned Subsidiary;
(x) incur any
aggregate indebtedness in excess of $50,000;
(xi) guarantee, directly or indirectly, or permit any Subsidiary to guarantee, directly or
indirectly, any indebtedness;
(xii) institute or settle any action, suit, litigation, petition, claim, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, or investigation by or before, or otherwise involving, any court or other governmental authority or arbitral body;
(xiii) enter into, amend, terminate take or omit to take any action that would constitute a violation or default under, or waive any rights
under, any contract or agreement relating to intellectual property of the Company or of a nature that would be required to be filed as an exhibit to a report filed with the SEC;
(xiv) enter into any corporate strategic relationship; or
(xv) agree to do, directly or indirectly, any of the foregoing actions set forth in clauses (i) through (xiv) above, unless such
agreement expressly provides that the Company’s obligation to undertake any of the foregoing is subject to the prior approval of the Requisite Holders.
(c) Notwithstanding anything to the contrary contained in this SECTION 4, the Company may not, directly or indirectly, take any action
otherwise approved pursuant to SECTION 4(b) if such action would have a materially adverse and disproportionate effect on the powers, preferences, rights, limitations, qualifications and restrictions or privileges of any Holder with respect to any
shares of Series A Preferred Stock held by any Holder, without the prior approval of such Holder.
(d) Any action as to which a class
vote of the holders of Preferred Stock, or the holders of Preferred Stock and Common Stock voting together, is required pursuant to the terms of this Certificate of Designations may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted and shall be delivered to the Company.
SECTION 5. Conversion. Each
Preferred Share is convertible into shares of Common Stock (or Reference Property, to the extent applicable) as provided in this SECTION 5.
(a) Conversion at the Option of Holders of Series A Preferred Stock. Each Holder is entitled to convert, at any time and from time to
time, at the option and election of such Holder, any or all outstanding Preferred Shares held by such Holder and receive therefor the property described in SECTION 5(c) upon such conversion. In order to convert Preferred Shares
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into shares of Common Stock (or Reference Property, to the extent applicable), the Holder must surrender the certificates representing such Preferred Shares at the office of the Company’s
transfer agent for the Series A Preferred Stock (or at the principal office of the Company, if the Company serves as its own transfer agent), together with (x) written notice that such Holder elects to convert all or part of the Preferred
Shares represented by such certificates as specified therein, (y) a written instrument or instructions of transfer or other documents and endorsements reasonably acceptable to the transfer agent or the Company, as applicable (if reasonably
required by the transfer agent or the Company, as applicable), and (z) funds for any stock transfer, documentary, stamp or similar taxes, if payable by the Holder pursuant to SECTION 5(e)(i). Except as provided in SECTION 5(b), the date the
transfer agent or the Company, as applicable, receives such certificates, together with such notice and any other documents and amounts required to be paid by the Holder pursuant to this SECTION 5, will be the date of conversion (the
“Conversion Date”).
(b) Mandatory Conversion at the Option of the Requisite Holders. Upon the written consent of
the Requisite Holders, all outstanding Preferred Shares held by all Holders shall be converted into shares of Common Stock and each Holder shall receive therefor the property described in SECTION 5(c) upon such conversion. The date of the consent of
the Requisite Holders shall be the Conversion Date. On the Conversion Date, all rights with respect to the Series A Preferred Stock so converted shall terminate, except any of the rights of the holders thereof upon surrender of their certificate or
certificates therefor or delivery of an affidavit of loss thereof to receive certificates for the number of shares of Common Stock into which such shares of Series A Preferred Stock have been converted. If so required by the Company, certificates
surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by his, her or its attorney duly authorized in writing.
Upon surrender of such certificates or affidavit of loss, the Company shall issue and deliver to such holder, promptly at such office and in its name as shown on such surrendered certificate or certificates, a certificate or certificates for the
number of shares of Common Stock into which the shares of the Series A Preferred Stock surrendered are convertible on the Conversion Date.
(c) Amounts Received Upon Conversion. Upon a conversion of Preferred Shares pursuant to SECTION 5(a) or (b), the Holder of such
converted Preferred Shares shall receive in respect of each Preferred Share a number of shares of Common Stock (or Reference Property, to the extent applicable) equal to the amount (the “Conversion Amount”) determined by dividing
(A) the Series A Original Purchase Price by (B) the Conversion Price in effect at the time of conversion. Notwithstanding the foregoing, in the event any Holder would be required to file any Notification and Report Form pursuant to the HSR
Act as a result of the conversion of any Preferred Shares into the property described above in this SECTION 5(c), at the option of such Holder upon written notice to the Company, the effectiveness of such conversion shall be delayed (only to the
extent necessary to avoid a violation of the HSR Act), until such Holder shall have made such filing under the HSR Act and the applicable waiting period shall have expired or been terminated; provided, however, that in such circumstances such Holder
shall use commercially reasonable efforts to make such filing and obtain the expiration or termination of such waiting period as promptly as reasonably practical and the Company shall make all required filings and reasonably cooperate with and
assist such Holder in connection with the making of such filing and obtaining the expiration or termination of such waiting period and shall be reimbursed by such Holder for any reasonable and documented out-of-pocket costs incurred by the Company
in connection with such filings and cooperation.
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(d) Fractional Shares. No fractional shares of Common Stock (or fractional shares in
respect of Reference Property, to the extent applicable) will be issued upon conversion of the Series A Preferred Stock. In lieu of fractional shares, the Company shall pay cash in respect of each fractional share equal to such fractional amount
multiplied by the Thirty Day VWAP as of the closing of business on the Business Day immediately preceding the Conversion Date (or the Fair Market Value thereof in respect of any Reference Property). If more than one Preferred Share is being
converted at one time by the same Holder, then the number of full shares issuable upon conversion will be calculated on the basis of the aggregate number of Preferred Shares converted by such Holder at such time.
(e) Mechanics of Conversion.
(i) As soon as reasonably practicable after the Conversion Date (and in any event within four (4) Business Days after such date), the
Company shall issue and deliver to the applicable Holder one or more certificates for the number of shares of Common Stock (or Reference Property, to the extent applicable) to which such Holder is entitled, together with, at the option of the
Holder, a check or wire transfer of immediately available funds for payment of fractional shares in exchange for the certificates representing the converted Preferred Shares. Such conversion will be deemed to have been made on the Conversion Date,
and the Person entitled to receive the shares of Common Stock (or Reference Property, to the extent applicable) issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock (or Reference
Property, to the extent applicable) on such date. The delivery of the Common Stock upon conversion of Preferred Shares shall be made, at the option of the applicable Holder, in certificated form or by book-entry. Any such certificate or certificates
shall be delivered by the Company to the appropriate Holder on a book-entry basis or by mailing certificates evidencing the shares to such Holder at its address as set forth in the conversion notice. In cases where fewer than all the Preferred
Shares represented by any such certificate are to be converted, a new certificate shall be issued representing the unconverted Preferred Shares. The Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of Common
Stock (or Reference Property, to the extent applicable) upon conversion or due upon the issuance of a new certificate for any Preferred Shares not converted to the converting Holder; provided that the Company shall not be required to pay any such
amounts, and any such amounts shall be paid by the converting Holder, in the event that such Common Stock or Preferred Shares are issued in a name other than the name of the converting Holder.
(ii) For the purpose of effecting the conversion of Preferred Shares, the Company shall: (A) at all times reserve and keep available,
free from any preemptive rights, out of its treasury or authorized but unissued shares of Common Stock (or Reference Property, to the extent applicable) the full number of shares of Common Stock (or Reference Property, to the extent applicable)
deliverable upon the conversion of all outstanding Preferred Shares after taking into account any adjustments to the Conversion Price from time to time pursuant to the terms of this SECTION 5 and any increases to the Accrued Value from time to time
and assuming for the purposes of this calculation that all outstanding Preferred Shares are held by one holder); and (B) without prejudice to any other remedy at law or in equity any Holder may have as a result of
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such default, take all actions reasonably required to amend its Certificate of Incorporation, as expeditiously as reasonably practicable, to increase the authorized and available amount of Common
Stock (or Reference Property, to the extent applicable) if at any time such amendment is necessary in order for the Company to be able to satisfy its obligations under this SECTION 5. Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value of the shares of Common Stock (or Reference Property, to the extent applicable) issuable upon conversion of the Series A Preferred Stock, the Company will take any corporate action which may be necessary
in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock (or Reference Property, to the extent applicable) upon the conversion of all outstanding Preferred Shares at such adjusted Conversion Price.
(iii) From and after the Conversion Date, the Preferred Shares converted on such date, will no longer be deemed to be outstanding and
all rights of the Holder thereof including the right to receive Dividends, but excluding the right to receive from the Company the Common Stock (or Reference Property, to the extent applicable) or any cash payment upon conversion, and except for any
rights of Holders (including any voting rights) pursuant to this Certificate of Designations which by their express terms continue following conversion or, for the avoidance of doubt, rights which by their express terms continue following conversion
pursuant to any of the other Transaction Agreements (as defined in the Securities Purchase Agreement) shall immediately and automatically cease and terminate with respect to such Preferred Shares; provided that, in the event that a Preferred
Share is not converted due to a default by the Company or because the Company is otherwise unable to issue the requisite shares of Common Stock (or Reference Property, to the extent applicable), such Preferred Share will, without prejudice to any
other remedy at law or in equity any Holder may have as a result of such default, remain outstanding and will continue be entitled to all of the rights attendant to such Preferred Share as provided herein.
(iv) The Company shall comply with all federal and state laws, rules and regulations and applicable rules and regulations of the Exchange on
which shares of the Common Stock (or Reference Property, to the extent applicable) are then listed. If any shares of Common Stock (or Reference Property, to the extent applicable) to be reserved for the purpose of conversion of Preferred Shares
require registration with or approval of any Person or group (as such term is defined in Section 13(d)(3) of the Exchange Act) under any federal or state law or the rules and regulations of the Exchange on which shares of the Common Stock (or
Reference Property, to the extent applicable) are then listed before such shares may be validly issued or delivered upon conversion, then the Company will, as expeditiously as reasonably practicable, use commercially reasonable efforts to secure
such registration or approval, as the case may be. So long as any Common Stock (or Reference Property, to the extent applicable) into which the Preferred Shares are then convertible is then listed on an Exchange, the Company will list and keep
listed on any such Exchange, upon official notice of issuance, all shares of such Common Stock (or Reference Property, to the extent applicable) issuable upon conversion.
(v) All shares of Common Stock (or Reference Property, to the extent applicable) issued upon conversion of the Preferred Shares will, upon
issuance by the Company, be duly and validly issued, fully paid and nonassessable, not issued in violation of any preemptive or similar rights arising under law or contract and free from all taxes, liens and charges with respect to the issuance
thereof, and the Company shall take no action which will cause a contrary result.
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(f) Adjustments to Conversion Price.
(i) The Conversion Price shall be subject to the following adjustments:
(A) Stock Splits and Combinations. If the Company shall at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each Preferred Share shall be
increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each Preferred Share shall be decreased in proportion to such decrease in the
aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.
(B) Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Conversion
Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in
effect by a fraction:
(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such record date; and
(2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.
Notwithstanding the foregoing: (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment
of such dividends or distributions; and (b) no such adjustment shall be made if the Holders simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they
would have received if all outstanding Preferred Shares had been converted into Common Stock on the date of such event.
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(C) Other Dividends and Distributions. In the event the Company at any time or from time
to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Company (other than a distribution of
shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of SECTION 2 do not apply to such dividend or distribution, then and in each such event the Holders shall receive, simultaneously with
the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding Preferred
Shares had been converted into Common Stock on the date of such event.
(D) Common Stock Issued at Less than Conversion Price.
(1) If, during the period beginning on the Original Issue Date and ending on the earlier of (i) the date immediately following the
closing date of a Qualified Financing, or (ii) the first anniversary of the Original Issue Date, the Company issues or sells any Common Stock (or Option Securities or Convertible Securities, to the extent set forth in this SECTION 5(f)(i)(D)),
other than Excluded Stock, for no consideration or for consideration per share (“New Issuance Price”) less than the Conversion Price in effect as of the date of such issuance or sale, then the Conversion Price in effect immediately
prior to each such issuance or sale will (except as provided below) be adjusted at the time of such issuance or sale to equal the New Issuance Price (the “Full Ratchet AD Right”); provided, however that the Full Ratchet AD Right shall
expire and have no further force or effect immediately following the closing of a Qualified Financing.
(2) If no Qualified Financing has
occurred prior to the first anniversary of the Original Issue Date, then at any time after the first anniversary of the Original Issue Date, if the Company issues or sells any Common Stock (or Option Securities or Convertible Securities, to the
extent set forth in this SECTION 5(f)(i)(D)), other than Excluded Stock, for no consideration or for consideration per share less than the Conversion Price in effect as of the date of such issuance or sale, then the Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the formula set forth immediately below (the “Weighted Average AD Right”); provided, however, that the
Weighted Average AD Right shall expire and have no further force or effect immediately following the closing of a Qualified Financing:
CP2 = CP1* (A + B) ÷ (A + C).
For
purposes of the foregoing formula, the following definitions shall apply:
(i)
“CP2” shall mean the Conversion Price in effect immediately following such issuance or sale;
(ii) “CP1” shall mean the Series A Conversion Price in effect immediately
prior to such issuance or sale;
(iii) “A” shall mean the number of shares of Common Stock outstanding immediately prior to
such issuance or sale (treating for this purpose as
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outstanding all shares of Common Stock issuable upon exercise of Option Securities outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including
the Series A Preferred Stock) outstanding (assuming exercise of any outstanding Option Securities therefor) immediately prior to such issuance or sale);
(iv) “B” shall mean the number of shares of Common Stock that would have been issued if such additional shares of Common Stock so
issued had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by CP1); and
(v) “C” shall mean the number of additional shares of Common Stock
so issued.
(E) For the purposes of any adjustment of the Conversion Price pursuant to this SECTION 5(f)(i)(D), the following
provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the amount of the consideration received by
the Company shall be deemed to be the amount of the cash proceeds received by the Company for such Common Stock after deducting therefrom any discounts or commissions allowed, paid or incurred by the Company for any underwriting or otherwise in
connection with the issuance and sale thereof;
(2) In the case of the issuance of Common Stock (otherwise than upon the conversion of
shares of Capital Stock or other securities of the Company) for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other
than cash shall be deemed to be the Fair Market Value thereof;
(3) In the case of (A) the issuance of Option Securities (whether or
not at the time exercisable) or (B) the issuance of Convertible Securities (whether or not at the time so convertible or exchangeable):
(i) the issuance of Option Securities shall be deemed the issuance of all shares of Common Stock deliverable upon the exercise of such Option
Securities;
(ii) such Option Securities shall be deemed to be issued for a consideration equal to the value of the consideration
(determined in the manner provided in SECTION 5(f)(i)(E)(1) and (2)), if any, received by the Company for such Option Securities, plus the exercise price, strike price or purchase price provided in such Option Securities for the Common Stock covered
thereby;
(iii) the issuance of Convertible Securities shall be deemed the issuance of all shares of Common Stock deliverable upon
conversion of, or in exchange for, such Convertible Securities;
(iv) such Convertible Securities shall be deemed to be issued for a
consideration equal to the value of the consideration (determined in the manner
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provided in SECTION 5(f)(i)(E)(1) and (2) and excluding any cash received on account of accrued interest or accrued dividends), if any, received by the Company for such Convertible
Securities, plus the value of the additional consideration (determined in the manner provided in SECTION 5(f)(i)(E)(1) and (2)) to be received by the Company upon the conversion or exchange of such Convertible Securities, if any;
(v) upon any change in the number of shares of Common Stock deliverable upon exercise of any Option Securities or Convertible Securities or
upon any change in the consideration to be received by the Company upon the exercise, conversion or exchange of such securities, the Conversion Price then in effect shall be readjusted to such Conversion Price as would have been in effect had such
change been in effect, with respect to any Option Securities or Convertible Securities outstanding at the time of the change, at the time such Option Securities or Convertible Securities originally were issued;
(vi) if the Conversion Price shall have been fully adjusted upon the issuance of any such options, warrants, rights or convertible or
exchangeable securities, no further adjustment of the Conversion Price shall be made for the actual issuance of Common Stock upon the exercise, conversion or exchange thereof; and
(vii) if any issuance of Common Stock, Option Securities or Convertible Securities would also require an adjustment pursuant to any other
adjustment provision of this SECTION 5(f)(i), then only the adjustment most favorable to the Holders shall be made.
(F) Merger or
Reorganization. Subject to the provisions of SECTION 3(a), if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock (but not the Series A Preferred
Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by SECTION 5(f)(i)(A), (B) or (C)), then, following any such reorganization, recapitalization, reclassification, consolidation or
merger, each Preferred Share shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of
Common Stock issuable upon conversion of one (1) share of Series A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such
transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this SECTION 5 with respect to the rights and interests thereafter of the holders of the Series A
Preferred Stock, to the end that the provisions set forth in this SECTION 5 (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation
to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Stock. For the avoidance of doubt, nothing in this SECTION 5(f)(i)(F) shall be construed as preventing the holders of Series A Preferred Stock
from seeking any appraisal rights to which they are otherwise entitled under the DGCL in connection with a merger triggering an adjustment hereunder, nor shall this SECTION 5(f)(i)(F) be deemed conclusive evidence of the fair value of the shares of
Series A Preferred Stock in any such appraisal proceeding.
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(ii) If the Company issues rights, options or warrants that are only exercisable upon the
occurrence of certain triggering events (each, a “Trigger Event”), then the Conversion Price will not be adjusted pursuant to SECTION 5(f)(i)(B) until the earliest Trigger Event occurs, and the Conversion Price shall be readjusted
to the extent any of these rights, options or warrants are not exercised before they expire (provided, however, that, for the avoidance of doubt, if such Trigger Event would require an adjustment pursuant to SECTION 5(f)(i)(D), such adjustment
pursuant to SECTION 5(f)(i)(D) shall be made at the time of issuance of such rights, options or warrants in accordance with such Section).
(iii) Notwithstanding anything in this SECTION 5(f) to the contrary, if a Conversion Price adjustment becomes effective pursuant to any of
clauses (A), (B) or (C) of this SECTION 5(f)(i) on any Ex-Date as described above, and a Holder that converts its Preferred Shares on or after such Ex-Date and on or prior to the related record date would be treated as the record holder of
shares of Common Stock as of the related Conversion Date based on an adjusted Conversion Price for such Ex-Date and participate on an adjusted basis in the related dividend, distribution or other event giving rise to such adjustment, then,
notwithstanding the foregoing Conversion Price adjustment provisions, the Conversion Price adjustment relating to such Ex-Date will not be made for such converting Holder. Instead, such Holder will be treated as if such Holder were the record owner
of the shares of Common Stock on an un-adjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.
Notwithstanding anything in this SECTION 5(f) to the contrary, no adjustment under SECTION 5(f)(i) need be made to the Conversion Price unless such adjustment
would require a decrease of at least one percent (1%) of the Conversion Price then in effect. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which,
together with any adjustment or adjustments so carried forward, shall amount to a decrease of at least one percent (1%) of such Conversion Price; provided that, on the date of any conversion of the Preferred Shares pursuant
to SECTION 5, adjustments to the Conversion Price will be made with respect to any such adjustment carried forward that has not been taken into account before such date. In addition, at the end of each year, beginning with the year ending
December 31, 2015, the Conversion Price shall be adjusted to give effect to any adjustment or adjustments so carried forward, and such adjustments will no longer be carried forward and taken into account in any subsequent adjustment.
(iv) Adjustments Below Par Value. The Company shall not take any action that would require an adjustment to the Conversion Price such
that the Conversion Price, as adjusted to give effect to such action, would be less than the then-applicable par value per share of the Common Stock, except that the Company may undertake a share split or similar event if such share split results in
a corresponding reduction in the par value per share of the Common Stock such that the as-adjusted new Conversion Price per share would not be below the new as-adjusted par value per share of the Common Stock following such share split or similar
transaction and the Conversion Price is adjusted as provided under SECTION 5(f)(i)(A) and any other applicable provision of SECTION 5(f).
(v) Reference Property. In the case of any recapitalization, reclassification or change of the Common Stock (other than changes
resulting from a subdivision, combination or reclassification described in SECTION 5(f)(i)(A)), a consolidation, merger or
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combination involving the Company, a sale, lease or other transfer to a third party of all or substantially all of the assets of the Company (or the Company and its Subsidiaries on a consolidated
basis), or any statutory share exchange, in each case as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any of the
foregoing, a “Transaction”), then, at the effective time of the Transaction, the right to convert each Preferred Share will be changed into a right to convert such Preferred Share into the kind and amount of shares of stock, other
securities or other property or assets (including cash or any combination thereof) (the “Reference Property”) that a Holder would have received in respect of the Common Stock issuable upon conversion of such Preferred Shares
immediately prior to such Transaction. In the event that holders of Common Stock have the opportunity to elect the form of consideration to be received in the Transaction, the Company shall make adequate provision whereby the Holders shall have a
reasonable opportunity to determine the form of consideration into which all of the Preferred Shares, treated as a single class, shall be convertible from and after the effective date of the Transaction. Any such election shall be made by the
Requisite Holders. Any such determination by the Holders shall be subject to any limitations to which all holders of Common Stock are subject, such as pro rata reductions applicable to any portion of the consideration payable in the Transaction, and
shall be conducted in such a manner as to be completed at approximately the same time as the time elections are made by holders of Common Stock. The provisions of this SECTION 5(f)(v) and any equivalent thereof in any such securities similarly shall
apply to successive Transactions. The Company shall not become a party to any Transaction unless its terms are in compliance with the foregoing.
(vi) Rules of Calculation; Treasury Stock. All calculations will be made to the nearest one-hundredth of a cent or to the nearest
one-ten thousandth of a share. Except as explicitly provided herein, the number of shares of Common Stock (or Reference Property, to the extent applicable) outstanding will be calculated on the basis of the number of issued and outstanding shares of
Common Stock (or Reference Property, to the extent applicable), not including shares held in the treasury of the Company. The Company shall not pay any dividend on or make any distribution to shares of Common Stock (or Reference Property, to the
extent applicable) held in treasury.
(vii) No Duplication. If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described in this SECTION 5 in a manner such that such adjustments are duplicative, only one adjustment (which shall be the adjustment most favorable to the Holders) shall be made.
(viii) Notice of Record Date. In the event of:
(A) any event described in SECTION 5(f)(i)(A), (B), (C) or (D);
(B) any Transaction to which SECTION 5(f)(v) applies;
(C) the dissolution, liquidation or winding-up of the Company; or
(D) any other event constituting a Change of Control;
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then the Company shall mail to the Holders at their last addresses as shown on the records of the Company, at
least ten (10) days prior to the record date specified in (A) below or ten (10) days prior to the date specified in (B) below, as applicable, a notice stating:
(E) the record date for the dividend, other distribution, stock split or combination or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend, other distribution, stock split or combination; or
(F) the date
on which such reclassification, change, dissolution, liquidation, winding-up or other event constituting a Transaction or Change of Control, or any transaction which would result in an adjustment pursuant to SECTION 5(f)(i)(D), is estimated to
become effective or otherwise occur, and the date as of which it is expected that holders of Common Stock of record will be entitled to exchange their shares of Common Stock for Reference Property, other securities or other property deliverable upon
such reclassification, change, liquidation, dissolution, winding-up, Transaction or Change of Control or that such issuance of Common Stock, Option Securities or Convertible Securities is anticipated to occur.
(ix) Certificate of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this
SECTION 5, the Company at its expense shall as promptly as reasonably practicable compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder a certificate, signed by an officer of the Company (in his or
her capacity as such and not in an individual capacity), setting forth (A) the calculation of such adjustments and readjustments in reasonable detail, (B) the facts upon which such adjustment or readjustment is based, (C) the
Conversion Price then in effect, and (D) the number of shares of Common Stock (or Reference Property, to the extent applicable) and the amount, if any, of Capital Stock, other securities or other property (including but not limited to cash and
evidences of indebtedness) which then would be received upon the conversion of a Preferred Share.
(x) No Upward Revisions to
Conversion Price. For the avoidance of doubt, except in the case of a reverse share split or share combination resulting in an adjustment under SECTION 5(f)(i)(A) effected with the approvals, if any, required pursuant to SECTION 4(b), in no
event shall any adjustment be made pursuant to this SECTION 5 that results in an increase in the Conversion Price.
SECTION 6.
Redemption.
(a) Redemption at Maturity. Unless prohibited by Delaware law governing distributions to stockholders, each
Holder shall have the right to require the Company to redeem such Holder’s Preferred Shares, in whole or in part, on or after March 31, 2016 (the “Maturity Date”) at a price per share payable, subject to SECTION 6(e), in
cash and equal to the Redemption Price (the right to redeem at maturity described in this SECTION 6(a), the “Redemption Right At Maturity”); provided, however, that the Redemption Right At Maturity shall expire and have no further
force or effect, if the Company closes a single or a series of related capital raising transactions in which the Company issues its Capital Stock to investors resulting in gross proceeds to the Company of at least $5.0 million in the aggregate,
excluding the conversion of any indebtedness and inclusive of the Series A Preferred Stock issuable pursuant to the Securities
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Purchase Agreement (any such transaction, a “Qualified Financing”). At any time during the period beginning on the thirtieth
(30th) calendar day prior to the Maturity Date (the “Holder Redemption Notice Period”), each Holder may deliver written notice to the Company notifying the Company of such
Holder’s election to require the Company to redeem all or a portion of such Holder’s Preferred Shares on or after the Maturity Date (the “Election Notice”). No later than thirty (30) calendar days prior to the
commencement of the Holder Redemption Notice Period, the Company shall deliver a notice to each Holder including the following information: (A) informing the Holder of the Maturity Date and such Holder’s right to elect to have all or a
portion of its Preferred Shares redeemed by Company on or after the Maturity Date, (B) the Redemption Price payable with respect to each share of Series A Preferred Stock on or after the Maturity Date in connection with any such redemption (to
the extent the Redemption Price is known or can be calculated, and to the extent not capable of being calculated, the manner in which such price will be determined); (C) that any certificates representing Preferred Shares which a Holder elects
to have redeemed must be surrendered for payment of the Redemption Price at the office of the Company or any redemption agent located in New York City selected by the Company therefor together with any written instrument or instructions of transfer
or other documents and endorsements reasonably acceptable to the redemption agent or the Company, as applicable (if reasonably required by the redemption agent or the Company, as applicable); (D) that, upon a Holder’s compliance with
clause (C), Holder shall receive, at the option of the Holder, either (x) payment of the Redemption Price to the Holder with respect to any Preferred Shares within twenty (20) Business Days following receipt to an account specified in such
Holder’s redemption Election Notice or (y) a secured promissory note issued by the Company to the Holder in principal amount equal to the Redemption Price, bearing an interest rate per annum of 12.00% and a maturity date six
(6) months from the date of the Election Notice, and secured by all of the assets of the Company, in form and substance acceptable to the Holder. The Company shall issue a press release for publication on the Dow Jones News Service or Bloomberg
Business News (or if either such service is not available, another broadly disseminated news or press release service selected by the Company) prior to the opening of business on the first Business Day following any date on which the Company
provides notice to Holders pursuant to this SECTION 6(a) disclosing the right of Holders to have the Company redeem Preferred Shares pursuant to this SECTION 6(a).
(b) Redemption at Option of the Holder upon a Change of Control.
(i) If a Change of Control occurs, each Holder shall have the right to require the Company to redeem its Preferred Shares pursuant to a
Change of Control Offer, which Change of Control Offer shall be made by the Company in accordance with SECTION 6(b)(ii). In such Change of Control Offer, the Company will offer a payment (such payment, a “Change of Control Payment”)
in cash per Preferred Share equal to the Redemption Price (the right to redeem upon a Change of Control described in this SECTION 6(b), the “Redemption Right Upon COC”); provided, however, that the Redemption Right Upon COC shall
expire and have no further force or effect, immediately following the closing of a Qualified Financing.
(ii) Within thirty
(30) days following any Change of Control, the Company will mail a notice (a “Change of Control Offer”) to each Holder describing the transaction or transactions that constituted such Change of Control and offering to redeem
the Preferred Shares on the date specified in such notice (the “Change of Control Payment Date”), which date shall be no earlier than thirty (30) days and no later than sixty-one (61) days from the
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date such notice is mailed. In addition, such Change of Control Offer shall further state: (A) the amount of the Change of Control Payment; (B) that the Holder may elect to have all or
any portion of its Preferred Shares redeemed pursuant to the Change of Control Offer, (C) that any Preferred Shares to be redeemed must be surrendered for payment of the Change of Control Payment at the office of the Company or any redemption
agent selected by the Company therefor together with any written instrument or instructions of transfer or other documents and endorsements reasonably acceptable to the redemption agent or the Company, as applicable (if reasonably required by the
redemption agent or the Company, as applicable); (D) that, upon a Holder’s compliance with clause (C), payment of the Change of Control Payment with will be made to the Holder on the Change of Control Payment Date to the account specified
by such Holder to the Company in writing; (E) the date and time by which the Holder must make its election, (F) that any Holder may withdraw its election notice with respect to all or a portion of their Preferred Shares at any time prior
to 5:00 p.m. (New York City time) on the Business Day immediately preceding the Change of Control Payment Date; and (G) the amount and type of property that the Holder would receive in connection with such Change of Control if the Holder elects
to convert its Preferred Shares in connection with the Change of Control. The Company shall issue a press release for publication on the Dow Jones News Service or Bloomberg Business News (or if either such service is not available, another broadly
disseminated news or press release service selected by the Company) prior to the opening of business on the first Business Day following any date on which the Company provides notice to Holders pursuant to this SECTION 6(b) disclosing the right of
Holders to have the Company redeem Preferred Shares pursuant to this SECTION 6(b).
(iii) On the Change of Control Payment Date, the
Company will, to the extent lawful: (A) accept for payment all Preferred Shares validly tendered pursuant to the Change of Control Offer; and (B) make a Change of Control Payment to each Holder that validly tendered Preferred Shares
pursuant to the Change of Control Offer.
(iv) If at any time prior to consummation of a transaction that would constitute a Change of
Control, the Company has publicly announced (whether by press release, SEC filing or otherwise) such transaction or prospective transaction or the entry by the Company into any definitive agreement with respect thereto, the Company shall, within
five (5) Business Days of the issuance of such public announcement, deliver a written notice to each Holder notifying them of the same and the anticipated date of consummation of such transaction.
(v) The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control
Offer and makes the Change of Control Payment in the manner, at the times and otherwise in compliance with the requirements set forth herein applicable to a Change of Control Offer made by the Company and purchases all Preferred Shares validly
tendered under such Change of Control Offer.
(vi) A Change of Control Offer may be made in advance of a Change of Control, conditional
upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.
(c) Notwithstanding anything in this SECTION 6 to the contrary, each Holder shall retain the right to elect to convert any Preferred Shares
to be redeemed at any time prior to 5:00 p.m. (New York City time) on the Business Day immediately preceding any Redemption Date. Any Preferred Shares that a Holder elects to convert prior to the Redemption Date shall not be redeemed pursuant to
this SECTION 6.
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(d) Insufficient Funds. Any redemption of the Preferred Shares pursuant to this SECTION 6
shall be payable out of any cash legally available therefor, provided, however, that, other than in respect of a redemption pursuant to SECTION 6(b) (which the Company may only effectuate to the extent it has sufficient cash legally available
therefor), if Delaware law governing distributions to stockholders prevents the Company from redeeming all Preferred Shares to be redeemed, then the Company may pay the maximum portion of the Redemption Price consistent with such law (valued at the
Fair Market Value thereof on the date of payment). If Delaware law governing distributions to stockholders prevents the Company from redeeming all Preferred Shares to be redeemed pursuant to SECTION 6(a) or SECTION 6(b), the redemption notice
delivered to Holders shall so specify, and indicate the nature of the other assets expected to be distributed and the Fair Market Value of the same. At the time of any redemption pursuant to this SECTION 6, the Company shall take all actions
required or permitted under Delaware law to permit the redemption of the Preferred Shares, including, without limitation, through the revaluation of its assets in accordance with Delaware law, to make cash funds (and to the extent cash funds are
insufficient, other assets) legally available for such redemption. In connection with any redemption pursuant to SECTION 6(b), to the extent that Holders elect to have their Preferred Shares redeemed and the Company has insufficient funds to redeem
such Preferred Shares (after taking into account the amount of any repurchase obligations the Company has or expects to have under any Indebtedness ranking senior to the Series A Preferred Stock), Senior Securities or any Parity Securities resulting
from the same facts and circumstances as the Change of Control hereunder), the Company shall use any available funds to redeem a portion of such Preferred Shares and Parity Securities (if any are being redeemed) ratably in proportion to the full
respective amounts to which they are entitled and shall redeem the remaining shares as soon as it may lawfully do so under such law.
(e)
Mechanics of Redemption.
(i) The Company (or a redemption agent on behalf of the Company, as applicable) shall pay the
applicable Redemption Price on the Redemption Date or the required payment date therefor upon surrender of the certificates representing the Preferred Shares to be redeemed and receipt of any written instrument or instructions of transfer or other
documents and endorsements reasonably acceptable to the redemption agent or the Company, as applicable, to the extent required by SECTIONS 6(a) and 6(b); provided that, if such certificates are lost, stolen or destroyed, the Company may
require an affidavit certifying to such effect and, if requested, an agreement indemnifying the Company from any losses incurred in connection therewith, in each case, in form and substance reasonably satisfactory to the Company, from such Holder
prior to paying such amounts.
(ii) Following any redemption of Preferred Shares on any Redemption Date, the Preferred Shares so
redeemed will no longer be deemed to be outstanding and all rights of the Holder thereof shall cease, including the right to receive Dividends; provided, however, that any rights of Holders pursuant to this Certificate of Designations
that by their terms survive redemption of the Preferred Shares and, for the avoidance of doubt, any rights that survive pursuant to any of the other Transaction Agreements (as defined in the Securities Purchase
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Agreement), shall survive in accordance with their terms. The foregoing notwithstanding, in the event that a Preferred Share is not redeemed by the Company when required, such Preferred Share
will remain outstanding and will continue to be entitled to all of the powers, designations, preferences and other rights (including but not limited to the accrual and payment of dividends and the conversion rights) as provided herein.
SECTION 7. Director Election Rights.
Effective immediately following the Original Issue Date and for so long as at least 20% of the originally issued shares of Series A Preferred
Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock) are outstanding, the holders of the Preferred Shares, voting or
consenting, as the case may be, separately as a single class to the exclusion of all other classes of the Company’s Voting Stock and with each Preferred Share entitled to one vote, by vote of the Requisite Holders, be entitled to elect one
(1) director to the Board (the “Preferred Elected Director”). Subject to applicable law, the Preferred Elected Director shall be entitled to be a member of each committee of the Board, including the Compensation Committee, the
audit committee and the nominating and corporate governance committee of the Board; provided, that notwithstanding anything to the contrary herein, membership on any such committee will be dependent upon such director meeting the
qualification, and if applicable, independence criteria deemed necessary to so comply in accordance with any listing requirements of the Exchange on which the Company’s capital stock is then listed. The Preferred Elected Director shall be
elected as set forth in this SECTION 7; provided that as a condition precedent to the election of any Preferred Elected Director, the individual to be elected by the Requisite Holders shall be required to provide to the Company a duly
executed and delivered written resignation of such Person to be elected as the Preferred Elected Director, providing that effective immediately and automatically (without any further action by any Person) upon the expiration of the Requisite
Holders’ right to elect such individual to the Board as provided herein, the Preferred Elected Director shall resign from the Board. For the avoidance of doubt, no Preferred Elected Director shall be elected to the Board unless the written
resignation referred to in the preceding sentence is delivered to the Company prior thereto. The Preferred Elected Director shall be elected, at the option of the Requisite Holders, (i) by the written consent of the Requisite Holders or
(ii) at annual or special meetings of stockholders of the Company at which directors are to be elected. If there is a vacancy in the office of the Preferred Elected Director, then the vacancy may only be filled by a nominee of the Requisite
Holders. The Preferred Elected Director will be entitled to one (1) vote on any matter with respect to which the Board votes and the Preferred Elected Director may be removed at any time with or without cause by, and shall not be removed
otherwise than by, the written consent or vote of the Requisite Holders. The Company shall take all such action as may be reasonably requested by the Requisite Holders to effect SECTION 7 (including nominating and recommending the Preferred Elected
Director for election, if applicable).
SECTION 8. Additional Definitions. For purposes of these resolutions, the following terms shall
have the following meanings:
(a) “Accrued Value” means $1.7003 per share, as the same may be increased pursuant to
SECTION 2.
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(b) “Actively Traded Security” means, as of any date of determination, a
Security of an entity with $2,000,000 average daily trading volume during the preceding 60-day period.
(c) “Affiliate”
means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person.
(d) “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except
that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such
“person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and
“Beneficially Owned” shall have a corresponding meaning.
(e) “Business Day” means any day except a Saturday,
Sunday or other day on which commercial banks in New York, New York are authorized or obligated to close.
(f) “Capital
Stock” means, with respect to any Person, any and all shares of stock of a corporation, partnership interests or other equivalent interests (however designated, whether voting or non-voting) in such Person’s equity, entitling the
holder to receive a share of the profits and losses, and a distribution of assets, after liabilities, of such Person.
(g) “Cash
Equivalents” means: (i) United States dollars, or money in other currencies received in the ordinary course of business; (ii) U.S. Government Obligations or certificates representing an ownership interest in U.S. Government
Obligations with maturities not exceeding one year from the date of acquisition; (iii) (A) demand deposits, (B) time deposits and certificates of deposit with maturities of one year or less from the date of acquisition,
(C) banker’s acceptances with maturities not exceeding one year from the date of acquisition, and (D) overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of the United States or
any state thereof having capital, surplus and undivided profits in excess of $500 million whose short-term debt is rated “A-2” or higher by S&P or “P-2” or higher by Moody’s; (iv) repurchase obligations with a term
of not more than seven (7) days for underlying securities of the type described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above;
(v) commercial paper rated at least P-1 by Moody’s or A-1 by S&P and maturing within six (6) months after the date of acquisition; and (vi) money market funds at least ninety-five percent (95%) of the assets of which
consist of investments of the type described in clauses (i) through (v) above.
(h) “Certificate of
Designations” means this amended and restated certificate of designations for the Series A Preferred Stock, as such shall be amended from time to time.
(i) “Change of Control” means (i) a sale of all or substantially all of the consolidated assets of the Company
(including by way of any reorganization, merger, consolidation or other similar transaction or a sale of Equity Securities issued by Subsidiaries of the Company), except any merger or consolidation involving the Company or a Subsidiary in
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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 that represent, immediately following such merger or consolidation, at least 75% by Voting Power, of the capital stock of (1) the surviving or resulting corporation; or (2) 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 (ii) a direct or indirect acquisition of Beneficial Ownership of Voting Power of the Company
by any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Holders or their Affiliates by means of any transaction or series of transactions (including any reorganization, merger,
consolidation, joint venture, share transfer, share exchange, share issuance, reclassification or other similar transaction), pursuant to which the stockholders of the Company immediately preceding such transaction or transactions collectively own,
following the consummation of such transaction or transactions, less than seventy-five percent (75%) of the Voting Power of the Company or other surviving entity (or parent thereof), as the case may be, (iii) the obtaining by any Person or
“group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Holders or their Affiliates of the power (whether or not exercised), other than pursuant to a revocable proxy in favor of the Company’s
proposed slate of directors in respect of an annual meeting or other meeting related to the election of directors, to elect a majority of the members of the Board or more than seventy-five percent (75%) of the Voting Power of the Company.
(j) “Closing Price” shall mean the price per share of the final trade of the Common Stock on the applicable Trading Day (or
the last trade of the Common Stock preceding the applicable Trading Day if no trades of such Common Stock were made on the applicable Trading Day) on the principal Exchange on which the Common Stock is listed or admitted to trading; provided
that if the Common Stock is not so listed or traded, the Closing Price shall be equal to the fair market value, as reasonably determined in good faith by the Board.
(k) “Common Stock” means the shares of common stock, par value $0.001 per share, of the Company or any other Capital Stock
of the Company into which such Common Stock shall be reclassified or changed.
(l) “Compensation Committee” means the
compensation committee of the Board which shall consist solely of Independent Directors, which shall consist of the Preferred Elected Director at all times.
(m) “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and
“under common control with”) 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.
(n) “Conversion Price” means initially $1.7003, as adjusted from time to time as
provided in SECTION 5.
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(o) “Convertible Securities” means securities by their terms convertible into
or exchangeable for Common Stock or options, warrants or rights to purchase such convertible or exchangeable securities.
(p)
“Daily VWAP” means the volume-weighted average price per share of Common Stock (or per minimum denomination or unit size in the case of any security other than Common Stock) as displayed under the heading “Bloomberg VWAP”
on the Bloomberg page for the “<equity> AQR” page corresponding to the “ticker” for such Common Stock or unit (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of
trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of such Common Stock (or per minimum denomination or unit size in
the case of any security other than Common Stock) on such Trading Day. The “volume weighted average price” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
(q) “Dividend Payment Date” means December 31, March 31, June 30 and September 30 of each
year, commencing on September 30, 2015; provided that, if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be the immediately succeeding Business Day.
(r) “Dividends” means Cumulative Dividends, the Participating Cash Dividends and the In-Kind Participating Dividends.
(s) “Equity Securities” means, with respect to any Person, (i) shares of Capital Stock of, or other equity or voting
interest in, such Person, (ii) any securities convertible into or exchangeable for shares of Capital Stock of, or other equity or voting interest in, such Person, (iii) options, warrants, rights or other commitments or agreements to
acquire from such Person, or that obligates such Person to issue, any Capital Stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of Capital Stock of, or other equity or voting interest in,
such Person, (iv) obligations of such Person to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any Capital Stock of, or other equity or
voting interest (including any voting debt) in, such Person and (v) the Capital Stock of such Person.
(t)
“Exchange” means the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, The New York Stock Exchange, the NYSE MKT LLC or any of their respective successors.
(u) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
(v) “Excluded Stock” means: (i) shares of Common Stock issued by the Company in an event subject to,
and for which the Conversion Price is subject to adjustment pursuant to, SECTION 5(f)(i)(A); (ii) the issuance of shares of Common Stock upon conversion of the Preferred Shares or upon the exercise or conversion of Option Securities and
Convertible Securities of the Company outstanding on the Original Issue Date or otherwise permitted to be
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issued, or not prohibited, by any other provision of this Certificate of Designations; (iii) Common Stock that becomes issuable in connection with, or as a result of, accretions to the face
amount of, or payments in kind with respect to, Preferred Shares, Option Securities and Convertible Securities of the Company outstanding on the Original Issue Date or otherwise permitted to be issued, or not prohibited, by any other provision of
this Certificate of Designations; (iv) shares of Common Stock issued by the Company pursuant to the Securities Purchase Agreement; (v) shares of Common Stock, Option Securities or Convertible Securities issued as a dividend or distribution
on Preferred Shares; (vi) shares of Common Stock, Option Securities or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is permitted to be issued, or not
prohibited, by any other provision of this Certificate of Designations; (vii) shares of Common Stock or Option Securities issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a
plan, agreement or arrangement approved by the Board; (viii) shares of Common Stock or Convertible Securities actually issued upon the exercise of Option Securities or shares of Common Stock actually issued upon the conversion or exchange of
Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option Security or Convertible Security; and (ix) shares of Common Stock, Option Securities or Convertible Securities issued to banks, equipment
lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board, which consent must include the Preferred Elected Director.
(w) Ex-Date” means the first date on which the Common Stock trades on the applicable exchange or in the applicable market,
regular way, without the right to receive the issuance, dividend or distribution in question from the Company or, if applicable, from the seller of the Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by
such exchange or market.
(x) “Fair Market Value” means: (i) in the case of any Security that is either
(a) listed on an Exchange or (b) an Actively Traded Security in the over-the-counter-market that represents equity in a Person with a market capitalization of at least $25,000,000 on each Trading Day in the preceding 60 day period prior to
such date, the product of (a) (i) the sum of the Daily VWAP of a single unit of such Security for each of the 20 consecutive Trading Days immediately prior to such date, divided by (ii) 20, multiplied by (b) the number of units
of such Security being valued, (ii) in the case of any Security that is not so listed or not an Actively Traded Security or any other property or asset (other than Cash Equivalents), the fair market value thereof (defined as the price that
would be negotiated in an arms’ length transaction for cash between a willing buyer and willing seller, neither of which is acting under compulsion), as determined by a written opinion of a nationally recognized investment banking, appraisal,
accounting or valuation firm that is not an Affiliate of the Company and is selected by the Company in good faith (provided that the Requisite Holders may object in writing to any such determination of Fair Market Value by such valuation expert once
every four (4) Testing Periods and if the Requisite Holders object in writing to any such determination of Fair Market Value by such valuation expert an alternative binding valuation shall be performed by a nationally recognized investment
banking, appraisal, accounting or valuation firm that is not an Affiliate of the Company and is selected by the Company and the Requisite Holders jointly, or if the Company and such Requisite Holders cannot jointly select such an alternative
valuation expert within ten (10) Business Days of the Requisite Holders delivering to the Company a written notice objecting to the initial valuation, by a nationally recognized
24
investment banking, appraisal, accounting or valuation firm that is not an Affiliate of the Company and is selected by one such valuation expert proposed by the Company and a second such
valuation expert proposed by the Requisite Holders (it being understood that the Company shall each be responsible for the payment of all of the fees and expenses of such alternative valuation expert) and (iii) in the case of Cash Equivalents,
the face value thereof; provided that with respect to any Security of the type referred to in clause (ii) above, in no event shall the Fair Market Value thereof exceed the Company’s cost basis in such Security (taking into account
adjustments made in respect of follow-on capital contributions and other similar investments) plus fifty percent (50%) of any appreciation as determined pursuant to the valuation provisions set forth above.
(y) “Full Ratchet AD Right” shall have the meaning ascribed to such term in SECTION 5(f)(i)(D)(1) of this Certificate of
Designations.
(z) “Governmental Entity” shall mean any United States or non-United States federal, state or local
government, or any agency, bureau, board, commission, department, tribunal or instrumentality thereof or any court, tribunal, or arbitral or judicial body.
(aa) “hereof”; “herein” and “hereunder” and words of similar import refer to this
Certificate of Designations as a whole and not merely to any particular clause, provision, section or subsection.
(bb)
“Holders” means the holders of outstanding Preferred Shares as they appear in the records of the Company.
(cc)
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder.
(dd) “Independent Director” means any director on the Board that is “independent” as defined in the Exchange Act
and the applicable rules of the Exchange on which the Common Stock is listed (or if the Common Stock is not listed on an Exchange, as defined in NASDAQ Marketplace Rule 4200(a)(15)).
(ee) “Issue Date” means, with respect to a Preferred Share, the date on which such share is first issued by the Company.
(ff) “Liquidation Event” means (i) the voluntary or involuntary liquidation, dissolution or winding-up of the
Company, (ii) the commencement by the Company of any case under applicable bankruptcy, insolvency or other similar laws now or hereafter in effect, including pursuant to Chapter 11 of the U.S. Bankruptcy Code, (iii) the consent to entry of
an order for relief in an involuntary case under applicable bankruptcy, insolvency or other similar laws now or hereafter in effect, including pursuant to Chapter 11 of the U.S. Bankruptcy Code, (iv) the consent to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee or similar official of the Company, or any general assignment for the benefit of creditors and (v) any Change of Control (x) unless all Holders elect to exercise their
Redemption Right Upon COC and the Company has redeemed in full all of the Preferred Shares and distributed the full proceeds for such redemption to all such Holders or (y) unless the Requisite Holders elect otherwise by written notice sent to
the Company at least three (3) days prior to the effective date of such Change of Control.
25
(gg) “Market Disruption Event” means the occurrence or existence for more than
one half hour period in the aggregate on any scheduled Trading Day for the Common Stock (or Reference Property, to the extent applicable) of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted
by the applicable Exchange or otherwise) in the Common Stock (or Reference Property, to the extent applicable) or in any options, contracts or future contracts relating to the Common Stock (or Reference Property, to the extent applicable), and such
suspension or limitation occurs or exists at any time before 4:00 p.m. (New York City time) on such day.
(hh) “Option
Securities” means options, warrants or other rights to purchase or acquire Common Stock, as well as stock appreciation rights, phantom stock units and similar rights whose value is derived from the value of the Common Stock.
(ii) “Original Issue Date” means Closing Date (as such term is defined in the Securities Purchase Agreement).
(jj) “Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government, any agency or political subdivisions thereof or other “Person” as contemplated by Section 13(d) of the Exchange Act.
(kk) “Preferred Shares” means the shares of Series A Preferred Stock.
(ll) “Preferred Stock” means the 5,000,000 shares of preferred stock, par value $0.001 per share, of the Company authorized
by the Certificate of Incorporation.
(mm) “Purchasers” means the several “Purchasers” named in and party to
the Securities Purchase Agreement.
(nn) “Qualified Financing” shall have the meaning ascribed to such term in SECTION 6(a) of
this Certificate of Designations.
(oo) “Redemption Date” means the Maturity Date or any Change of Control Payment Date,
as applicable.
(pp) “Redemption Price” means, with respect to each Preferred Share, the greater of (i) the Fair
Market Value of such Preferred Share and (ii) the Accrued Value plus all accrued and unpaid Dividends (to the extent not included in the Accrued Value, including, without limitation, accrued and unpaid Cash Dividends to the Redemption Date), if
any, on each Preferred Share to be redeemed.
(qq) “Redemption Right Upon COC” shall have the meaning ascribed to such term in
SECTION 6(b) of this Certificate of Designations.
(rr) “Requisite Holders” means Holders owning a majority of the
issued and outstanding Preferred Shares.
(ss) “SEC” means the Securities and Exchange Commission.
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(tt) “Securities” with respect to a Person means debt or equity securities
issued by such Person or similar obligations of, or participations in, such Person.
(uu) “Securities Purchase
Agreement” means that certain Securities Purchase Agreement, dated May 12, 2015, by and among the Company and the Purchasers, as amended, supplemented or modified in accordance with its terms.
(vv) “Series A Original Purchase Price” means $1.7003 per share.
(ww) “Stock Dividend Amount” equals the accrued but unpaid Cumulative Dividend divided by the lower of the Accrued Value and
the Conversion Price.
(xx) “Subsidiary” means with respect to any Person, any corporation, association or other
business entity of which more than fifty percent (50%) of the outstanding Voting Stock is owned, directly or indirectly, by, or of which more than fifty percent (50%) of the economic value accrues to, or, in the case of a partnership, the
sole general partner or the managing partner or the only general partners of which are, such Person and one or more Subsidiaries of such Person (or a combination thereof). Unless otherwise specified, “Subsidiary” means a Subsidiary of the
Company.
(yy) “Thirty Day VWAP” means, with respect to a security, the average of the Daily VWAP of such security for
each day during a thirty (30) consecutive Trading Day period ending immediately prior to the date of determination. Unless otherwise specified, “Thirty Day VWAP” means the Thirty Day VWAP of the Common Stock.
(zz) “Trading Day” means any day on which (i) there is no Market Disruption Event and (ii) the Exchange on which
the Common Stock (or Reference Property, to the extent applicable) is listed and is open for trading or, if the Common Stock (or Reference Property, to the extent applicable) is not so listed, admitted for trading or quoted, any Business Day. A
Trading Day only includes those days that have a scheduled closing time of 4:00 p.m. (New York City time) or the then standard closing time for regular trading on the relevant exchange or trading system.
(aaa) “Transaction Agreements” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(bbb) “U.S. Government Obligations” means obligations issued or directly and fully guaranteed or insured by the United
States of America or by any agent or instrumentality thereof, provided that the full faith and credit of the United States of America is pledged in support thereof.
(ccc) “Voting Power” means either (a) the power to elect, designate or nominate directors to the Board, or
(b) vote (as Common Stock or together with Common Stock) on matters to be voted on or consented to by the Common Stock through the ownership of Voting Stock, by contract or otherwise.
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(ddd) “Voting Stock” means, with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.
(eee) “Weighted Average AD Right” shall have the meaning ascribed to such term in SECTION 5(f)(i)(D)(2) of this Certificate of
Designations.
(fff) “Wholly Owned Subsidiary” means any Subsidiary of a Person of which such Person owns, either
directly or indirectly, one hundred percent (100%) of the commons stock or other common equity interests of such Subsidiary (excluding qualifying shares held by directors).
SECTION 9. Miscellaneous. For purposes of this Certificate of Designations, the following provisions shall apply:
(a) Share Certificates. If any certificates representing Preferred Shares shall be mutilated, lost, stolen or destroyed, the Company
shall issue, in exchange and in substitution for and upon cancellation of the mutilated certificate, or in lieu of and substitution for the lost, stolen or destroyed certificate, a new Preferred Share certificate of like tenor and representing an
equivalent number of Preferred Shares, but only upon receipt of evidence of such loss, theft or destruction of such certificate and indemnity by the holder thereof, if requested, reasonably satisfactory to the Company.
(b) Status of Cancelled Shares. Preferred Shares which have been converted, redeemed, repurchased or otherwise cancelled shall be
retired and, following the filing of any certificate required by the DGCL, have the status of authorized and unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated by the Board as part of a
particular series of Preferred Stock of the Company.
(c) Severability. If any right, preference or limitation of the Series A
Preferred Stock set forth in this Certificate of Designations is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this Certificate of
Designations which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect, and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so expressed herein.
(d) Remedies.
(i) The Company acknowledges that the obligations imposed on it in this Certificate of Designations are special, unique and of an
extraordinary character, and irreparable damages, for which money damages, even if available, would be an inadequate remedy, would occur in the event that the Company does not perform the provisions of this Certificate of Designations in accordance
with its specified terms or otherwise breaches such provisions. The Holders shall be entitled to seek an injunction, specific performance and other equitable relief to prevent breaches of this Certificate of Designations and to seek to enforce
specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled, at law or in equity, including without limitation money damages.
28
(e) Renunciation under DGCL Section 122(17). Pursuant to Section 122(17) of the
DGCL, the Company renounces any interest or expectancy of the Company in, or being offered an opportunity to participate in, business opportunities that are presented to one or more of the Preferred Elected Director, in each case other than any
business opportunities that are presented to the Preferred Elected Director solely in his or her capacity as a director of the Company.
(f) Headings. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
(g) Notices. All notices or communications in respect of Preferred Stock shall be
in writing and shall be deemed delivered (a) one (1) Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, (b) on the date of delivery if delivered personally or by
electronic communication, or (c) if by facsimile, upon written confirmation of receipt by facsimile. Notwithstanding the foregoing, if Preferred Stock is issued in book-entry form through The Depository Trust Company or any similar facility,
such notices may be given to the beneficial holders of Preferred Stock in any manner permitted by such facility.
(h) Other
Rights. The shares of Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set
forth herein or in the Certificate of Incorporation or as provided by applicable law and regulation.
(i) Waiver. Any of the
rights, powers, preferences and other terms of the Series A Preferred Stock set forth herein may be waived on behalf of all holders of Series A Preferred Stock by the Requisite Holders.
(j) Requisite Holders. Notwithstanding anything to the contrary contained herein, any consent, waiver, vote, decision, election or
action required or permitted to be taken hereunder by the Holders of the Preferred Shares as a group (i.e., as opposed to by a specified Holder or specified subset of Holders) shall require the approval or action, as applicable, of the Requisite
Holders and, after such approval or action, shall be binding on all of the Holders.
29
IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be executed by a
duly authorized officer of the Company as of August 17, 2015.
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| BG MEDICINE, INC. |
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| By: |
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/s/ Paul R. Sohmer, M.D. |
| Name: |
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Paul R. Sohmer, M.D. |
| Title: |
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President and Chief Executive Officer |
[SIGNATURE PAGE TO CERTIFICATE OF DESIGNATIONS]
Exhibit 4.1
PREFUNDED COMMON STOCK PURCHASE WARRANT
BG MEDICINE, INC.
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| Warrant Shares: |
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Initial Exercise Date: , 2015 |
THIS PREFUNDED COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise
and the conditions hereinafter set forth, at any time on or after (the “Initial Exercise Date”) and on or before the five year anniversary of the Initial
Exercise Date (the “Termination Date”) but not thereafter, to subscribe for up to shares (as subject to adjustment hereunder, the
“Warrant Shares”) of Common Stock of BG Medicine, Inc., a Delaware corporation (the “Company”). The purchase price for the exercise of the Warrants Shares, $ in the
aggregate (the “Aggregate Exercise Price”), was fully paid at Closing and no additional consideration is required to be paid by the Holder upon exercise of this Warrant.
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings
set forth in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of
securities into which such securities may hereafter be reclassified or changed.
“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
1
“Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be
amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
“Transfer Agent” means Computershare Trust Company, N.A., the current transfer agent of the Company, with a
mailing address of and a facsimile number of
, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or
quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets”
published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good faith by the Holder, the fees and expenses of which shall be paid by the Company.
“Warrants” means the substantially identical warrants initially issued by the Company on or about the date
first written above and having the same exercise price as this Warrant.
2
Section 2. Exercise.
a) Exercise of the rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the
books of the Company) of a duly executed copy of the Notice of Exercise in the form annexed hereto by facsimile or e-mail attachment. No additional consideration shall be required to be paid upon exercise of this Warrant. No ink-original Notice of
Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has exercised in full its right to acquire all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the
Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is received by the Company. Partial exercises of this Warrant shall have the effect of lowering the outstanding number of Warrant Shares issuable
hereunder in an amount equal to the applicable number of Warrant Shares exercised. The Holder and the Company shall maintain records showing the number of Warrant Shares issued and the date of the applicable exercise. The Company shall deliver any
objection to any Notice of Exercise within two (2) Business Days of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the
exercise of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for exercise hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. There shall be no additional consideration paid upon exercise of this Warrant.
c) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares issuable hereunder to be
transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if
the Company is then a participant in such system, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the receipt by the Company of the Notice of Exercise (such date, the “Warrant Share
Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the
3
Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the
VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to exercise the unexercised Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights
available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (A)
4
of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the
exercise of this Warrant.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge
to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall
be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all
Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the
Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner
which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
d) Holder’s Exercise
Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such
issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any
5
of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this
Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and
of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder and the Company shall have no obligation to verify or confirm the accuracy of such
determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days
confirm in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be [4.99%/9.99%] of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the
6
terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock
dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common
Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into
a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or re-classification.
b) RESERVED.
c) Subsequent Rights Offerings. If at any time the Company grants, issues or sells any Common Stock Equivalents or
rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock that does not otherwise result in an adjustment pursuant to Section 3(a) above (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent
that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this
Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or
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rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each
such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would
result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such
Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or
other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company,
directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard
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to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). If holders of Common Stock are given any choice as to the securities, cash or property to be received in a
Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the
provisions of this Section 3(e) pursuant to customary written agreements prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of
Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction (taking into account the relative value of the shares of Common Stock
pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such
Fundamental Transaction), and which shall require no additional consideration upon exercise, and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the
Company herein.
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or
the nearest whole share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment. Whenever this Warrant is adjusted pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the adjusted terms of this Warrant after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
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ii. Notice to Allow Exercise by Holder. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the
Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of
the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or
contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise
this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the
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name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has
assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if
properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid
office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer
which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers
or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that
purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5.
Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any
voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
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c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the rights under this Warrant. The Company will take all such reasonable action as may be necessary to
assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon exercise of the rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth
in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase
in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is
exercisable, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
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e) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and defense of this Warrant shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New
York Courts are improper or inconvenient venue for such proceeding. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Warrant. If any party shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other
costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
f) [Reserved].
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part
of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company intentionally and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including,
without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at 880 Winter Street, Suite 210, Waltham, Massachusetts
02451, Attention: , facsimile number:
, email address:
, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders.
Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the
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Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile or e-mail at the facsimile number or e-mail address set forth in this Section 5(h) prior to 5:30 p.m. (New York City time) on any Trading Day, (ii) the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth in this Section 5(h) on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the
second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this
Warrant to receive Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being
entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from
time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This
Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this
Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
o)
FAST Compliance. While this Warrant is outstanding, the Company shall maintain a transfer agent that participates in the DTC Fast Automated Securities Transfer Program.
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(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto
duly authorized as of the date first above indicated.
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NOTICE OF EXERCISE
(1) The undersigned hereby elects to exercise
Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full).
(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following DWAC Account Number:
[SIGNATURE OF HOLDER]
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EXHIBIT B
ASSIGNMENT FORM
(To assign
the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the warrants.)
FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Exhibit 4.2
COMMON STOCK PURCHASE WARRANT
BG MEDICINE, INC.
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Initial Exercise Date: , 2015 |
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THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after (the “Initial Exercise Date”) and on or prior to the close of business on the five (5) year
anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from BG Medicine, Inc., a Delaware corporation (the “Company”), up to
shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock
under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In
addition to the terms defined elsewhere in this Warrant, the following terms have the meanings set forth in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of
securities into which such securities may hereafter be reclassified or changed.
“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
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“Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be
amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
“Transfer Agent” means Computershare Trust Company, N.A., the current transfer agent of the Company, with a
mailing address of and a facsimile number of
, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or
quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets”
published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good faith by the Holder, the fees and expenses of which shall be paid by the Company.
“Warrants” means the substantially identical warrants initially issued by the Company on or about the date
first written above and having the same exercise price as this Warrant.
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Section 2. Exercise.
a) Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or
after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing
on the books of the Company) of a duly executed copy of the Notice of Exercise in the form annexed hereto by facsimile or e-mail attachment. Within three (3) Trading Days following the date that said Notice of Exercise is received by the
Company, the Company shall have received from the Holder the payment of the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) below is permitted and is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is received by the
Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of
Exercise within two (2) Business Days of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of
the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be
$ , subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the
prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be
entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
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the Exercise Price of this Warrant, as adjusted hereunder; and |
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If Warrant Shares are issued in such a cashless exercise, the parties acknowledge
and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this
Section 2(c).
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be
transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if
the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being
exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the receipt by the Company of the Notice of Exercise (such date, the “Warrant Share Delivery
Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant
has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having
been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day for each Trading Day after such Warrant Share Delivery Date until such Warrant
Shares are delivered or Holder rescinds such exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
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evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares
pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights
available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the
exercise of this
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Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as
may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for
same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof.
e) Holder’s Exercise Limitations. The Company
shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set
forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(e),
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such
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calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that
the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder and the Company shall have no obligation to
verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the
Company shall within two Trading Days confirm in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be [4.99/9.99%] of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the
Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase in the Beneficial Ownership Limitation
will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock
dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common
Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into
a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or
re-classification.
b) RESERVED.
c) Subsequent Rights Offerings. If at any time the Company grants, issues or sells any Common Stock Equivalents or
rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock that does not otherwise result in an adjustment pursuant to Section 3(a) above (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent
that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this
Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
8
rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion
of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been
partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or
other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company,
directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the “Alternate Consideration”)
9
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the
“Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to customary written
agreements prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to,
and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest whole
share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any)
issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this
Section 3, the Company shall
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promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the
facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its
last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of
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this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a
new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant
may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its
agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that
purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5.
Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any
voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock
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certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that
all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth
in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase
in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is
exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
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e) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and defense of this Warrant shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New
York Courts are improper or inconvenient venue for such proceeding. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Warrant. If any party shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other
costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal
securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company intentionally and knowingly fails to
comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including,
without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at 880 Winter Street, Suite 210, Waltham, Massachusetts
02451, Attention: , facsimile number:
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, email address:
, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders.
Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth in this Section 5(h) prior to 5:30 p.m. (New York City time) on any Trading Day, (ii) the next Trading
Day after the date of transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth in this Section 5(h) on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be
given.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to
exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from
time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This
Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Warrant.
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n) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
o) FAST Compliance. While this
Warrant is outstanding, the Company shall maintain a transfer agent that participates in the DTC Fast Automated Securities Transfer Program.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto
duly authorized as of the date first above indicated.
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NOTICE OF EXERCISE
(1) The undersigned hereby elects to purchase
Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith
payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check
applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set
forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following DWAC Account Number:
[SIGNATURE OF HOLDER]
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EXHIBIT B
ASSIGNMENT FORM
(To assign
the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the warrants.)
FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Exhibit 99.1
BG Medicine Announces Proposed Underwritten Public Offering
WALTHAM, Mass. – August 12, 2015 – (NASDAQ: BGMD), BG Medicine, Inc., the developer of the BGM Galectin-3® Test, today announced that it intends to offer and sell equity securities in an underwritten public offering. The offering is subject to market and other conditions, and there can be no assurance
as to whether or when the offering may be completed, or as to the actual size or terms of the offering.
Roth Capital Partners is acting as the sole
manager for the offering.
The Company is offering Series A units, consisting of common stock and warrants. The Company is also offering Series B units,
in lieu of Series A units, to those purchasers whose purchase of additional Series A units in the offering would result in the purchaser beneficially owning more than 9.99% of the Company’s outstanding common stock following the completion of
the offering. The Series B units will consist of fully pre-funded warrants to purchase one share of common stock and warrants.
The company expects to use
net proceeds from the proposed offering for its support of the U.S. launch of the first automated test for galectin-3, support of its automated partners in the development and commercialization of additional automated tests for galectin-3, its
proposed expansion of clinical claims and indications for galectin-3 testing, and other general corporate purposes, including, but not limited to, working capital, intellectual property protection, enforcement and in-licensing, capital expenditures
and collaborations.
The securities are being offered by BG Medicine pursuant to an effective shelf registration statement (File No. 333-204307),
which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on June 5, 2015. A preliminary prospectus supplement, as well as a final prospectus supplement, relating to and describing the terms of the
offering will be filed with the SEC, each of which will form a part of the effective registration statement. When available, copies of the preliminary and final prospectus supplements relating to these securities may be obtained by visiting the
SEC’s website at www.sec.gov or from Roth Capital Partners, 888 San Clemente Drive, Newport Beach, CA 92660, (800) 678-9147.
This press release
does not and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which, or to any person to whom, such offer, solicitation or sale
is unlawful. The shares of common stock and warrants may only be offered by means of a prospectus.
About BG Medicine
BG Medicine, Inc. (BGMD), the developer of the BGM Galectin-3® Test, is focused on the
development and delivery of diagnostic solutions to aid in the clinical management of heart failure and related disorders. For additional information about BG Medicine, heart failure and galectin-3 testing, please visit www.BG-Medicine.com.
The BG Medicine Inc. logo is available for download here.
Safe Harbor / Forward-Looking Statements
This press
release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the proposed public offering and the intended use of proceeds from the offering. The offering is subject to
market and other conditions and there can be no assurance as to whether or when the offering may be completed or as to the actual size or terms of the offering. These forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially, including market conditions, risks associated with the cash requirements of our business and other risks detailed from time to time in our filings with the Securities and Exchange Commission, including the
factors discussed under the heading “Risk Factors”
contained in the prospectus relating to this offering. All information in this press release is as of the date of the release and should not be relied upon as representing our views as of any
subsequent date. BG Medicine disclaims any obligation to update the information contained in this press release as new information becomes available.
CONTACT: Stephen Hall, EVP & Chief Financial Officer, (781) 890-1199
Exhibit 99.2
BG Medicine Prices Underwritten Public Offering
WALTHAM, Mass. – August 13, 2015 – (NASDAQ: BGMD) BG Medicine, Inc., the developer of the BGM Galectin-3® Test, today announced the pricing of an underwritten public offering of its equity securities. Roth Capital Partners is acting as sole manager for the offering.
The company is offering 2,315,654 Series A units, each consisting of one share of common stock and one half of a warrant to purchase one share of common
stock, at a purchase price of $1.00 per Series A unit. The company is also offering 184,346 Series B units, in lieu of Series A units, at a purchase price of $1.00 per Series B unit to those purchasers whose purchase of additional Series A units in
the offering would result in the purchaser beneficially owning more than 9.99% of the company’s outstanding common stock following the completion of the offering. Each Series B unit consists of one fully pre-funded warrant to purchase one share
of common stock and one half of a warrant to purchase one share of common stock. The warrants (other than the fully pre-funded warrants) will have an exercise price of $1.00 per share. After the underwriting discount and estimated offering expenses
payable by the company, the company expects to receive net proceeds of approximately $2.1 million. There is no established public trading market for the pre-funded warrants or the warrants and the company does not expect a market for these
securities to develop. The offering is expected to close on August 18, 2015, subject to customary closing conditions.
The company expects to use net
proceeds from the offering for its support of the U.S. launch of the first automated test for galectin-3, support of its automated partners in the development and commercialization of additional automated tests for galectin-3, its proposed expansion
of clinical claims and indications for galectin-3 testing, and other general corporate purposes, including, but not limited to, working capital, intellectual property protection, enforcement and in-licensing, capital expenditures and collaborations.
The securities are being offered by BG Medicine pursuant to an effective shelf registration statement (File No. 333-204307), which was declared
effective by the U.S. Securities and Exchange Commission (the “SEC”) on June 5, 2015. A preliminary prospectus supplement relating to and describing the terms of the offering has been filed with the SEC and is available on the
SEC’s website at www.sec.gov. Copies of the final prospectus supplement relating to the offering, when available, may be obtained by visiting the SEC’s website at www.sec.gov or from Roth Capital Partners, 888 San Clemente Drive, Newport
Beach, CA 92660, (800) 678-9147.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any
securities, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which, or to any person to whom, such offer, solicitation or sale is unlawful. The shares of common stock and warrants may only be offered by means of a
prospectus.
About BG Medicine
BG Medicine, Inc.
(BGMD), the developer of the BGM Galectin-3® Test, is focused on the development and delivery of diagnostic solutions to aid in the clinical management of heart failure and related
disorders
The BG Medicine Inc. logo is available for download here.
Safe Harbor / Forward-Looking Statements
This press
release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the public offering and the intended use of proceeds from the offering. The offering is subject to market
and other conditions and there can be no assurance as to whether or when the offering may be completed or as to the actual size or terms of the offering. These forward-looking statements are subject to risks and uncertainties that may cause actual
results to differ materially, including market conditions,
risks associated with the cash requirements of our business and other risks detailed from time to time in our filings with the Securities and Exchange Commission, including the factors discussed
under the heading “Risk Factors” contained in the prospectus relating to this offering. All information in this press release is as of the date of the release and should not be relied upon as representing our views as of any subsequent
date. BG Medicine disclaims any obligation to update the information contained in this press release as new information becomes available.
CONTACT:
Stephen Hall, EVP & Chief Financial Officer, (781) 890-1199
BG Medicine (CE) (USOTC:BGMD)
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