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): July 13, 2005
Xenomics,
Inc.
(Exact
name of registrant as specified in its charter)
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Florida
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04-3721895
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(State
or other jurisdiction of
incorporation
or organization)
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(IRS
Employer Identification
No.)
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420
Lexington Avenue, Suite 1701
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New
York, New York
10170
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(Address
of principal executive offices)
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Registrant’s
telephone number, including area code: (212) 297-0808
(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:
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o
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Written
communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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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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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01 Entry
into a Material Definitive Agreement.
The
information required to be disclosed in this Item 1.01 is incorporated
herein by
reference from Item 3.02.
Item
3.02
Unregistered
Sales of Equity Securities.
On
July
13, 2005, Xenomics, Inc. (the “Company”) closed a private placement of 277,100
shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”)
and 386,651 warrants to certain investors (the “Investors”) for aggregate gross
proceeds of $2,771,000 pursuant to a Securities Purchase Agreement
dated as of
July 13, 2005 (the “SPA”). The warrants are immediately exercisable at $3.25 per
share and are exercisable at any time within five years from the date
of
issuance. Pursuant to the SPA, the Company agreed that until January
9, 2006,
the Investors would have the right to participate in subsequent financings
up to
the lesser of $2,771,000 and the full amount of such subsequent financing.
In
addition, the Company agreed not to offer any of its securities for
sale prior
to the effectiveness date of its registration statement registering
the
securities purchased by the Investors (the “Registration Statement”), and the
Company agreed not to file a registration statement seeking to register
additional shares of common stock for resale until 180 days after the
effectiveness date of the Registration Statement. The Company
paid an
aggregate $277,100 and issued an aggregate 105,432 warrants to purchase
common
stock to certain selling agents. The warrants are immediately exercisable
at
$3.25 per share and will expire five years after issuance.
In
connection with the offer and sale of securities to the Investors and
the
selling agents, the Company relied on the exemption from registration
provided
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 promulgated thereunder. The Company believes that the
Investors and the selling agents are “accredited investors”, as such term is
defined in Rule 501(a) promulgated under the Securities Act.
The
Investors also are parties to a Registration Rights Agreement, dated
as of July
13, 2005 (the “Registration Rights Agreement”), pursuant to which the Company
has agreed to file, within 30 days of closing, a registration statement
covering
the resale of the shares of common stock underlying the Series A Preferred
Stock
and Warrants issued to the Investors.
Item
5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
The
Company’s
Articles of Incorporation have been amended to provide for the issuance
of
277,100 shares of Series A Preferred Stock pursuant to the Articles
of Amendment
to the Articles of Incorporation filed with the State of Florida on
July 13,
2005, which provides that:
Dividends.
Holders
shall be entitled to receive and the Company shall pay, cumulative
dividends at
the rate per share (as a percentage of the Stated Value per share of
$10) of 4%
per annum, payable quarterly on March 31, June 30, September 30 and
December 31,
beginning with September 30, 2005. If funds are legally available for
the
payment of dividends, dividends shall be payable, at the sole election
of the
Company, in cash or shares of Common Stock which shall be valued solely
for such
purpose at 90% of the average of the volume weighted average price
for the 20
days immediately prior to the Dividend Payment Date. If funds are not
legally
available for the payment of dividends then, at the election of such
Holder,
such dividends shall accrue to the next Dividend Payment Date or shall
be
accreted to the outstanding Stated Value. If at any time the Company
has the
right to pay dividends in cash or Common Stock, the Company must provide
the
Holder with at least 20 Trading Days’ notice of its election to pay a regularly
scheduled dividend in Common Stock. Dividends on the Series A Preferred
Stock
shall be calculated on the basis of a 360-day year, shall accrue daily
commencing on July 13, 2005, and shall be deemed to accrue from such
date
whether or not earned or declared and whether or not there are profits,
surplus
or other funds of the Company legally available for the payment of
dividends.
Notwithstanding the foregoing, the Company shall only be permitted
to make a
dividend payment in Common Stock provided that such shares of Common
Stock have
been registered under the Securities Act.
2
Voting
Rights. Except
as
otherwise provided herein and as otherwise required by law, the Series
A
Preferred Stock shall have no voting rights. However, so long as any
shares of
Series A Preferred Stock are outstanding, the Company shall not, without
the
affirmative vote of the Holders of the shares of the Series A Preferred
Stock
then outstanding, (a) alter or change adversely the powers, preferences
or
rights given to the Series A Preferred Stock or alter or amend these
Articles of
Amendment (whether by merger, consolidation or otherwise), (b) authorize
or
create any class of stock ranking as to dividends, redemption or distribution
of
assets upon a Liquidation senior to or otherwise pari passu with the
Series A
Preferred Stock, (c) amend its certificate of incorporation or other
charter
documents (whether by merger, consolidation or otherwise) so as to
affect
adversely any rights of the Holders, (d) increase the authorized number
of
shares of Series A Preferred Stock, or (e) enter into any agreement
with respect
to the foregoing.
Liquidation.
Upon
any liquidation, dissolution or winding-up of the Company, whether
voluntary or
involuntary (a “Liquidation”), the Holders shall be entitled to receive out of
the assets of the Company, whether such assets are capital or surplus,
for each
share of Series A Preferred Stock an amount equal to the Stated Value
per share
plus any accrued and unpaid dividends thereon and any other fees or
liquidated
damages owing thereon before any distribution or payment shall be made
to the
holders of any junior securities, and if the assets of the Company
shall be
insufficient to pay in full such amounts, then the entire assets to
be
distributed to the Holders shall be distributed among the Holders ratably
in
accordance with the respective amounts that would be payable on such
shares if
all amounts payable thereon were paid in full.
Conversion.
Conversions
at Option of Holder.
Each
share of Series A Preferred Stock shall be convertible into that number
of
shares of Common Stock determined by dividing the Stated Value of such
share of
Series A Preferred Stock by $2.15 (the “Conversion Price”), at the option of the
Holder, at any time and from time to time from and after July 13,
2005.
Automatic
Conversion.
Beginning July 13, 2006, provided certain conditions are satisfied,
if the
volume weighted average price of the Common Stock equals $4.30 (subject
to
adjustment for stock splits, reclassifications, combinations and similar
adjustments) per share for the 20 consecutive Trading Days immediately
prior to
the Automatic Conversion Notice Date (as defined below), and an average
of
50,000 shares of Common Stock per day shall have been traded during
such 20
Trading Days, unless the Holder is prohibited from converting the Series
A
Preferred Stock pursuant to certain limitations, the Company shall
have the
right to deliver a notice to the Holder (an “Automatic
Conversion Notice”
and the
date such notice is received by the Holder, the “Automatic
Conversion Notice Date”),
to
convert any portion of the shares of Series A Preferred Stock then
held by the
Holder into shares of Common Stock at the then-effective Conversion
Price.
Subsequent
Equity Sales.
Other
than pursuant to certain issuances, for the twelve (12) month period
beginning
on the effective date of the Registration Statement registering the
resale of
the shares of Common Stock underlying the Series A Preferred Stock
by the
Holder, if the Company at any time while Series A Preferred Stock is
outstanding, shall sell or grant any option to purchase or otherwise
dispose of
or issue any Common Stock or common stock equivalents entitling any
Person to
acquire shares of Common Stock, at an effective price per share less
than the
then Conversion Price (such lower price, the “Base
Conversion Price”
and
such issuances individually and collectively, a “Dilutive
Issuance”),
as
adjusted hereunder (if the holder of the Common Stock or common stock
equivalents so issued shall at any time, whether by operation of
3
purchase
price adjustments, reset provisions, floating conversion, exercise
or exchange
prices or otherwise, or due to warrants, options or rights per share
which is
issued in connection with such issuance, be entitled to receive shares
of Common
Stock at an effective price per share which is less than the Conversion
Price,
such issuance shall be deemed to have occurred for less than the Conversion
Price), then, the Conversion Price shall be reduced by multiplying
the
Conversion Price by a fraction, the numerator of which is the number
of shares
of Common Stock issued and outstanding immediately prior to the Dilutive
Issuance plus the number of shares of Common Stock and common stock
equivalents
which the aggregate consideration received or receivable by the Company
in
connection with such Dilutive Issuance would purchase at the then effective
Conversion Price, and the denominator of which shall be the sum of
the number of
shares of Common Stock issued and outstanding immediately prior to
the Dilutive
Issuance plus the number of shares of Common Stock and common stock
equivalents
so issued or assumable in connection with the Dilutive Issuance.
A
copy of the Articles of Amendment to the Articles of Incorporation,
as filed
with the Secretary of State of the State of Florida, is attached as
Exhibit 3.1
to this Current Report on Form 8-K, and is incorporated herein by reference.
Item
9.01 Financial
Statements and Exhibits
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(c)
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Exhibits.
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3.1
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Articles
of Amendment to Articles of Incorporation of Xenomics,
Inc.
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4.1
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Form
of Warrant to purchase shares of Common Stock issued in connection
with
the sale of the Series A Convertible Preferred Stock.
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4.2
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Form
of Warrant to purchase shares of Common Stock issued to selling
agents in
connection with the sale of the Series A Convertible Preferred
Stock.
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10.1
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Form
of Securities Purchase Agreement dated July 13, 2005 by and among
Xenomics, Inc. and the purchasers set forth on the signature page
thereto.
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10.2
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Form
of Registration Rights Agreement dated July 13, 2005 by and among
Xenomics, Inc. and the purchasers signatory thereto.
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99.1
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Press
Release dated July 15, 2005.
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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.
Dated: July
19, 2005
| XENOMICS, INC. | ||
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| By: | /s/ V. Randy White | |
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V.
Randy White, Ph.D.
Chief
Executive Officer
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5
Exhibit
3.1
ARTICLES
OF AMENDMENT
DESIGNATING
SERIES
A CONVERTIBLE PREFERRED STOCK
OF
XENOMICS,
INC.
PURSUANT
TO SECTION 607.0602 OF THE
FLORIDA
BUSINESS CORPORATION ACT
Xenomics,
Inc., a corporation organized and existing under the Florida Business
Corporation Act (hereinafter called the “Corporation”), in accordance with the
provisions of Section 607.0602 thereof, DOES HEREBY CERTIFY:
The
following Articles of Amendment were adopted by consent of the Board of
Directors in the manner prescribed by Section 607.1002 of the Florida Business
Corporation Act. Shareholder action was not required.
That
pursuant to the authority vested in the Board of Directors in accordance with
the provisions of the Articles of Incorporation, as amended and restated, of
the
Corporation (the “Articles of Incorporation”), the said Board of Directors on
June 30, 2005 adopted the following resolution creating a series of 277,100
shares of Preferred Stock of the Corporation designated as “Series A Convertible
Preferred Stock”:
RESOLVED,
that
pursuant to the authority vested in the Board of Directors of this Corporation
in accordance with the provisions of the Articles of Incorporation, a series
of
Preferred Stock, having a par value of $0.001 per share, of the Corporation
be
and hereby is created, and that the designation and number of shares thereof,
and the voting and other powers, preferences and relative, participating,
optional or other rights of the shares of such series, and the qualifications,
limitations and restrictions thereof, are as follows:
1
TERMS
OF PREFERRED STOCK
Section
1.
Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. For the purposes hereof, the following terms shall have the following
meanings:
“Bankruptcy
Event”
means
any of the following events: (a) the Corporation or any Significant Subsidiary
(as such term is defined in Rule 1.02(s) of Regulation S-X) thereof commences
a
case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or
similar law of any jurisdiction relating to the Corporation or any Significant
Subsidiary thereof; (b) there is commenced against the Corporation or any
Significant Subsidiary thereof any such case or proceeding that is not dismissed
within 90 days after commencement; (c) the Corporation or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief
or other order approving any such case or proceeding is entered; (d) the
Corporation or any Significant Subsidiary thereof suffers any appointment of
any
custodian or the like for it or any substantial part of its property that is
not
discharged or stayed within 90 days; (e) the Corporation or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors;
(f)
the Corporation or any Significant Subsidiary thereof calls a meeting of its
creditors with a view to arranging a composition, adjustment or restructuring
of
its debts; or (g) the Corporation or any Significant Subsidiary thereof, by
any
act or failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or other action
for
the purpose of effecting any of the foregoing.
“Change
of Control Transaction”
means
the occurrence after the date hereof of any of (a) an acquisition (whether
by
merger, consolidation or otherwise) after the date hereof by an individual
or
legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Corporation, by contract or otherwise) of
in
excess of 50% of the voting securities of the Corporation, or (b) a replacement
at one time or within a one year period of more than one-half of the members
of
the Corporation's board of directors which is not approved by a majority of
those individuals who are members of the board of directors on the date hereof
(or by those individuals who are serving as members of the board of directors
on
any date whose nomination to the board of directors was approved by a majority
of the members of the board of directors who are members on the date hereof),
(c) the sale, conveyance, transfer or exchange of all or substantially all
of
the assets of the Company, or (d) the execution by the Corporation of an
agreement to which the Corporation is a party or by which it is bound, providing
for any of the events set forth above in (a), (b), (c) or (d).
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions
2
precedent
to (i) the Holders’ obligations to pay the Subscription Amount and (ii) the
Corporation’s obligations to deliver the Securities have been satisfied or
waived.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock"
means
the Corporation's common stock, par value $.0001 per share, and stock of any
other class into which such shares may hereafter have been reclassified or
changed.
“Common
Stock Equivalents”
means
any securities of the Corporation or the Subsidiaries which would entitle the
holder thereof to acquire at any time Common Stock, including without
limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
“Conversion
Amount”
means
the sum of the Stated Value at issue.
“Conversion
Date”
shall
have the meaning set forth in Section 6(a).
“Conversion
Price”
shall
have the meaning set forth in Section 6(b).
“Conversion
Shares”
means,
collectively, the shares of Common Stock into which the shares of Preferred
Stock are convertible in accordance with the terms hereof.
“Conversion
Shares Registration Statement”
means a
registration statement that meets the requirements of the Registration Rights
Agreement and registers the resale of all Conversion Shares by the Holder,
who
shall be named as a “selling stockholder” thereunder, all as provided in the
Registration Rights Agreement.
“Dividend
Payment Date”
shall
have the meaning set forth in Section 3(a).
“Effective
Date”
means
the date that the Conversion Shares Registration Statement is declared effective
by the Commission.
“Equity
Conditions”
shall
mean, during the period in question, (i)
the Corporation shall have duly honored all conversions scheduled to occur
or
occurring by virtue of one or more Notices of Conversion, if any, (ii) all
amounts owing in respect of the Preferred Stock shall have been paid;
(iii)
there is an effective Conversion Shares Registration Statement pursuant to
which
the Holder is permitted to utilize the prospectus thereunder to resell all
of
the shares issuable pursuant to the Transaction Documents (and the Corporation
believes, in good faith, that such effectiveness will continue uninterrupted
for
the foreseeable future), (iv) the Common Stock is trading on the Trading Market
and all of the shares issuable pursuant to the Transaction Documents are listed
for trading on a Trading Market (and the Corporation believes, in good faith,
that trading of the Common Stock on a Trading Market will continue uninterrupted
for the foreseeable future), (v) there is a sufficient number of authorized
but
unissued and otherwise
3
unreserved
shares of Common Stock for the issuance of all of the shares issuable pursuant
to the Transaction Documents, (vi) all of the shares issued or issuable pursuant
to the transaction proposed would not violate the limitations set forth in
Sections 6(c) and (d) and (vii)
no public announcement of a pending or proposed Fundamental Transaction, Change
of Control Transaction or acquisition transaction has occurred that has not
been
consummated.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options to consultants, employees
or proposed employees, officers or directors of the Corporation pursuant to
any
stock or option plan or agreement duly adopted by a majority of the non-employee
members of the Board of Directors of the Corporation or a majority of the
members of a committee of non-employee directors established for such purpose,
(b) securities upon the exercise of or conversion of any securities issued
hereunder, convertible securities, options or warrants issued and outstanding
on
the date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities,
and
(c) securities issued pursuant to acquisitions or strategic transactions,
provided any such issuance shall only be to a Person which is, itself or through
its subsidiaries, an operating company in a business synergistic with the
business of the Corporation and in which the Corporation receives benefits
in
addition to the investment of funds, but shall not include a transaction in
which the Corporation is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in
securities.
“Fundamental
Transaction”
shall
have the meaning set forth in Section 7(f)(iii) hereof.
“Holder”
shall
have the meaning given such term in Section 2 hereof.
“Junior
Securities”
means
the Common Stock and all other equity or equity equivalent securities of the
Corporation other than those securities that are (a) outstanding on the Original
Issue Date and (b) which are explicitly senior or pari passu in rights or
liquidation preference to the Preferred Stock.
“Original
Issue Date”
shall
mean the date of the first issuance of any shares of the Preferred Stock
regardless of the number of transfers of any particular shares of Preferred
Stock and regardless of the number of certificates which may be issued to
evidence such Preferred Stock.
“Person”
means a
corporation, an association, a partnership, an organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.
4
“Purchase
Agreement”
means
the Securities Purchase Agreement, dated as of the Original Issue Date, to
which
the Corporation and the original Holders are parties, as amended, modified
or
supplemented from time to time in accordance with its terms.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of the Purchase
Agreement, to which the Corporation and the original Holder are parties, as
amended, modified or supplemented from time to time in accordance with its
terms.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Subscription
Amount”
shall
mean, as to each Purchaser, the amount to be paid for the Preferred Stock
purchased pursuant to the Purchase Agreement as specified below such Purchaser's
name on the signature page of the Purchase Agreement and next to the heading
“Subscription Amount”, in United States Dollars and in immediately available
funds.
“Subsidiary”
shall
have the meaning given to such term in the Purchase Agreement.
“Trading
Day”
means a
day on which the Common Stock is traded on a Trading Market.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq SmallCap Market, the American
Stock Exchange, the New York Stock Exchange or the Nasdaq National
Market.
“Transaction
Documents”
shall
have the meaning set forth in the Purchase Agreement.
“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 Financial L.P. (based on a
Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)
if
the Common Stock is not then listed or quoted on a Trading Market and if prices
for the Common Stock are then quoted on the OTC Bulletin Board, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock
is not
then listed or quoted on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by the Pink sheets, LLC
(or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported;
or
(d) in all other cases, the fair market value of a share of Common Stock
as
determined by an
5
independent
appraiser selected in good faith by the Purchasers and reasonably acceptable
to
the Corporation.
Section
2.
Designation,
Amount and Par Value.
The
series of preferred stock shall be designated as its Series A Convertible
Preferred Stock (the “Preferred
Stock”)
and
the number of shares so designated shall be 277,100 (which shall not be subject
to increase without the consent of all of the holders of the Preferred Stock
(each, a “Holder”
and
collectively, the “Holders”)).
Each
share of Preferred Stock shall have a par value of $0.001 per share and a stated
value equal to $10 (the “Stated
Value”).
Capitalized terms not otherwise defined herein shall have the meaning given
such
terms in Section 1 hereof.
Section
3.
Dividends.
a)
Holders
shall be entitled to receive and the Corporation shall pay, cumulative dividends
at the rate per share (as a percentage of the Stated Value per share) of 4%
per
annum, payable quarterly on March 31, June 30, September 30 and December 31,
beginning with September 30, 2005. If funds are legally available for the
payment of dividends, dividends shall be payable, at the sole election of the
Corporation, in cash or shares of Common Stock which shall be valued solely
for
such purpose at 90% of the average of the 20 VWAPs immediately prior to the
Dividend Payment Date. If funds are not legally available for the payment of
dividends then, at the election of such Holder, such dividends shall accrue
to
the next Dividend Payment Date or shall be accreted to the outstanding Stated
Value. If at any time the Corporation has the right to pay dividends in cash
or
Common Stock, the Corporation must provide the Holder with at least 20 Trading
Days’ notice of its election to pay a regularly scheduled dividend in Common
Stock. Dividends on the Preferred Stock shall be calculated on the basis of
a
360-day year, shall accrue daily commencing on the Original Issue Date, and
shall be deemed to accrue from such date whether or not earned or declared
and
whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends. Except as otherwise provided
herein, if at any time the Corporation pays dividends partially in cash and
partially in shares, then such payment shall be distributed ratably among the
Holders based upon the number of shares of Preferred Stock held by each Holder.
Notwithstanding the foregoing, the Corporation shall only be permitted to make
a
dividend payment in Common Stock provided that such shares of Common Stock
have
been registered under the Securities Act and the Equity Conditions have been
satisfied.
b)
So
long
as any Preferred Stock shall remain outstanding, neither the Corporation nor
any
subsidiary thereof shall directly or indirectly pay or declare any dividend
or
make any distribution (other than a dividend or distribution described in
Section 7 or dividends due and paid in the ordinary course on preferred stock
of
the Corporation or a subsidiary at such times when the Corporation is in
compliance with its payment and other obligations hereunder) upon, nor shall
any
distribution be made in respect of, any Junior Securities so long as any
dividends due on the Preferred Stock remain unpaid, nor shall any monies be
set
aside for or applied to the purchase or
6
redemption
(through a sinking fund or otherwise) of any Junior Securities or shares pari
passu with the Preferred Stock.
Section
4.
Voting
Rights.
Except
as otherwise provided herein and as otherwise required by law, the Preferred
Stock shall have no voting rights. However, so long as any shares of Preferred
Stock are outstanding, the Corporation shall not, without the affirmative vote
of the Holders of the shares of the Preferred Stock then outstanding, (a) alter
or change adversely the powers, preferences or rights given to the Preferred
Stock or alter or amend these Articles of Amendment (whether by merger,
consolidation or otherwise), (b) authorize or create any class of stock ranking
as to dividends, redemption or distribution of assets upon a Liquidation (as
defined in Section 5) senior to or otherwise pari passu with the Preferred
Stock, (c) amend its certificate of incorporation or other charter documents
(whether by merger, consolidation or otherwise) so as to affect adversely any
rights of the Holders, (d) increase the authorized number of shares of Preferred
Stock, or (e) enter into any agreement with respect to the
foregoing.
Section
5.
Liquidation.
Upon
any liquidation, dissolution or winding-up of the Corporation, whether voluntary
or involuntary (a “Liquidation”),
the
Holders shall be entitled to receive out of the assets of the Corporation,
whether such assets are capital or surplus, for each share of Preferred Stock
an
amount equal to the Stated Value per share plus any accrued and unpaid dividends
thereon and any other fees or liquidated damages owing thereon before any
distribution or payment shall be made to the holders of any Junior Securities,
and if the assets of the Corporation shall be insufficient to pay in full such
amounts, then the entire assets to be distributed to the Holders shall be
distributed among the Holders ratably in accordance with the respective amounts
that would be payable on such shares if all amounts payable thereon were paid
in
full. A Fundamental Transaction or Change of Control Transaction shall be
treated as a Liquidation. The Corporation shall mail written notice of any
such
Liquidation, not less than 45 days prior to the payment date stated therein,
to
each record Holder.
Section
6.
Conversion.
a)
Conversions
at Option of Holder.
Each
share of Preferred Stock shall be convertible into that number of shares of
Common Stock (subject to the limitations set forth in Sections 6(c) and (d))
determined by dividing the Stated Value of such share of Preferred Stock by
the
Conversion Price, at the option of the Holder, at any time and from time to
time
from and after the Original Issue Date. Holders shall effect conversions by
providing the Corporation with the form of conversion notice attached hereto
as
Annex
A
(a
“Notice
of Conversion”).
Each
Notice of Conversion shall specify the number of shares of Preferred Stock
to be
converted, the number of shares of Preferred Stock owned prior to the conversion
at issue, the number of shares of Preferred Stock owned subsequent to the
conversion at issue and the date on which such conversion is to be effected,
which date may not be prior to the date the Holder delivers such Notice of
Conversion to the Corporation by facsimile (the “Conversion
Date”).
If no
Conversion Date is specified in a Notice of Conversion, the Conversion Date
shall be the date that such Notice of Conversion to the Corporation is deemed
delivered hereunder. The
7
calculations
and entries set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error. To effect conversions, as the case may be,
of
shares of Preferred Stock, a Holder shall not be required to surrender the
certificate(s) representing such shares of Preferred Stock to the Corporation
unless all of the shares of Preferred Stock represented thereby are so
converted, in which case the Holder shall deliver the certificate representing
such share of Preferred Stock promptly following the Conversion Date at issue.
Shares of Preferred Stock converted into Common Stock or redeemed in accordance
with the terms hereof shall be canceled and may not be reissued.
b)
Conversion
Price.
The
conversion price for the Preferred Stock shall equal $2.15 (the
“Conversion
Price”),
subject to adjustment herein.
c)
Beneficial Ownership Limitation. The Corporation shall not effect
any conversion of the Preferred Stock, and the Holder shall not have the right
to convert any portion of the Preferred Stock to the extent that after giving
effect to such conversion, the Holder (together with the Holder’s affiliates),
as set forth on the applicable Notice of Conversion, would beneficially own
in
excess of 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to such conversion. 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 conversion of the Preferred Stock with respect to which the
determination of such sentence is being made. Except as set forth in the
preceding sentence, for purposes of this Section 6(c), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act. To
the
extent that the limitation contained in this Section 6(c) applies, the
determination of whether the Preferred Stock is convertible (in relation to
other securities owned by the Holder together with any affiliates) and of which
shares of Preferred Stock is convertible shall be in the sole discretion of
such
Holder, and the submission of a Notice of Conversion shall be deemed to be
such
Holder’s determination of whether the shares of Preferred Stock may be converted
(in relation to other securities owned by such Holder) and which shares of
the
Preferred Stock is convertible, in each case subject to such aggregate
percentage limitations. To ensure compliance with this restriction, the Holder
will be deemed to represent to the Corporation each time it delivers a Notice
of
Conversion that such Notice of Conversion has not violated the restrictions
set
forth in this paragraph and the Corporation shall have no obligation to verify
or confirm the accuracy of such determination. For purposes of this Section
6(c), in determining the number of outstanding shares of Common Stock, the
Holder may rely on the number of outstanding shares of Common Stock as reflected
in the most recent of the following: (A) the Corporation’s most recent Form
10-QSB or Form 10-KSB, as the case may be, (B) a more recent public announcement
by the Corporation or (C) any other notice by the Corporation or the
Corporation’s transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of the Holder, the
Corporation shall within two Trading Days confirm orally and 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
8
conversion
or exercise of securities of the Corporation, including the Preferred Stock,
by
the Holder or its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The provisions of this Section
6(c) may be waived by the Holder upon, at the election of the Holder, not less
than 61 days’ prior notice to the Corporation, and the provisions of this
Section 6(c) shall continue to apply until such 61st day (or such
later date, as determined by the Holder, as may be specified in such notice
of
waiver).
d)
Limitation on Number of Shares Issuable. If required by any exchange on
which the Corporation’s securities are then traded, notwithstanding anything
herein to the contrary, the Corporation shall not issue to any Holder any shares
of Common Stock, including pursuant to any rights herein, including, without
limitation, any conversion rights or right to issue shares of Common Stock
in
payment of dividends, to the extent such shares, when added to the number of
shares of Common Stock issued (A) upon conversion of any shares of Preferred
Stock pursuant to Section 6(a) and (B) upon exercise of those certain warrants
issued pursuant to that certain Securities Purchase Agreement would exceed
3,719,000 shares of Common Stock immediately prior to the Original Issue Date,
or such greater number of shares of Common Stock permitted pursuant to the
corporate governance rules of the Trading Market that is at the time the
principal trading exchange or market for the Common Stock, based upon share
volume, as confirmed in writing by counsel to the Corporation (the “Maximum
Aggregate Share Amount”), unless the Corporation first obtains shareholder
approval permitting such issuances in accordance with the Trading Market rules
(“Shareholder Approval”). Each Holder shall be entitled to a portion of the
Maximum Aggregate Share Amount equal to the quotient obtained by dividing (x)
such the number of shares of Preferred Stock initially purchased by such Holder
by (y) the aggregate number of shares purchased by all Holders. Such portions
shall be adjusted upward ratably in the event all of the shares of Preferred
Stock of any Holder are no longer outstanding. If at any time the number of
shares of Common Stock which could, notwithstanding the limitation set forth
herein, be issuable and sold to all Holders during the following 12 months
equals or exceeds the Maximum Aggregate Share Amount, then the Corporation
shall, subject to any requirements in the Purchase Agreement to act sooner,
seek
to obtain the Shareholder Approval applicable to such issuance as soon as is
possible, but in any event not later than the 90th day after the date
in which the Corporation determines (or is notified by any Holder) that the
Maximum Aggregate Share Amount could be exceeded.
e)
Mechanics
of Conversion
i.
Delivery
of Certificate Upon Conversion.
Not
later than three Trading Days after each Conversion Date (the “Share
Delivery Date”),
the
Corporation shall deliver to the Holder a certificate or certificates which,
after the Effective Date, shall be free of restrictive legends and trading
restrictions (other than those required by the Purchase Agreement) representing
the number of shares of Common Stock being acquired upon the conversion of
shares of Preferred Stock. After the Effective Date, the Corporation shall,
upon
request of
9
the
Holder, deliver any certificate or certificates required to be delivered by
the
Corporation under this Section electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions. If in the case of any Notice of Conversion such certificate or
certificates are not delivered to or as directed by the applicable Holder by
the
third Trading Day after the Conversion Date, the Holder shall be entitled to
elect by written notice to the Corporation at any time on or before its receipt
of such certificate or certificates thereafter, to rescind such conversion,
in
which event the Corporation shall immediately return the certificates
representing the shares of Preferred Stock tendered for conversion. Such right
shall not be in lieu of any of the Holders’ rights.
ii.
Obligation
Absolute.
The
Corporation’s obligations to issue and deliver the Conversion Shares upon
conversion of Preferred Stock in accordance with the terms hereof are absolute
and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or
any
breach or alleged breach by the Holder or any other Person of any obligation
to
the Corporation or any violation or alleged violation of law by the Holder
or
any other person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to the Holder in connection
with the issuance of such Conversion Shares.
iii.
Reservation
of Shares Issuable Upon Conversion.
The
Corporation covenants that it will at all times reserve and keep available
out
of its authorized and unissued shares of Common Stock solely for the purpose
of
issuance upon conversion of the Preferred Stock and payment of dividends on
the
Preferred Stock, each as herein provided, free from preemptive rights or any
other actual contingent purchase rights of persons other than the Holders,
not
less than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Corporation as to reservation of such shares
set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 7) upon the conversion of all
outstanding shares of Preferred Stock. The Corporation covenants that all shares
of Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable and, if the Conversion Shares
Registration Statement is then effective under the Securities Act, registered
for public sale in accordance with such Conversion Shares Registration
Statement.
iv.
Fractional
Shares.
Upon a
conversion hereunder, the Corporation shall not be required to issue stock
certificates representing fractions of shares of the Common Stock, but may
if
otherwise permitted, make a cash payment in respect of any final fraction of
a
share based on the VWAP at such time. If the Corporation elects not, or is
unable, to make such a cash payment, the Holder
10
shall
be
entitled to receive, in lieu of the final fraction of a share, one whole share
of Common Stock.
v.
Transfer
Taxes.
The
issuance of certificates for shares of the Common Stock on conversion of the
Preferred Stock shall be made without charge to the Holders thereof for any
documentary stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificate, provided that the Corporation shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of such shares of Preferred Stock so converted
and
the Corporation shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall
have
paid to the Corporation the amount of such tax or shall have established to
the
satisfaction of the Corporation that such tax has been paid.
f)
Automatic
Conversion.
Beginning twelve (12) months after the Original Issue Date, provided the Equity
Conditions are satisfied, if the VWAP of the Common Stock equals $4.30 (subject
to adjustment for stock splits, reclassifications, combinations and similar
adjustments) per share for the 20 consecutive Trading Days (such calculation
to
occur no earlier than twelve (12) months after the Original Issue Date)
immediately prior to the Automatic Conversion Notice Date (as defined below),
and an average of 50,000 shares of Common Stock per day shall have been traded
during such 20 Trading Days, unless the Holder is prohibited from converting
the
Preferred Stock pursuant to Section 6(c) or 6(d) hereof, the Corporation shall
have the right to deliver a notice to the Holder (an “Automatic
Conversion Notice”
and the
date such notice is received by the Holder, the “Automatic
Conversion Notice Date”),
to
convert any portion of the shares of Preferred Stock then held by the Holder
into shares of Common Stock at the then-effective Conversion Price. To effect
an
Automatic Conversion hereunder, the Holder shall not be required to physically
surrender the Preferred Stock certificate to the Corporation. Delivery of the
certificates for the Common Stock by the Corporation to the Holder shall be
as
set forth in Section 6(e) herein.
Section
7.
Certain
Adjustments.
a)
Stock
Dividends and Stock Splits.
If the
Corporation, at any time while the Preferred Stock is outstanding: (A) shall
pay
a stock dividend or otherwise make 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 Corporation pursuant to this Preferred
Sock), (B) subdivide outstanding shares of Common Stock into a larger number
of
shares, (C) combine (including by way of reverse stock split) outstanding shares
of Common Stock into a smaller number of shares, or (D) issue by
reclassification of shares of the Common Stock any shares of capital stock
of
the Corporation, then the Conversion 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 before such
11
event
and
of which the denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this Section
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)
Subsequent
Equity Sales.
Other
than pursuant to an Exempt Issuance, for the twelve (12) month period beginning
on the effective date of the Registration Statement registering the resale
of
the Conversion Shares by the Holder, if the Corporation at any time while
Preferred Stock is outstanding, shall sell or grant any option to purchase
or
otherwise dispose of or issue any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at an effective price
per share less than the then Conversion Price (such lower price, the
“Base
Conversion Price”
and
such issuances individually and collectively, a “Dilutive
Issuance”),
as
adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued
in
connection with such issuance, be entitled to receive shares of Common Stock
at
an effective price per share which is less than the Conversion Price, such
issuance shall be deemed to have occurred for less than the Conversion Price),
then, the Conversion Price shall be reduced by multiplying the Conversion Price
by a fraction, the numerator of which is the number of shares of Common Stock
issued and outstanding immediately prior to the Dilutive Issuance plus the
number of shares of Common Stock and Common Stock Equivalents which the
aggregate consideration received or receivable by the Corporation in connection
with such Dilutive Issuance would purchase at the then effective Conversion
Price, and the denominator of which shall be the sum of the number of shares
of
Common Stock issued and outstanding immediately prior to the Dilutive Issuance
plus the number of shares of Common Stock and Common Stock Equivalents so issued
or issuable in connection with the Dilutive Issuance. Such adjustment shall
be
made whenever such Common Stock or Common Stock Equivalents are issued. The
Corporation shall notify the Holder in writing, no later than the Business
Day
following the issuance of any Common Stock or Common Stock Equivalents subject
to this section, indicating therein the applicable issuance price, or of
applicable reset price, exchange price, conversion price and other pricing
terms
(such notice the “Dilutive
Issuance Notice”).
For
purposes of clarification, whether or not the Corporation provides a Dilutive
Issuance Notice pursuant to this Section 7(b), upon the occurrence of any
Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
entitled to receive a number of Conversion Shares based upon the Base Conversion
Price regardless of whether the Holder accurately refers to the Base Conversion
Price in the Notice of Conversion.
c)
Pro
Rata Distributions.
If the
Corporation, at any time while Preferred Stock is outstanding, shall distribute
to all holders of Common Stock (and not to Holders) evidences of its
indebtedness or assets or rights or warrants to subscribe for or
purchase
12
any
security, then in each such case the Conversion Price shall be determined by
multiplying such Conversion Price in effect immediately prior to the record
date
fixed for determination of stockholders entitled to receive such distribution
by
a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP
on
such record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable
to
one outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be described
in a
statement provided to the Holders of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution
is
made and shall become effective immediately after the record date mentioned
above.
d)
Calculations.
All
calculations under this Section 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held
by or
for the account of the Corporation, and the description of any such shares
of
Common Stock shall be considered on issue or sale of Common Stock. For purposes
of this Section 7, 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.
e)
Notice
to Holders.
i.
Adjustment
to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any of this Section 7,
the
Corporation shall promptly mail to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief statement
of
the facts requiring such adjustment. If the Corporation issues a variable rate
security, the Corporation shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion or exercise price at which
such securities may be converted or exercised.
ii.
Notice
to Allow Conversion by Holder.
If (A)
the Corporation shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Corporation shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Corporation 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 Corporation shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Corporation is a party, any sale or
transfer of all or substantially all of the assets of the Corporation, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the
Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up
13
of
the affairs of the Corporation; then, in each case, the Corporation shall cause
to be filed at each office or agency maintained for the purpose of conversion
of
the Preferred Stock, and shall cause to be mailed
to the Holders at their last addresses as they shall appear upon the
stock
books of
the Corporation, 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. Holders are entitled to convert the Conversion Amount of
Preferred Stock during the 20-day period commencing the date of such notice
to
the effective date of the event triggering such notice. Such right does not
limit the Holders right to convert at any time.
iii.
Fundamental
Transaction.
If, at
any time while this Preferred Stock is outstanding, (A) the Corporation effects
any merger or consolidation of the Corporation with or into another Person,
(B)
the Corporation effects any sale of all or substantially all of its assets
in
one or a series of related transactions, (C) any tender offer or exchange offer
(whether by the Corporation or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, or (D) the Corporation effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “Fundamental
Transaction”),
then
upon any subsequent conversion of this Preferred Stock, the Holder shall have
the right to receive, for each Conversion Share that would have been issuable
upon such conversion absent such Fundamental Transaction, the same kind and
amount of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of one share of Common Stock
(the “Alternate
Consideration”).
For
purposes of any such conversion, the determination of the Conversion 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 Corporation shall apportion
the
Conversion 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
14
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 conversion of this Preferred Stock following
such Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the Corporation or surviving entity
in
such Fundamental Transaction shall file a new Articles of Amendment with the
same terms and conditions and issue to the Holder new preferred stock consistent
with the foregoing provisions and evidencing the Holder’s right to convert such
preferred stock into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this paragraph (e)(iii) and insuring that this Preferred Stock (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.
iv.
Exempt
Issuance.
Notwithstanding
the foregoing, no adjustment will be made under this Section 7 in respect of
an
Exempt Issuance.
Section
8.
Miscellaneous.
a)
Notices.
Any and
all notices or other communications or deliveries to be provided by the Holders
hereunder, including, without limitation, any Notice of Conversion, shall be
in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service, addressed to the Corporation, at the address set
forth above, facsimile number (212) 297-1888, Attn:
V.
Randy White, Chief Executive Officer, or such other address or facsimile number
as the Corporation may specify for such purposes by notice to the Holders
delivered in accordance with this Section. Any and all notices or other
communications or deliveries to be provided by the Corporation hereunder shall
be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service addressed to each Holder at the facsimile
telephone number or address of such Holder appearing on the books of the
Corporation, or if no such facsimile telephone number or address appears, at
the
principal place of business of the Holder. 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 at the facsimile telephone number specified in this Section prior
to
5:30 p.m. (New York City time), (ii) the date after the date of transmission,
if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such
date,
(iii) the second Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt
by
the party to whom such notice is required to be given.
b)
Absolute
Obligation.
Except
as expressly provided herein, no provision of these Articles of Amendment shall
alter or impair the obligation of the Corporation,
15
which
is
absolute and unconditional, to pay the liquidated damages (if any) on, the
shares of Preferred Stock at the time, place, and rate, and in the coin or
currency, herein prescribed.
c)
Lost
or Mutilated Preferred Stock Certificate.
If a
Holder’s Preferred Stock certificate shall be mutilated, lost, stolen or
destroyed, the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate, or in lieu
of
or in substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Preferred Stock so mutilated, lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such certificate, and of the ownership hereof, and indemnity, if requested,
all reasonably satisfactory to the Corporation.
d)
Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of these Articles of Amendment shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced 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
any such court, or such New York Courts are improper or inconvenient venue
for
such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address
in
effect for notices to it under these Articles of Amendment and agrees that
such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
and
all right to trial by jury in any legal proceeding arising out of or relating
to
these Articles of Amendment or the transactions contemplated hereby. If either
party shall commence an action or proceeding to enforce any provisions of these
Articles of Amendment, 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 with the investigation, preparation and prosecution of
such action or proceeding.
e)
Waiver.
Any
waiver by the Corporation or the Holder of a breach of any provision of these
Articles of Amendment shall not operate as or be construed to be a
16
waiver
of
any other breach of such provision or of any breach of any other provision
of
these Articles of Amendment. The failure of the Corporation or the Holder to
insist upon strict adherence to any term of these Articles of Amendment on
one
or more occasions shall not be considered a waiver or deprive that party of
the
right thereafter to insist upon strict adherence to that term or any other
term
of these Articles of Amendment. Any waiver must be in writing.
f)
Severability.
If any
provision of these Articles of Amendment is invalid, illegal or unenforceable,
the balance of these Articles of Amendment shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
g)
Next
Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
h)
Headings.
The
headings contained herein are for convenience only, do not constitute a part
of
these Articles of Amendment and shall not be deemed to limit or affect any
of
the provisions hereof.
*********************
17
RESOLVED,
FURTHER,
that
the Chairman, the Chief Executive Officer, the president or any vice-president,
and the secretary or any assistant secretary, of the Corporation be and they
hereby are authorized and directed to prepare and file these Articles of
Amendment in accordance with the foregoing resolution and the provisions of
Florida law.
IN
WITNESS WHEREOF, the undersigned have executed these Articles of Amendment
this
12th day of July, 2005.
| /s/ V. Randy White | ||
|
|
||
|
Name: V.
Randy White, Ph.D.
Title: Chief
Executive Officer
|
||
18
ANNEX
A
NOTICE
OF
CONVERSION
(TO
BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED
STOCK)
The
undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below, into shares of common stock, par
value $.0001 per share (the "Common
Stock"),
of
Xenomics, Inc., a Florida corporation (the "Corporation"),
according to the conditions hereof, as of the date written below. If shares
are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the
Corporation in accordance therewith. No fee will be charged to the Holder for
any conversion, except for such transfer taxes, if any.
Conversion
calculations:
|
Date
to Effect Conversion:
____________________________________________________________________
|
|
|
Number
of shares of Preferred Stock owned prior to Conversion:
________________________________________
|
|
|
Number
of shares of Preferred Stock to be Converted:
________________________________________________
|
|
|
Stated
Value of shares of Preferred Stock to be Converted:
____________________________________________
|
|
|
Number
of shares of Common Stock to be Issued:
___________________________________________________
|
|
|
Applicable
Conversion Price:
_________________________________________________________________________
|
|
|
Number
of shares of Preferred Stock subsequent to Conversion:
_________________________________________
|
| [HOLDER] | ||
| |
|
|
| By: | ||
|
|
||
|
Name:
Title:
|
||
19
Exhibit
4.1
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
July
13, 2005 W-__
COMMON
STOCK PURCHASE WARRANT
To
Purchase _____ Shares of Common Stock of
XENOMICS,
INC.
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, _____ (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 date hereof
(the
“Initial
Exercise Date”)
and on
or prior to the close of business on the fifth anniversary of the Initial
Exercise Date (the “Termination
Date”)
but
not thereafter, to subscribe for and purchase from Xenomics, Inc., a Florida
corporation (the “Company”),
up to
_____ shares (the “Warrant
Shares”)
of
Common Stock, par value $.0001 per share, of the Company (the “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.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”),
dated
July 13, 2005, among the Company and the purchasers signatory
thereto.
Section
2.
Exercise.
a)
Exercise
of Warrant.
Exercise of the purchase rights represented by this Warrant may be made at
any
time or times on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed facsimile
copy of
the Notice of Exercise Form annexed hereto (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 such Holder appearing on the books of the Company); provided,
however,
within
5 Trading Days of the date said Notice of Exercise is delivered to the Company,
the Holder shall have surrendered this Warrant to the Company and the Company
shall
1
have
received payment of the aggregate Exercise Price of the shares thereby purchased
by wire transfer or cashier’s check drawn on a United States bank.
b)
Exercise
Price.
The
exercise price of the Common Stock under this Warrant shall be $3.25, subject
to
adjustment hereunder (the “Exercise
Price”).
c)
Net
Exercise.
In lieu
of the payment methods set forth in Section 2(a) above and subject
to
Section 2(d)(3)(iii) below, commencing on October 26, 2005, the Holder shall
be
entitled to receive a certificate for the number of Warrant Shares equal
to the
quotient obtained by dividing [(A-B) (X)] by (A), where:
(A)
= the VWAP on the Trading Day immediately preceding
the date
of such election;
(B)
= the Exercise Price of this Warrant, as adjusted;
and
(X)
= the number of Warrant Shares issuable upon exercise of
this
Warrant in accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise.
d)
Exercise
Limitations.
i.
Holder’s
Restrictions.
The
Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2(c) or otherwise, to the extent that after giving effect
to
such issuance after exercise, the Holder (together with the Holder’s
affiliates), as set forth on the applicable Notice of Exercise, would
beneficially own in excess of 9.99% of the number of shares of the Common
Stock
outstanding immediately after giving effect to such issuance. 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
the
determination of such sentence is being made. Except as set forth
in the
preceding sentence, for purposes of this Section 2(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act,
it
being acknowledged by Holder that the Company is not representing to Holder
that
such calculation is in compliance with Section 13(d) of the Exchange Act
and
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(d) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder) and of which portion
of
this Warrant is exercisable shall be in the sole discretion of such Holder,
and
the submission of a Notice of Exercise shall be deemed to be such Holder’s
determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation,
and
the Company shall have no obligation
2
to
verify
or confirm the accuracy of such determination. For purposes of this Section
2(d), in determining the number of outstanding shares of Common Stock, the
Holder may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be,
(y) a more recent public announcement by the Company or (z) any other notice
by
the Company or the Company’s Transfer Agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of
the
Holder, the Company shall within two Trading Days confirm orally and 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
provisions of this Section 2(d) may be waived by the Holder upon, at the
election of the Holder, not less than 61 days’ prior notice to the Company, and
the provisions of this Section 2(d) shall continue to apply until such
61st day (or such later date, as determined by the Holder, as may
be
specified in such notice of waiver).
ii.
Trading
Market Restrictions.
If the
Company has not obtained Shareholder Approval (as defined below) if required,
then the Company may not issue upon exercise of this Warrant in the aggregate,
in excess of 19.999% of the number of shares of Common Stock outstanding
on the
Trading Day immediately preceding the Closing Date, less any shares of Common
Stock issued upon conversion of or as payment of dividends on the Preferred
Stock or upon prior exercise of this or any other Warrant issued pursuant
to the
Purchase Agreement (such number of shares, the “Issuable
Maximum”).
If on
any attempted exercise of this Warrant, the issuance of Warrant Shares would
exceed the Issuable Maximum and the Company shall not have previously obtained
the vote of shareholders (the “Shareholder
Approval”),
if
any, as may be required by the applicable rules and regulations of the Trading
Market (or any successor entity) to approve the issuance of shares of Common
Stock in excess of the Issuable Maximum pursuant to the terms hereof, then
the
Company shall issue to the Holder requesting a Warrant exercise such number
of
Warrant Shares as may be issued below the Issuable Maximum and, with respect
to
the remainder of the aggregate number of Warrant Shares, this Warrant shall
not
be exercisable until and unless Shareholder Approval has been obtained.
iii.
Restriction
on “Net” Exercise.
Notwithstanding any other provision of this Certificate, Holder shall only
be
permitted to effect a “net” exercise of the Warrants if on the date of exercise
a registration statement permitting the Holder to resell the shares of Common
Stock issuable upon the exercise of the Warrants is required to be effective
and
is not then effective or the prospectus forming a part of such
registration
3
statement
is not then available to be used by the Holder for the resale of the shares
of
Common Stock issuable upon the exercise of the Warrants.
e)
Mechanics
of Exercise.
i.
Authorization
of Warrant Shares.
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, be duly authorized, validly
issued,
fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue). 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 certificates
for
the 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.
ii.
Delivery
of Certificates Upon Exercise.
Certificates for shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the Holder’s
prime broker with the Depository Trust Company through its Deposit Withdrawal
Agent Commission (“DWAC”)
system
if the Company is a participant in such system, and otherwise by physical
delivery to the address specified by the Holder in the Notice of Exercise
within
3 Trading Days from the delivery to the Company of the Notice of Exercise
Form,
surrender of this Warrant and payment of the aggregate Exercise Price as
set
forth above (“Warrant
Share Delivery Date”).
This
Warrant shall be deemed to have been exercised on the date the Exercise Price
is
received by the Company. The Warrant Shares shall be deemed to have been
issued,
and Holder or any other person so designated to be named therein shall be
deemed
to have become a holder of record of such shares for all purposes, as of
the
date the Warrant has been exercised by payment to the Company of the Exercise
Price and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(e)(vii) prior to the issuance of such shares, have been paid.
iii.
Delivery
of New Warrants Upon Exercise.
If this
Warrant shall have been exercised in part, the Company shall, at the time
of
delivery of the certificate or certificates representing Warrant
Shares,
4
deliver
to Holder a new Warrant evidencing the rights of 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.
iv.
No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares shall be issued
upon
the exercise of this Warrant. As to any fraction of a share which Holder
would
otherwise be entitled to purchase upon such exercise, the Company shall pay
a
cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Exercise Price.
v.
Charges,
Taxes and Expenses.
Issuance of certificates for 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 certificate, all of which taxes and expenses shall be
paid
by the Company, and such certificates 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 certificates for 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.
vi.
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.
Section
3. Certain Adjustments.
a)
Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding: (A) pays a stock
dividend or otherwise make 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 pursuant to this Warrant), (B)
subdivides outstanding shares of Common Stock into a larger number of shares,
(C) combines (including by way of reverse stock split) outstanding shares
of
Common Stock into a smaller number of shares, or (D) 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 before such event and of which the denominator
shall
be the number of shares of Common Stock outstanding after such event and
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
5
shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b)
Subsequent
Equity Sales.
Other
than pursuant to an Exempt Issuance, for the twelve (12) month period beginning
on the effective date of the Registration Statement registering the resale
of
the Warrant Shares by the Holder, if the Company shall sell or grant any
option
to purchase or otherwise dispose of or issue any Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock, at an
effective price per share less than the then Exercise Price (such lower price,
the “Base
Share Price”
and
such issuances collectively, a “Dilutive
Issuance”),
as
adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase
price
adjustments, reset provisions, floating conversion, exercise or exchange
prices
or otherwise, or due to warrants, options or rights per share which is issued
in
connection with such issuance, be entitled to receive shares of Common Stock
at
an effective price per share which is less than the Exercise Price, such
issuance shall be deemed to have occurred for less than the Exercise Price),
then, the Exercise Price shall be reduced by multiplying the Exercise Price
by a
fraction, the numerator of which is the number of shares of Common Stock
issued
and outstanding immediately prior to the Dilutive Issuance plus the number
of
shares of Common Stock and Common Stock Equivalents which the aggregate
consideration received or receivable by the Corporation in connection with
such
Dilutive Issuance would purchase at the then effective Exercise Price, and
the
denominator of which shall be the sum of the number of shares of Common Stock
issued and outstanding immediately prior to the Dilutive Issuance plus the
number of shares of Common Stock and Common Stock Equivalents so issued or
issuable in connection with the Dilutive Issuance. Such adjustment shall
be made
whenever such Common Stock or Common Stock Equivalents are issued. The Company
shall notify the Holder in writing, no later than the Trading Day following
the
issuance of any Common Stock or Common Stock Equivalents subject to this
section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms (such
notice the “Dilutive
Issuance Notice”).
For
purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
entitled to receive a number of Warrant Shares based upon the Base Share
Price
regardless of whether the Holder accurately refers to the Base Share Price
in
the Notice of Exercise.
c)
Pro
Rata Distributions.
If the
Company, at any time prior to the Termination Date, shall distribute to all
holders of Common Stock (and not to Holders of the Warrants) evidences of
its
indebtedness or assets or rights or warrants to subscribe for or purchase
any
security other than the Common Stock, then in each such case the Exercise
Price
shall be adjusted by multiplying the Exercise Price in effect immediately
prior
to the record date fixed for determination of stockholders entitled to receive
such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair market
value
at such record date of the portion of such assets or evidence of indebtedness
so
distributed applicable to one
6
outstanding
share of the Common Stock as determined by the Board of Directors in good
faith.
In either case the adjustments shall be described in a statement provided
to the
Holders of the portion of assets or evidences of indebtedness so distributed
or
such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become
effective immediately after the record date mentioned above.
d)
Calculations.
All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not includes shares of Common Stock
owned or held by or for the account of the Company, and the description of
any
such shares of Common Stock shall be considered on issue or sale of Common
Stock. 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.
e)
Notice
to Holders.
i.
Adjustment
to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
shall promptly mail to each Holder a notice setting forth the Exercise Price
after such adjustment 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) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend
on or
a redemption of the Common Stock; (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with
any reclassification of the Common Stock, any consolidation or merger to
which
the Company is a party, any sale or transfer of all or substantially all
of the
assets of the Company, of any compulsory share exchange whereby the Common
Stock
is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of
the affairs of the Company; then, in each case, the Company shall cause to
be
mailed to the Holder at its last addresses as it shall appear upon the Warrant
Register of the Company, at least 10 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the
date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and
the
date as of which it is
7
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. The Holder is entitled to exercise this Warrant during the
10-day period commencing the date of such notice to the effective date of
the
event triggering such notice.
f)
Reorganizations,
Etc.
In case,
at any time during the Exercise Period, of any capital reorganization, of
any
reclassification of the stock of the Company (other than a change in par
value
or from par value to no par value or from no par value to par value or as
a
result of a stock dividend or subdivision, split-up or combination of shares),
or the consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
operation and which does not result in any change or reclassification in
the
Warrant Shares) or of the sale of all or substantially all the properties
and
assets of the Company as an entirety to any other corporation, the Company,
at
its sole discretion, shall have the right and option to (A) provide 10 days
prior written notice of such event to the Holder and this Warrant shall
terminate and be of no further force and effect on and after the effective
date
of such capital reorganization or reclassification or the consummation of
such
consolidation, sale or merger; or (B) provide that this Warrant shall, after
such reorganization, reclassification, consolidation, merger or sale, be
exercisable for the kind and number of shares of stock or other securities
or
property of the Company or of the corporation resulting from such consolidation
or surviving such merger or to which such properties and assets shall have
been
sold to which such holder would have been entitled if he, she or it had held
the
Warrant Shares issuable upon the exercise hereof immediately prior to such
reorganization, reclassification, consolidation, merger or sale.
g)
Exempt
Issuance.
Notwithstanding the foregoing, no adjustments, nor notices shall be made,
paid
or issued under this Section 3 in respect of an Exempt Issuance.
h)
Voluntary
Adjustment By Company.
The
Company may at any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate
by
the Board of Directors of the Company.
Section
4.
Transfer
of Warrant.
a)
Transferability.
Subject
to compliance with any applicable securities laws and the conditions set
forth
in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of
the
Purchase Agreement, this Warrant and all rights hereunder are transferable,
in
whole or in part, upon surrender of this Warrant at the principal office
of the
Company, 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
8
and,
if
required, such payment, the Company shall execute and deliver a new Warrant
or
Warrants in the name of the assignee or assignees 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. A Warrant, if properly assigned,
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.
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.
d)
Transfer
Restrictions.
If,
at the time
of the surrender of this Warrant in connection with any transfer of this
Warrant, the transfer of this Warrant shall not be registered pursuant to
an
effective registration
statement under the Securities Act
and under
applicable state securities or blue sky laws, the Company may require, as
a
condition of allowing such transfer (i) that the Holder or transferee of
this
Warrant, as the case may be, furnish to the Company a written opinion of
counsel
(which opinion shall be in form, substance and scope customary for opinions
of
counsel in comparable transactions) to the effect that such transfer may
be made
without
registration under
the
Securities Act and under applicable state securities or blue sky laws, (ii)
that
the holder or transferee execute and deliver to the Company an investment
letter
in form and substance acceptable to the Company and (iii) that the transferee
be
an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a qualified institutional buyer as
defined in Rule 144A(a) under the Securities Act.
Section
5.
Miscellaneous.
a)
Title
to Warrant.
Prior
to the Termination Date and subject to compliance with applicable laws and
Section 4 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company
by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed. The
transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.
b)
No
Rights as Shareholder Until Exercise.
This
Warrant does not entitle the Holder to any voting rights or other rights
as a
shareholder of the Company prior to
9
the
exercise hereof. Upon the surrender of this Warrant and the payment of the
aggregate Exercise Price (or by means of a cashless exercise), the Warrant
Shares so purchased shall be and be deemed to be issued to such Holder as
the
record owner of such shares as of the close of business on the later of the
date
of such surrender or payment.
c)
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.
d)
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 be a Saturday, Sunday or a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
e)
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 certificates for the 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.
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
(a) 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,
(b)
take all such action as may be necessary or appropriate in order that the
Company
10
may
validly and legally issue fully paid and nonassessable Warrant Shares upon
the
exercise of this Warrant, and (c) 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.
f)
Jurisdiction.
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of
the
Purchase Agreement.
g)
Restrictions.
The
Holder acknowledges that the Warrant Shares acquired upon the exercise of
this
Warrant, if not registered, will have restrictions upon resale imposed by
state
and federal securities laws.
h)
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
Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. If the Company willfully 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 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 Holder in collecting any amounts due pursuant hereto
or
in otherwise enforcing any of its rights, powers or remedies
hereunder.
i)
Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
j)
Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant or purchase Warrant Shares, and no enumeration herein of the
rights
or privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
k)
Remedies.
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 the defense in any
action
for specific performance that a remedy at law would be adequate.
11
l)
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 of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all
Holders
from time to time of this Warrant and shall be enforceable by any such Holder
or
holder of Warrant Shares.
m)
Amendment.
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
n)
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.
o)
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.
********************
12
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.
Dated:
July 13, 2005
| XENOMICS, INC. | ||
| |
|
|
| By: | ||
|
|
||
|
Name:
Title:
|
||
13
NOTICE
OF EXERCISE
TO:
XENOMICS,
INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full),
and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[
] in
lawful money of the United States; or
[
] 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 a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor.
The
undersigned is an “accredited investor” as defined in Regulation D promulgated
under the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of
Investing Entity:
____________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_____________________________________________________
Name
of
Authorized Signatory:
________________________________________________________________________
Title
of
Authorized Signatory:
_________________________________________________________________________
Date:
___________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
| Holder's Signature: | |||
| Holder's Address: | |||
Signature
Guaranteed: ___________________________________________
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
Exhibit
4.2
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS. THESE SECURITIES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.
| July 13, 2005 W-__ |
XENOMICS,
INC.
COMMON
STOCK WARRANT
THIS
CERTIFIES
that, for value received, __________ and its permitted transferees hereunder
(the “Holder”), is entitled to subscribe for and purchase from XENOMICS,
INC.,
a Florida corporation (the “Company”), up to _____ fully paid and nonassessable
shares (the “Warrant Shares”) of common stock, $.0001 par value, of the Company
(the “Common Stock”) at $3.25
per share (the “Warrant Price”) subject to adjustment as provided in Section 2
hereof, at any time or from time to time during the period (the “Exercise
Period”) commencing on the date hereof and ending on July 13, 2010.
SECTION
1. Exercise
of Warrant.
(a)
General.
This
Warrant may be exercised by the Holder as to the whole or any lesser number
of
the Warrant Shares covered hereby, upon surrender of this Warrant to the Company
at its principal executive office together with the Notice of Exercise attached
hereto as Exhibit A, duly completed and executed by the Holder, and
payment
to the Company of the aggregate Exercise Price for the Warrant Shares to be
purchased in the form of (i) a check made payable to the Company,
(ii) wire transfer according to the Company’s instructions or
(iii) any combination of (i) and (ii). The exercise of this Warrant
shall
be deemed to have been effected on the day on which the Holder surrenders this
Warrant to the Company and satisfies all of the requirements of this
Section 1. Upon such exercise, the Holder will be deemed a shareholder
of
record of those Warrant Shares for which the warrant has been exercised with
all
rights of a shareholder (including, without limitation, all voting rights with
respect to such Warrant Shares and all rights to receive any dividends with
respect to such Warrant Shares). If this Warrant is to be exercised in respect
of less than all of the Warrant Shares covered hereby, the Holder shall be
entitled to receive a new warrant covering the number of Warrant Shares in
respect of which this Warrant shall not have been exercised and for which it
remains subject to exercise. Such new warrant shall be in all other respects
identical to this Warrant.
(b)
Net
Issue Exercise.
In lieu
of exercising this Warrant via cash payment, the Holder may elect to receive
shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with a Notice of Exercise duly executed and completed indicating
payment pursuant to this Section 1(b), in which event the Company shall issue
to
the Holder a number of shares of Common Stock of the Company computed using
the
following formula:
X
=
Y
(A -
B)
A
|
Where
|
X
|
=
|
the
number of Warrant Shares to be issued to the
Holder.
|
|
Y
|
=
|
the
number of Warrant Shares purchasable under this Warrant or, if only
a
portion of the Warrant is being exercised, the portion of the Warrant
being cancelled (at the date of such
calculation).
|
|
A
|
=
|
the
Fair Market Value (as defined below) of one Warrant Share (at the
date of
such calculation).
|
|
B
|
=
|
the
Exercise Price (as adjusted to the date of such
calculation).
|
If
the
above calculation results in a negative number, then no shares of Common Stock
shall be issued or issuable upon conversion of this Warrant.
(c)
Fair
Market Value.
For
purposes of this Section 1, the Fair Market Value of one Warrant Share
shall be determined by the Company’s Board of Directors in good faith; provided,
however, that where there exists a public market for the Common Stock at the
time of such exercise, the fair market value per Warrant Share shall be the
average of the closing bid and asked prices of the Common Stock quoted in the
Over-The-Counter Market Summary or the last reported sale price of the Common
Stock or the closing price quoted on the Nasdaq National Market or on any
exchange on which the Common Stock is listed, whichever is applicable, as
published in The
Wall Street Journal
for the
five trading days prior to the date of determination of Fair Market
Value.
SECTION
2. Adjustment
of Warrant Price.
If,
at
any time during the Exercise Period, the number of outstanding shares of Common
Stock is (i) increased by a stock dividend payable in shares of Common Stock
or
by a subdivision or split of shares of such class of Common Stock, or (ii)
decreased by a combination or reverse split of shares of Common Stock, then,
following the record date fixed for the determination of holders of Common
Stock
entitled to receive the benefits of such stock dividend, subdivision, split-up,
reverse split-up or combination, the Warrant Price shall be proportionately
reduced, in the case of an increase in shares of Common Stock outstanding,
or
proportionately increased, in the case of a decrease in shares of Common Stock
outstanding, in both cases by the ratio which the total number of shares of
Common Stock to be outstanding immediately after such event bears to the total
number of shares of Common Stock outstanding immediately prior to such
event.
SECTION
3. Adjustment
of Warrant Shares.
Upon
each
adjustment of the Warrant Price as provided in Section 2, the Holder shall
thereafter be entitled to subscribe for and purchase, at the Warrant Price
resulting from such adjustment, the number of Warrant Shares equal to the
product of (i) the number of Warrant Shares existing prior to such adjustment
and (ii) the quotient obtained by dividing (A) the Warrant Price existing prior
to such adjustment by (B) the new Warrant Price resulting from such adjustment.
No fractional shares of capital stock of the Company shall be issued as a result
of any such adjustment, and any fractional shares resulting
from
the
computations pursuant to this paragraph shall be eliminated without
consideration.
SECTION
4. No
Shareholder Rights.
This
Warrant shall not entitle the holder hereof to any voting rights or other rights
as a shareholder of the Company.
SECTION
5. Covenant
of the Company.
The
Company covenants and agrees that the Company shall at all times have authorized
and reserved or shall authorize and reserve, free from preemptive rights, a
sufficient number of shares of its Common Stock to provide for the exercise
of
the rights represented by this Warrant.
SECTION
6. Investment
Representations and Warranties.
The
Holder hereby represents and warrants to the Company as follows:
(a)
The
Holder is acquiring the Warrant, and it will acquire the Common Stock issuable
upon exercise thereof, for its own account, for investment and not with a view
to the distribution thereof, nor with any present intention of distributing
the
same. The Holder understands that the Warrant and Common Stock issuable upon
exercise thereof, will not be registered under the Act or registered or
qualified under any state securities or “blue-sky” laws, by reason of their
issuance in a transaction exempt from the registration and/or qualification
requirements thereof, and that they must be held indefinitely unless a
subsequent disposition thereof is registered under the Act or registered or
qualified under any applicable state securities or “blue-sky” laws or is exempt
from registration and/or qualification.
(b)
The
Holder understands that the exemption from registration afforded by Rule 144
(the provisions of which are known to the Holder) promulgated under the Act
depends on the satisfaction of various conditions and that, if applicable,
Rule
144 may only afford the basis for sales under certain circumstances only in
limited amounts.
(c)
The
Holder has no need for liquidity in its investment in the Company, and is able
to bear the economic risk of such investment for an indefinite period and to
afford a complete loss thereof.
(d)
The
Holder is an “accredited purchaser” as such term is defined in Rule 501 (the
provisions of which are known to the Holder) promulgated under the
Act.
SECTION
7. Restrictions
on Transfer.
The
Holder of this Warrant by acceptance hereof agrees that the transfer of this
Warrant and the shares of Common Stock issuable upon exercise of this Warrant
are subject to the following provisions:
(a)
General.
Subject
to the requirements of the Act or any applicable state securities laws, the
Holder may sell, assign, transfer or otherwise dispose of all or any portion
of
the Warrants or the Warrant Shares acquired upon any exercise hereof at any
time
and from time to time. Upon the sale, assignment, transfer or other disposition
of all or any portion of the Warrants, Holder shall deliver to the Company
a
written notice of such in the form attached hereto as Exhibit
B,
duly
executed by Holder, which includes the identity and address of any purchaser,
assignor or transferee.
(b)
Restrictive
Legend.
Each certificate for Warrant Shares held by the Holder
and each certificate for any such securities issued to subsequent transferees
of
any such certificate shall be stamped or otherwise imprinted with legends in
substantially the following form:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”) OR ANY RELEVANT STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS”.
(c)
Indemnification.
Holder
acknowledges that he, she or it understands the meaning and legal consequences
of the representations, warranties and acknowledgments he, she or it has made
in
Section 7 and elsewhere in this Warrant and he, she or it understands that
the
Company is relying upon the truth and accuracy thereof. Accordingly, the Holder
hereby agrees to indemnify and hold harmless the Company, its officers, agents
and representatives, from and against any and all loss, damage or liability
due
to or arising out of a breach of any representation or warranty of Holder
contained in this Warrant.
SECTION
8. Amendment.
The
terms and provisions of this Warrant may not be modified or amended, except
with
the written consent of the Company and the Holder.
SECTION
9. Reorganizations,
Etc.
In case,
at any time during the Exercise Period, of any capital reorganization, of any
reclassification of the stock of the Company (other than a change in par value
or from par value to no par value or from no par value to par value or as a
result of a stock dividend or subdivision, split-up or combination of shares),
or the consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
operation and which does not result in any change or reclassification in the
Warrant Shares) or of the sale of all or substantially all the properties and
assets of the Company as an entirety to any other corporation, the Company,
at
its sole discretion, shall have the right and option to (A) provide 10 days
prior written notice of such event to the Holder and this Warrant shall
terminate and be of no further force and effect on and after the effective
date
of such capital reorganization or reclassification or the consummation of such
consolidation, sale or merger; or (B) provide that this Warrant shall, after
such reorganization, reclassification, consolidation, merger or sale, be
exercisable for the kind and number of shares of stock or other securities
or
property of the Company or of the corporation resulting from such consolidation
or surviving such merger or to which such properties and assets shall have
been
sold to which such holder would have been entitled if he, she or it had held
the
Warrant Shares issuable upon the exercise hereof immediately prior to such
reorganization, reclassification, consolidation, merger or sale.
SECTION
10. Lost,
Stolen, Mutilated or Destroyed Warrant.
If
this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms
as to indemnity or otherwise as it may in its discretion impose (which shall,
in
the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated
or destroyed. Any such new Warrant shall constitute an original
contractual
obligation
of the Company, whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant shall be at any time enforceable by anyone.
SECTION
11. Notices.
All
notices, advices and communications to be given or otherwise made to any party
to this Agreement shall be deemed to be sufficient if contained in a written
instrument delivered in person or by telecopier or duly sent by first class
registered or certified mail, return receipt requested, postage prepaid, or
by
overnight courier, or by electronic mail, with a copy thereof to be sent by
mail
(as aforesaid) within 24 hours of such electronic mail, addressed to such party
at the address set forth below or at such other address as may hereafter be
designated in writing by the addressee to the addresser listing all
parties:
|
(a)
|
If
to the Company, to:
|
| Xenomics, Inc. | ||
| 420 Lexington Avenue, Suite 1701 | ||
| New York, New York 10170 | ||
| Attention: | V. Randy White, Ph.D. | |
| Chief Executive Officer | ||
and
|
(b)
|
If
to the Holder, to:
|
or
to
such other address as the party to whom notice is to be given may have furnished
to the other parties hereto in writing in accordance herewith. Any such notice
or communication shall be deemed to have been delivered and received (i) in
the
case of personal delivery or delivery by telecopier, on the date of such
deliver, (ii) in the case of nationally-recognized overnight courier, on the
next business day after the date when sent and (ii) in the case of mailing,
on
the third business day following that on which the piece of mail containing
such
communication is posted. As used in this Section 11, “business day” shall mean
any day other than a day on which banking institutions in the State of New
York
are legally closed for business.
SECTION
12. Binding
Effect on Successors.
Subject
to Section 9 hereof, this Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or
substantially all of the Company’s assets.
SECTION
13. Descriptive
Headings and Governing Law.
The
description headings of the several sections and paragraphs of this Warrant
are
inserted for convenience only and do not constitute a part of this Warrant.
This
Warrant shall be construed and enforced in accordance with, and the rights
of
the parties shall be governed by, the laws of the State of New York (without
giving effect to conflicts of law principles thereunder).
SECTION
14. Fractional
Shares.
No
fractional shares shall be issued upon exercise of this Warrant. The Company
shall, in lieu of issuing any fractional share, pay the holder entitled to
such
fraction a sum in cash equal to such fraction multiplied by the then effective
Warrant Price.
*
* *
IN
WITNESS WHEREOF,
the undersigned has caused this Common Stock Warrant to be executed by its
duly
authorized officer as of the date first above written.
| XENOMICS, INC. | ||
| |
|
|
| By: | ||
|
|
||
|
Name:
V. Randy White, Ph.D.
Title:
Chief Executive Officer
|
||
Exhibit
A
Form
of Subscription
NOTICE
OF EXERCISE
COMMON
STOCK WARRANT
To:
Xenomics,
Inc.
The
undersigned hereby:
1.
(a) elects to purchase _______ shares of Common Stock (“Common Stock”) of
Xenomics, Inc., a Florida corporation, (the “Company”) pursuant to the terms of
the attached Warrant, and tenders herewith payment of the aggregate exercise
price therefor and any transfer taxes payable pursuant to the terms of the
Warrant; or
2.
(b)
elects to exercise this Warrant for the purchase of ________ shares of the
Common Stock pursuant to the provisions of Section 1(b) of the attached
Warrant.
Please
issue a certificate or certificates representing said shares of Common Stock
in
the name of the undersigned or in such other name or names as are specified
below:
|
Name:
|
|||
| Address: | |||
IN
WITNESS WHEREOF, the Warrant Holder has executed this Notice of Exercise
effective this ___ day of ________, ______.
|
|
||
| (Signature) | ||
8
Exhibit
B
Form
of Assignment
[To
be signed only upon transfer of Warrant]
For
value received, the undersigned hereby sells, assigns and transfers unto the
right represented by the within Warrant to purchase _______ shares of Common
Stock of XENOMICS,
INC.,
to which the within Warrant relates, and appoints Attorney to transfer such
right on the books of XENOMICS,
INC.,
with full power of substitution in the premises.
| Dated: | ||
|
(Signature)
|
Signed
in the presence of:
______________________________
9
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of July 13, 2005, by and among Xenomics, Inc., a Florida corporation
(the “Company”),
and
the purchasers identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser”
and
collectively the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”)
and
Rule 506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company, securities of the Company as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agrees as
follows:
ARTICLE
I
DEFINITIONS
1.1
Definitions.
In
addition to the terms defined elsewhere in this Agreement: (a) capitalized
terms
that are not otherwise defined herein have the meanings given to such terms
in
the Certificate of Designation (as defined herein), and (b) the following terms
have the meanings indicated in this Section 1.1:
“Action”
shall
have the meaning ascribed to such term in Section 3.1(j).
“Actual
Minimum”
means,
as of any date, the maximum aggregate number of shares of Common Stock then
issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon exercise or conversion
in full of all Warrants and shares of Preferred Stock, ignoring any conversion
or exercise limits set forth therein, and assuming that any previously
unconverted shares of Preferred Stock are held until the second anniversary
of
the date of determination and all dividends are paid in shares of Common Stock
until such second anniversary.
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
“Articles
of Amendment” means
the
Articles of Amendment Designating Series A Convertible Preferred Stock to be
filed prior to the Closing by the Company with the Secretary of State of
Florida, in the form of Exhibit
A
attached
hereto.
“Closing”
means
the closing of the purchase and sale of the Securities pursuant to Section
2.1.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to
(i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities have been satisfied or
waived.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $.0001 per share, and any securities
into which such common stock shall hereinafter have been reclassified
into.
“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, rights, options, warrants or other instrument that is
at
any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
“Company
Counsel”
means
Sichenzia Ross Friedman Ference LLP.
“Conversion
Price”
shall
have the meaning ascribed to such term in the Articles of
Amendment.
“Disclosure
Schedules”
shall
have the meaning ascribed to such term in Section 3.1 hereof.
“Effective
Date”
means
the date that the initial Registration Statement filed by the Company pursuant
to the Registration Rights Agreement is first declared effective by the
Commission.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options to employees, officers
or
directors of the Company pursuant to any stock or option plan duly adopted
by a
majority of the non-employee members of the Board of Directors of the Company
or
a majority of the members of a committee of non-employee directors established
for such purpose, (b) securities upon the exercise of or conversion of any
securities issued hereunder, convertible securities, options or warrants issued
and outstanding on the date of this Agreement, provided that such securities
have not been amended since the date of this Agreement to increase the number
of
such securities, and (c) securities issued pursuant to acquisitions or strategic
transactions, provided any such issuance shall only be to a Person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the
2
Company
receives benefits in addition to the investment of funds, but shall not include
a transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing
in securities.
“GAAP”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Liens”
means a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Material
Adverse Effect”
shall
have the meaning assigned to such term in Section 3.1(b).
“Material
Permits”
shall
have the meaning ascribed to such term in Section 3.1(m).
“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.
“Preferred
Stock”
means
the up to 277,100 shares of the Company’s Series A Convertible Preferred Stock
issued hereunder having the rights, preferences and privileges set forth in
the
Certificate of Designation.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated the date hereof, among the Company
and
the Purchasers, in the form of Exhibit
B
attached
hereto.
“Registration
Statement”
means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale of the Underlying Shares by each
Purchaser as provided for in the Registration Rights Agreement.
“Required
Approvals”
shall
have the meaning ascribed to such term in Section 3.1(e).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means
the Preferred Stock, the Warrants and the Underlying Shares.
3
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Shareholder
Approval”
means
such approval as may be required by the applicable rules and regulations of
the
Trading Market (or any successor entity) from the shareholders of the Company
with respect to the transactions contemplated by the Transaction Documents,
including the issuance of all of the Underlying Shares and shares of Common
Stock issuable upon exercise of the Warrants in excess of 19.99% of the issued
and outstanding Common Stock on the Closing Date.
“Stated
Value”
means
$10 per share of Preferred Stock.
“Subscription
Amount”
shall
mean, as to each Purchaser, the amount to be paid for the Preferred Stock
purchased hereunder as specified below such Purchaser's name on the signature
page of this Agreement and next to the heading “Subscription Amount”, in United
States Dollars and in immediately available funds.
“Subsequent
Financing”
shall have the meaning ascribed to such term in Section 4.13.
“Subsidiary”
means
any subsidiary of the Company as set forth on Schedule
3.1(a).
“Trading
Day”
means a
day on which the Common Stock is traded on a Trading Market.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Over-The-Counter Bulletin Board, the
Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange
or the Nasdaq National Market.
“Transaction
Documents”
means
this Agreement, the Certificate of Designation, the Warrants, the Registration
Rights Agreement and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“Underlying
Shares”
means
the shares of Common Stock issuable upon conversion of the Preferred Stock,
upon
exercise of the Warrants and issued and issuable in lieu of the cash payment
of
dividends on the Preferred Stock.
“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 Financial L.P. (based on a
Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if
the
Common Stock is not then listed or quoted on a Trading Market and if prices
for
the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on the OTC Bulletin Board; (c) if the Common
4
Stock
is
not then listed or quoted on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by the Pink Sheets, LLC
(or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported;
or
(c) 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 Purchasers
and reasonably acceptable to the Company.
“Warrants”
means
collectively the Common Stock purchase warrants, in the form of Exhibit C
delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable immediately and have a term of
exercise equal to 5 years.
“Warrant
Shares”
means
the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
II
PURCHASE
AND SALE
2.1
Closing.
On the
Closing Date, upon the terms and subject to the conditions set forth herein,
concurrent with the execution and delivery of this Agreement by the parties
hereto, the Company agrees to sell, and each Purchaser agrees to purchase in
the
aggregate, severally and not jointly, up to $2,771,000 of shares of Preferred
Stock with an aggregated Stated Value equal to such Purchaser’s Subscription
Amount and Warrants as determined by pursuant to Section 2.2(a)(iii). The
aggregate number of shares of Preferred Stock sold hereunder shall be up to
277,100. Each
Purchaser shall deliver to the Company via wire transfer or a certified check
immediately available funds equal to their Subscription Amount and the Company
shall deliver to each Purchaser their respective shares of Preferred Stock
and
Warrants as determined pursuant to Section 2.2(a) and the other items set forth
in Section 2.2 issuable at the Closing. Upon satisfaction of the conditions
set
forth in Section 2.2, the Closing shall occur at the offices of Company Counsel,
or such other location as the parties shall mutually agree.
2.2
Deliveries.
|
a)
|
On
the Closing Date, the Company shall deliver or cause to be delivered
to
each Purchaser the following:
|
|
(i)
|
this
Agreement duly executed by the
Company;
|
|
(ii)
|
a
certificate evidencing a number of shares of Preferred Stock equal
to such
Purchaser’s Subscription Amount divided by the Stated Value, registered in
the name of such Purchaser;
|
|
(iii)
|
a
Warrant registered in the name of such Purchaser to purchase up to
a
number of shares of Common Stock equal to 30% of such Purchaser’s
Subscription Amount divided by the Conversion Price
|
5
| immediately prior to the Closing Date, with an exercise price equal to $3.25, subject to adjustment therein; |
|
(iv)
|
the
Registration Rights Agreement duly executed by the Company;
|
|
(v)
|
a
legal opinion of Company Counsel, in the form of Exhibit
D
attached hereto; and
|
|
(vi)
|
a
certificate, dated the Closing Date, duly executed by an officer
of the
Company to the effect that the conditions specified in Sections 2.3(b)(i)
and 2.3(b)(ii) have been satisfied.
|
|
b)
|
On
the Closing Date, each Purchaser shall deliver or cause to be delivered
to
the Company the following:
|
|
(i)
|
this
Agreement duly executed by such
Purchaser;
|
|
(ii)
|
such
Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company;
and
|
|
(iii)
|
the
Registration Rights Agreement duly executed by such
Purchaser.
|
2.3
Closing Conditions.
|
a)
|
The
obligations of the Company hereunder in connection with the Closing
are
subject to the following conditions being
met:
|
|
(i)
|
the
accuracy in all material respects when made and on the Closing Date
of the
representations and warranties of the Purchasers contained
herein;
|
|
(ii)
|
all
obligations, covenants and agreements of the Purchasers required
to be
performed at or prior to the Closing Date shall have been performed;
and
|
|
(iii)
|
the
delivery by the Purchasers of the items set forth in Section 2.2(b)
of
this Agreement.
|
|
b)
|
The
respective obligations of the Purchasers hereunder in connection
with the
Closing are subject to the following conditions being
met:
|
|
(i)
|
the
accuracy in all material respects when made and on the Closing Date
of the
representations and warranties of the Company contained
herein;
|
|
(ii)
|
all
obligations, covenants and agreements of the Company required
|
6
| to be performed at or prior to the Closing Date shall have been performed; |
|
(iii)
|
the
delivery by the Company of the items set forth in Section 2.2(a)
of this
Agreement;
|
|
(iv)
|
there
shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and
|
|
(v)
|
From
the date hereof to the Closing Date, trading in the Common Stock
shall not
have been suspended by the Commission (except for any suspension
of
trading of limited duration agreed to by the Company, which suspension
shall be terminated prior to the Closing), and, at any time prior
to the
Closing Date, trading in securities generally as reported by Bloomberg
Financial Markets shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are
reported by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New
York
State authorities nor shall there have occurred any material outbreak
or
escalation of hostilities or other national or international calamity
of
such magnitude in its effect on, or any material adverse change in,
any
financial market which, in each case, in the reasonable judgment
of each
Purchaser, makes it impracticable or inadvisable to purchase the
Preferred
Stock at the Closing.
|
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1
Representations
and Warranties of the Company.
Except
as set forth under the corresponding section of the disclosure schedules
delivered to the Purchasers concurrently herewith (the “Disclosure
Schedules”)
which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
the
representations and warranties set forth below to each Purchaser.
(a)
Subsidiaries.
All of
the direct and indirect subsidiaries of the Company are set forth on
Schedule
3.1(a).
Except
as set forth on Schedule
3.1(a),
the
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued
and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b)
Organization
and Qualification.
Each of
the Company and the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as
7
applicable),
with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Neither the Company nor
any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or financial condition of the Company and the Subsidiaries, taken
as a
whole, or (iii) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”)
and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(c)
Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company in connection therewith other than in
connection with the Required Approvals. Each Transaction Document has been
(or
upon delivery will have been) duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with
its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
(d)
No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the other transactions contemplated
thereby do not and will not: (i) conflict with or violate any provision of
the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any
of
the properties or assets of the Company or any Subsidiary, or give to others
any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which
any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any
8
court
or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which
any
property or asset of the Company or a Subsidiary is bound or affected; except
in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.
(e)
Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) filings required pursuant to Section
4.6,
(ii) the filing with the Commission of the Registration Statement, (iii) the
notice and/or application(s) to each applicable Trading Market for the issuance
and sale of the Preferred Stock and Warrants and the listing of the Underlying
Shares for trading thereon in the time and manner required thereby, (iv) the
filing of Form D with the Commission and such filings as are required to be
made
under applicable state securities laws and (vi) the approvals set forth on
Schedule
3.1(e)
(collectively, the “Required
Approvals”).
(f)
Issuance
of the Securities.
The
Preferred Stock and the Underlying Shares are duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will
be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for
in
the Transaction Documents. The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance of the Underlying
Shares at least equal to the Actual Minimum on the date hereof. The Company
has
not, and to the knowledge of the Company, no Affiliate of the Company has sold,
offered for sale or solicited offers to buy or otherwise negotiated in respect
of any security (as defined in Section 2 of the Securities Act) that would
be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers, or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading
Market.
(g)
Capitalization.
The
capitalization of the Company is as described in the Company’s most recent
report filed with the Commission. Except as set forth on Schedule 3.1(g), the
Company has not issued any capital stock since such filing other than pursuant
to the employee stock option plan. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate
in
the transactions contemplated by the Transaction Documents which shall not
have
been waived prior to Closing. Except as disclosed in the Company’s reports filed
with the Commission, issued pursuant to the Company’s stock incentive plan or as
a result of the purchase and sale of the Securities, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts,
9
commitments,
understandings
or arrangements by which the Company or any Subsidiary is or may become bound
to
issue additional shares of Common Stock, or securities or rights convertible
or
exchangeable into shares of Common Stock. The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities, except as set forth on Schedule
3.1(g).
No
further approval or authorization of any stockholder, the Board of Directors
of
the Company or others is required for the issuance and sale of the shares of
Preferred Stock.
(h)
SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto, being collectively referred to herein as the
“SEC
Reports”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As
of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i)
Material
Changes.
Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports, (i) there has
been
no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent
with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or
10
required
to be disclosed in filings made with the Commission, (iii) the Company has
not
altered its method of accounting, (iv) the Company has not declared or made
any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares
of
its capital stock and (v) the Company has not issued any equity securities
to
any officer, director or Affiliate, except pursuant to existing Company stock
option plan or restricted stock plan. The Company does not have pending before
the Commission any request for confidential treatment of
information.
(j)
Litigation.
Except
as set forth in SEC Reports, there is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any
of
their respective properties before or by any court, arbitrator, governmental
or
administrative agency or regulatory authority (federal, state, county, local
or
foreign) (collectively, an “Action”)
which
(i) adversely affects or challenges the legality, validity or enforceability
of
any of the Transaction Documents or the Securities or (ii) could, if there
were
an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving a claim
of
violation of or liability under federal or state securities laws or a claim
of
breach of fiduciary duty. There has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer
of
the Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act.
(k)
Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company which could reasonably
be
expected to result in a Material Adverse Effect.
(l)
Compliance.
Except
as set forth in the SEC Reports or on Schedule 3.1(l), neither the Company
nor
any Subsidiary (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under), nor has
the
Company or any Subsidiary received notice of a claim that it is in default
under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any
of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute, rule
or
regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws applicable to its business except in
each
case as could not have a Material Adverse Effect.
(m)
Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as
11
described
in the SEC Reports, except where the failure to possess such permits could
not
have or reasonably be expected to result in a Material Adverse Effect
(“Material
Permits”),
and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(n)
Title
to Assets.
Except
as set forth on Schedule
3.1(n),
the
Company and the Subsidiaries have good and marketable title in fee simple to
all
real property owned by them that is material to the business of the Company
and
the Subsidiaries and good and marketable title in all personal property owned
by
them that is material to the business of the Company and the Subsidiaries,
in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the
use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries
are
held by them under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in compliance.
(o)
Patents
and Trademarks.
The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material
for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual
Property Rights”).
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates
or
infringes upon the rights of any Person. To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights of
others.
(p)
Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged. To the best of Company’s knowledge, such insurance contracts and
policies are accurate and complete. Neither the Company nor any Subsidiary
has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(q)
Transactions
With Affiliates and Employees.
Except
as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such
12
employee
or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner, in each case in excess of $60,000 other than (i) for payment
of salary or consulting fees for services rendered, (ii) reimbursement for
expenses incurred on behalf of the Company and (iii) for other employee
benefits, including stock option agreements under any stock option plan of
the
Company and restricted stock agreements under any restricted stock plan of
the
Company.
(r)
Sarbanes-Oxley;
Internal Accounting Controls.
Except
as set forth in the SEC Reports, the Company is in material compliance with
all
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as
of
the Closing Date. The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general
or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(s)
Certain
Fees.
No
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement, except as set forth on Schedule
3.1(s).
The
Purchasers shall have no obligation with respect to any fees or with respect
to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
(t)
Private
Placement.
Assuming the accuracy of the Purchasers representations and warranties set
forth
in Section 3.2, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does
not
contravene the rules and regulations of the Trading Market.
(u)
Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the shares of Preferred Stock, will not be or be an Affiliate of,
an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(v)
Listing
and Maintenance Requirements.
The
Company’s Common Stock is registered pursuant to Section 15(d) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification
that
the Commission is contemplating terminating such registration. The Company
has
not, in the 12 months preceding the date hereof,
13
received
notice from any Trading Market on which the Common Stock is or has been listed
or quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is, and has
no
reason to believe that it will not in the foreseeable future continue to be,
in
compliance with all such listing and maintenance requirements.
(w)
Disclosure.
The
Company understands and confirms that the Purchasers will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, furnished by or on behalf of the Company with
respect to the representations and warranties made herein are true and correct
with respect to such representations and warranties and do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2 hereof.
(x)
No
Integrated Offering.
Assuming
the accuracy of the Purchasers’ representations and warranties set forth in
Section 3.2, neither the Company, nor any of its affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers
or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to be integrated
with prior offerings by the Company for purposes of the Securities Act or any
applicable shareholder approval provisions, including, without limitation,
under
the rules and regulations of any exchange or automated quotation system on
which
any of the securities of the Company are listed or designated.
(y)
Tax
Status.
Except
for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and the Company has no knowledge of a tax deficiency which has been asserted
or
threatened against the Company or any Subsidiary.
(z)
No
General Solicitation.
Neither
the Company nor any person acting on behalf of the Company has offered or sold
any of the Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only to the
Purchasers and certain other “accredited investors” within the meaning of Rule
501 under the Securities Act.
(aa) Foreign
Corrupt Practices.
Neither
the Company, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made
any
14
unlawful
payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii)
failed to disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended
(bb) Accountants.
The
Company’s accountants are set forth on Schedule
3.1(cc)
of the
Disclosure Schedule. To the Company’s knowledge, such accountants are a
registered public accounting firm as required by the Securities
Act.
(cc) No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the accountants and lawyers formerly or
presently employed by the Company and the Company is current with respect to
any
fees owed to its accountants and lawyers.
(dd) Acknowledgment
Regarding Purchasers’ Purchase of Securities.
The
Company acknowledges and agrees that each of the Purchasers is acting solely
in
the capacity of an arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of
the Company (or in any similar capacity) with respect to this Agreement and
the
transactions contemplated hereby and any advice given by any Purchaser or any
of
their respective representatives or agents in connection with this Agreement
and
the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
that the Company’s decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives. The Company further understands and
acknowledges that (a) one or more Purchasers may engage in hedging activities
at
various times during the period that the Securities are outstanding, including,
without limitation, during the periods that the value of the Underlying Shares
deliverable with respect to Securities are being determined and that such
hedging activities will be done in accordance with all applicable laws, rules
and regulations and (b) such hedging activities (if any) could reduce the value
of the existing stockholders' equity interests in the Company at and after
the
time that the hedging activities are being conducted.
3.2
Representations
and Warranties of the Purchasers.Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
(a)
Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations thereunder. The execution, delivery and performance by
such
15
Purchaser
of the transactions contemplated by this Agreement have been duly authorized
by
all necessary corporate or similar action on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except (i)
as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
(b)
Purchaser
Representation.
Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part
thereof, has no present intention of distributing any of such Securities and
has
no arrangement or understanding with any other persons regarding the
distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement
or
understanding, directly or indirectly, with any Person to distribute any of
the
Securities.
(c)
Purchaser
Status.
At the
time such Purchaser was offered the Securities, it was, and at the date hereof
it is, and on each date on which it exercises any Warrants, it will be either:
(i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the
Exchange Act.
(d)
Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
(e)
General
Solicitation.
Such
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(f)
Certain
Trading Activities.
Such Purchaser has not, directly or indirectly,
16
nor
has
any Person acting on behalf of or pursuant to any understanding with such
Purchaser, engaged in (i) any Short Sales (defined below) involving the
Company's securities during the 30 Trading Days immediately preceding the date
hereof or (ii) any transactions in any securities of the Company following
the
date on which such Purchaser was aware of this Transaction (other than this
Transaction); provided, however, that the restrictions contained in this Section
3.2(f) shall not apply after the date that the Company publicly discloses the
consummation of the transactions contemplated hereby. For purposes
of this
Section, "Short Sales" include, without limitation, all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps and similar arrangements
(including on a total return basis), and sales and other transactions
through non-US broker dealers or foreign regulated brokers having the effect
of
hedging the securities or investment made under this Agreement.
(g)
Material
Non-Public Information.
Such
Purchaser understands that any material non-public information provided to
such
Purchaser pursuant to a confidentiality agreement is preliminary and subject
to
change at any time prior to any public announcement, if any. Such Purchaser
acknowledges that there can be no assurance that the Company will consummate
or
execute any transaction or agreement disclosed to such Purchaser and considered
by the Company to be material non-public information. Such Purchaser hereby
represents that it is not entering into this Agreement solely on the basis
of
any material non-public information provided to such Purchaser.
The
Company acknowledges and agrees that each Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.2.
ARTICLE
IV
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a)
The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company
or
to an affiliate of a Purchaser or in connection with a pledge as contemplated
in
Section 4.1(b), the Company may require the transferor thereof to provide to
the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing
to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.
(b)
The
Purchasers agree to the imprinting, so long as is required by this Section
4.1(b), of a legend on any of the Securities substantially in the following
form:
17
[NEITHER]
THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[EXERCISABLE] [CONVERTIBLE]] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES
AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject
to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further,
no
notice shall be required of such pledge. At the appropriate Purchaser’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are subject
to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under
the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.
(c)
Certificates
evidencing the Underlying Shares shall not contain any legend (including the
legend set forth in Section 4.1(b) hereof): (i) while a registration statement
(including the Registration Statement) covering the resale of such security
is
effective under the Securities Act, or (ii) following any sale of such
Underlying Shares pursuant to Rule 144, or (iii) if such Underlying Shares
are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission).
The
Company shall cause its counsel to issue a legal opinion to the Company’s
transfer agent promptly after the Effective Date if required by the Company’s
transfer agent to effect the removal of the legend hereunder. If all or any
shares of
18
Preferred
Stock or any portion of a Warrant is converted or exercised (as applicable)
at a
time when there is an effective registration statement to cover the resale
of
the Underlying Shares, or if such Underlying Shares may be sold under Rule
144(k) or if such legend is not otherwise required under applicable requirements
of the Securities Act (including judicial interpretations thereof) then such
Underlying Shares shall be issued free of all legends. The Company agrees that
following the Effective Date or at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than five Trading Days
following the delivery by a Purchaser to the Company or the Company's transfer
agent of a certificate representing Underlying Shares, as applicable, issued
with a restrictive legend (such third Trading Day, the “Legend
Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing
such shares that is free from all restrictive and other legends. The Company
may
not make any notation on its records or give instructions to any transfer agent
of the Company that enlarge the restrictions on transfer set forth in this
Section.
(d)
Each
Purchaser, severally and not jointly with the other Purchasers, agrees that
the
removal of the restrictive legend from certificates representing Securities
as
set forth in this Section 4.1 is predicated upon the Company’s reliance that the
Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.
4.2
Acknowledgment
of Dilution.
The
Company acknowledges that the issuance of the Securities may result in dilution
of the outstanding shares of Common Stock, which dilution may be substantial
under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including without limitation its
obligation to issue the Underlying Shares pursuant to the Transaction Documents,
are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.
4.3
Furnishing
of Information.
As long
as any Purchaser owns Securities, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. As long as any Purchaser owns Securities, if
the
Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell
the
Securities under Rule 144. The Company further covenants that it will take
such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144.
4.4
Integration.
The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the
19
registration
under the Securities Act of the sale of the Securities to the Purchasers or
that
would be integrated with the offer or sale of the Securities for purposes of
the
rules and regulations of any Trading Market.
4.5
Conversion
and Exercise Procedures.
The
form of Notice of Exercise included in the Warrants and the Notice of Conversion
included in the Articles of Amendment set forth the totality of the procedures
required of the Purchasers in order to exercise the Warrants or convert the
Preferred Stock. No additional legal opinion or other information or
instructions shall be required of the Purchasers to exercise their Warrants
or
convert their Preferred Stock. The Company shall honor exercises of the Warrants
and conversions of the Preferred Stock and shall deliver Underlying Shares
in
accordance with the terms, conditions and time periods set forth in the
Transaction Documents.
4.6
Securities
Laws Disclosure; Publicity.
The
Company agrees that no later than one Trading Day after the Closing Date it
shall issue a press release announcing the Closing. Within four Trading Days
after the Closing Date, the Company shall issue a Current Report on Form 8-K
disclosing the material terms of the transactions contemplated hereby, and
shall
attach the Transaction Documents thereto. The Company and each Purchaser shall
consult with each other in issuing any other press releases with respect to
the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release
of
any Purchaser, or without the prior consent of each Purchaser, with respect
to
any press release of the Company, which consent shall not unreasonably be
withheld, 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.
4.7
Non-Public
Information.
The
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
4.8
Use
of
Proceeds.
Except
as set forth on Schedule
4.8
attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes.
4.9
Indemnification
of Purchasers.
Subject
to the provisions of this Section 4.9, the Company will indemnify and hold
the
Purchasers and their directors, officers, shareholders, partners, employees
and
agents (each, a “Purchaser
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses (collectively, “Losses”), including
all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in
this
Agreement or in the other Transaction Documents or (b) any action instituted
against a Purchaser, or any of them or their respective Affiliates, by
any
20
stockholder
of the Company who is not an Affiliate of such Purchaser, with respect to any
of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser’s representation, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right
to
assume the defense thereof with counsel of its own choosing. Any Purchaser
Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (i)
the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action the Purchaser Party
reasonable concludes that, either (x) one or more defenses are available to
the
Purchaser Party that are not available to the Company or (y) a conflict or
potential conflict exists between the Company, on the one hand, and such
Purchaser Party, on the other hand, that would make such separate representation
advisable. The Company will not be liable to any Purchaser Party under this
Agreement (i) for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by the Purchasers
in this Agreement or in the other Transaction Documents.
4.10
Contribution.
If the
indemnification provided for in this Article IV from the Company is unavailable
to a Purchaser Party hereunder in respect of any Losses referred to herein,
then
the Company, in lieu of indemnifying such Purchaser Party, shall contribute
to
the amount paid or payable by such Purchaser Party as a result of such Losses
in
such proportion as is appropriate to reflect the relative fault of the Company
and Purchaser Party in connection with the actions which resulted in such
Losses, as well as any other relevant equitable considerations. The relative
faults of the Company and such Purchaser Party shall be determined by reference
to, among other things, whether any action in question, including any untrue
or
alleged untrue statement of a material fact or omission or alleged omission
to
state a material fact, has been made by, or relates to information supplied
by,
the Company or such Purchaser Party, and the parties relative intent, knowledge,
access to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the Losses referred to above
shall be deemed to include any legal or other fees, charges or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
4.11
Reservation
and Listing of Securities.
The
Company shall maintain a reserve from its duly authorized shares of Common
Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction Documents.
21
4.12
Equal
Treatment of Purchasers.
No
consideration shall be offered or paid to any person to amend or consent to
a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. For clarification purposes, this provision constitutes
a
separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended to treat for the Company the
Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or
voting of Securities or otherwise.
4.13
Future
Financing.
(a)
For 180 days after the Closing, upon any financing by the Company or any of
its
Subsidiaries of Common Stock or Common Stock Equivalents (a “Subsequent
Financing”), all Purchasers in the aggregate shall have the right to participate
in the Subsequent Financing for an amount up to the lesser of the aggregated
Stated Value of all outstanding Preferred Stock and the full amount of the
Subsequent Financing (the “Participation Maximum”). At least 5 Trading Days
prior to the closing of the Subsequent Financing, the Company shall deliver
to
each Purchaser a written notice of its intention to effect a Subsequent
Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it wants
to review the details of such financing (such additional notice, a “Subsequent
Financing Notice”). Upon the request of a Purchaser, and only upon a request by
such Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
but no later than 1 Trading Day after such request, deliver a Subsequent
Financing Notice to such Purchaser. The Subsequent Financing Notice shall
describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder, the Person with whom
such Subsequent Financing is proposed to be effected, and attached to which
shall be a term sheet or similar document relating thereto. If by 5:30 p.m.
(New
York City time) on the 5th Trading Day after all of the Purchasers
have received the Pre-Notice, notifications by the Purchasers of their
willingness to participate in the Subsequent Financing (or to cause their
designees to participate) is, in the aggregate, less than the total amount
of
the Subsequent Financing, then the Company may effect the remaining portion
of
such Subsequent Financing on the terms and to the Persons set forth in the
Subsequent Financing Notice. If the Company receives no notice from a Purchaser
as of such 5th Trading Day, such Purchaser shall be deemed to have
notified the Company that it does not elect to participate. The Company must
provide the Purchasers with a second Subsequent Financing Notice, and the
Purchasers will again have the right of participation set forth above in this
Section 4.13, if the Subsequent Financing subject to the initial Subsequent
Financing Notice is not consummated for any reason on the terms set forth in
such Subsequent Financing Notice within 45 Trading Days after the date of the
initial Subsequent Financing Notice. In the event the Company receives responses
to Subsequent Financing Notices from Purchasers seeking to purchase more than
the aggregate amount of the Subsequent Financing, each such Purchaser shall
have
the right to purchase their Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” is the ratio of (x) the Subscription
Amount of Securities purchased by a participating Purchaser and (y) the sum
of
the aggregate Subscription Amount of all
22
participating
Purchasers. Notwithstanding the foregoing, this Section 4.13 shall not apply
in
respect of an Exempt Issuance or any public offering of securities of the
Company which result in gross proceeds to the Company of $5,000,0000 or
more.
(b)
Neither
the Company nor any of its Subsidiaries will offer any Subsequent Financings
prior to the Effectiveness Date (as defined in the Registration Rights
Agreement) of the Registration Statement and neither the Company nor any of
its
Subsidiaries will file a registration statement seeking to register additional
shares of common stock for resale (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable
in
connection with stock option or other bona fide
employee
benefit plans), until
180 days after the Effectiveness Date.
(c)
A Purchaser shall not have the right to participate in a Subsequent Financing,
pursuant to Section 4.13 or otherwise, to the extent that after giving effect
to
such participation, the Purchaser (together with the Purchaser’s affiliates),
would beneficially own in excess of 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to such
participation. Except as set forth in the preceding sentence, for purposes
of this Section 4.13(c), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act, it being acknowledged by Purchaser
that
the Company is not representing to Purchaser that such calculation is in
compliance with Section 13(d) of the Exchange Act and Purchaser is solely
responsible for any schedules required to be filed in accordance therewith.
To
the extent that the limitation contained in this Section 4.13 (c) applies,
the
determination of whether Purchaser can participate in a Subsequent Financing
(in
relation to other securities owned by the Purchaser) shall be in the sole
discretion of such Purchaser, and the submission of a notification by a
Purchaser of their willingness to participate in a Subsequent Financing shall
be
deemed to be such Purchaser’s determination of whether such Purchaser can
participate in a Subsequent Financing pursuant to this Section 4.13 (in relation
to other securities owned by such Purchaser), in each case subject to such
aggregate percentage limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. For purposes of this
Section 4.13(c), in determining the number of outstanding shares of Common
Stock, the Purchaser may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB,
as the case may be, (y) a more recent public announcement by the Company or
(z)
any other notice by the Company or the Company’s Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or
oral
request of the Purchaser, the Company shall within two Trading Days confirm
orally and in writing to the Purchaser 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 by the Purchaser or its affiliates since the date
as
of which such number of outstanding shares of Common Stock was reported. The
provisions of this Section 4.13(c) may be waived by the Purchaser upon, at
the
election of the Purchaser, not less than 61 days’ prior notice to the Company,
and the provisions of this Section 4.13 (c) shall continue to apply until such
61st day (or such later date, as determined by the Purchaser, as may
be specified in such notice of waiver).
23
ARTICLE
V
MISCELLANEOUS
5.1
Termination.
This
Agreement may be terminated by any Purchaser, by written notice to the other
parties, if the Closing has not been consummated on or before June 30, 2005;
provided that no such termination will affect the right of any party to sue
for
any breach by the other party (or parties).
5.2
Fees
and Expenses.
Except
as expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to
the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes
and
duties levied in connection with the issuance of any Securities.
5.3
Entire
Agreement.
The
Transaction Documents, together with the exhibits and schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
5.4
Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading
Day,
(b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth
on
the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.
5.5
Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each
Purchaser or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
24
5.6
Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
5.7
Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each Purchaser. Any Purchaser may assign any or all of its rights
under this Agreement and the Registration Rights Agreement to any Person to
whom
such Purchaser assigns or transfers any Securities, provided such transferee
agrees in writing to be bound, with respect to the transferred Securities,
by
the provisions hereof that apply to the “Purchasers”.
5.8
No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Section 4.9.
5.9 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced
in
accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively
in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect
to
the enforcement of any of 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 any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions
of
the Transaction Documents, 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 with the investigation, preparation and
prosecution of such action or proceeding.
25
5.10
Survival.
The
representations and warranties contained herein shall survive the Closing and
the delivery, exercise and/or conversion of the Securities, as applicable for
the applicable statue of limitations.
5.11
Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
5.12
Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
5.13
Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement
Securities.
5.14
Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Purchasers and the Company
will
be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
5.15
Independent
Nature of Purchasers’ Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out
of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an
26
additional
party in any proceeding for such purpose. Each Purchaser has been represented
by
its own separate legal counsel in their review and negotiation of the
Transaction Documents. The Company has elected to provide all Purchasers with
the same terms and Transaction Documents for the convenience of the Company
and
not because it was required or requested to do so by the
Purchasers.
[SIGNATURE
PAGE FOLLOWS]
27
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
XENOMICS,
INC.
|
Address
for Notice:
|
|||
|
|
||||
| By: | Xenomics, Inc. | |||
|
|
420
Lexington Avenue, Suite 1701
New
York, NY 10170
|
|||
|
Name:
V. Randy White, Ph.D.
Title:
Chief Executive Officer
|
||||
With
a
copy to (which shall not constitute notice):
Jeffrey
J. Fessler, Esq.
Sichenzia
Ross Friedman Ference LLP
1065
Avenue of the Americas
New
York,
New York 10018
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
28
[PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Investing Entity: __________________________
Signature
of Authorized Signatory of Investing Entity:
__________________________
Name
of
Authorized Signatory: _________________________
Title
of
Authorized Signatory: __________________________
Email
Address of Authorized Signatory:________________________________
Tax
ID
number of Investing Entity:__________________________________
Address
for Notice of Investing Entity:
Address
for Delivery of Securities for Investing Entity (if not same as
above):
Subscription
Amount:
Shares
of
Preferred Stock:
Warrant
Shares:
[SIGNATURE
PAGES CONTINUE]
29
Annex
A
CLOSING
STATEMENT
Pursuant
to the attached Securities Purchase Agreement, dated as of the date hereto,
the
purchasers shall purchase up to $_____ of Preferred Stock and Warrants from
Xenomics, Inc. (the “Company”).
All
funds will be disbursed in accordance with this Closing Statement.
Disbursement
Date: ___,
2005
|
I.
PURCHASE
PRICE
|
|
|
Gross
Proceeds to be Received
|
$
|
|
II.
DISBURSEMENTS
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Total
Amount Disbursed:
|
$
|
|
WIRE
INSTRUCTIONS:
|
|
|
To:
_____________________________________
|
|
|
To:
_____________________________________
|
30
Exhibit
10.2
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of July 13, 2005, among Xenomics, Inc., a Florida
corporation (the “Company”),
and
the purchasers signatory hereto (each such purchaser is a “Purchaser”
and all
such purchasers are, collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof among the Company and the Purchasers (the “Purchase
Agreement”).
The
Company and the Purchasers hereby agree as follows:
1.
Definitions
Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.
As used
in this Agreement, the following terms shall have the following
meanings:
“Advice”
shall
have the meaning set forth in Section 6(d).
“Effectiveness
Date”
means,
with respect to the initial Registration Statement required to be filed
hereunder, October 25, 2005 and, with respect to any additional Registration
Statements which may be required pursuant to Section 3(c), the 105th calendar
day following the date on which the Company first knows, or reasonably should
have known, that such additional Registration Statement is required hereunder;
provided,
however,
in the
event the Company is notified by the Commission that one of the above
Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement
shall be the fifth Trading Day following the date on which the Company is so
notified if such date precedes the dates required above.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(a).
“Event”
shall
have the meaning set forth in Section 2(b).
“Event
Date”
shall
have the meaning set forth in Section 2(b).
“Filing
Date” means, with respect to the initial Registration Statement required
hereunder, the 30th calendar day following the Closing Date and, with
respect to any additional Registration Statements which may be required pursuant
to Section 3(c), the 30th day following the date on which the Company
first knows, or reasonably should have known that such additional Registration
Statement is required hereunder.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c) hereof.
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c) hereof.
“Losses”
shall
have the meaning set forth in Section 5(a).
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities”
means,
as of the date in question, (i) all of the shares of Common Stock issuable
upon
conversion in full of the shares of Preferred Stock, (ii) all Warrant Shares,
(iii) any securities issued or issuable upon any stock split, dividend or other
distribution recapitalization or similar event with respect to the foregoing
and
(iv) any additional shares issuable in connection with any anti-dilution
provisions associated with the Preferred Stock and Warrants.
“Registration
Statement”
means
the registration statements required to be filed hereunder and any additional
registration statements contemplated by Section 3(c), including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
2.
Shelf
Registration
(a)
On or prior to each Filing Date, the Company shall prepare and file with the
Commission a “Shelf” Registration Statement covering the resale of the
Registrable Securities on such Filing Date for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall be
on
Form S-3 (except if the Company is not then eligible to register for resale
the
Registrable Securities on Form S-3, in which case such registration shall be
on
another appropriate form in accordance herewith) and shall contain (unless
otherwise directed by the Holders) substantially the “Plan
of Distribution”
attached hereto as Annex
A.
Subject
to the terms of this Agreement, the Company shall use its commercially
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof,
but
in any event prior to the applicable Effectiveness Date, and shall use its
commercially reasonable efforts to keep such Registration Statement continuously
effective under the Securities Act until the earliest of (i) the date that
is
two (2) years after the last day of the calendar month following the month
in
which the relevant Effective Date occurs, (ii) the date when the Holder may
sell
all Registrable Securities under Rule 144 without volume or other restrictions
or limits or (iii) the date the Holders no longer own any of the Registrable
Securities (the “Effectiveness
Period”).
The
Company shall immediately notify the Holders via facsimile or e-mail of the
effectiveness of the Registration Statement on the same day that the Company
receives notification of the effectiveness from the Commission.
(b)
If: (i) a Registration Statement is not filed on or prior to its Filing Date,
or
(ii) the Company fails to file with the Commission a request for acceleration
in
accordance with Rule 461 promulgated under the Securities Act, within five
Trading Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will
not
be “reviewed,” or not subject to further review, (iii) a Registration Statement
filed or required to be filed hereunder is not declared effective by the
Commission by its Effectiveness Date, or (iv) after the Effectiveness Date,
the
availability of the Registration and Prospectus is suspended for more than
60
days in any 12-month period (any such failure or breach being referred to as
an
“Event”,
and
for purposes of clause (i) or (iii) the date on which such Event occurs, or
for
purposes of clause (ii) the date on which such five Trading Day period is
exceeded being referred to as “Event
Date”),
then
in addition to any other rights the Holders may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of
each
such Event Date (if the applicable Event shall not have been cured by such
date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to
1%
of the aggregate purchase price paid by such Holder pursuant to the Purchase
Agreement for any Registrable Securities then held by such Holder. The partial
liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata
basis for any portion of a month prior to the cure of an Event.
3.
Registration
Procedures
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a)
Not
less
than four Trading Days prior to the filing of each Registration Statement or
any
related Prospectus or any amendment or supplement thereto (including any
document that
would
be
incorporated or deemed to be incorporated therein by reference), the Company
shall, (i) furnish to each Holder copies of all such documents proposed to
be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders, and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to conduct a reasonable investigation
within the meaning of the Securities Act. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable Securities shall
reasonably object in good faith, provided that, the Company is notified of
such
objection, including the substance of such objection, in writing no later than
two Trading Days after the Holders have been so furnished copies of such
documents. Each Holder, severally and not jointly agrees to furnish to the
Company a completed Questionnaire in the form attached to this Agreement as
Annex B (a “Selling
Holder Questionnaire”)
not
less than ten Trading Days prior to the Filing Date.
(b)
(i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of
this
Agreement), and as so supplemented or amended to be filed pursuant to Rule
424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to a Registration Statement or any amendment
thereto; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during the applicable
period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.
(c)
If
during
the Effectiveness Period, the number of Registrable Securities at any time
exceeds the number of shares of Common Stock then registered in a Registration
Statement, then the Company shall file as soon as reasonably practicable but
in
any case prior to the applicable Filing Date, an additional Registration
Statement covering the resale by the Holders of such additional Registrable
Securities.
(d)
Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (ii) through (vi) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as
promptly as reasonably possible (and, in the case of (i)(A) below, not less
than
five Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the
day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with
respect
to a Registration Statement or any post-effective amendment, when the same
has
become effective; (ii) of any request by the Commission or any other Federal
or
state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information; (iii) of the issuance
by
the Commission or any other federal or state governmental authority of any
stop
order suspending the effectiveness of a Registration Statement covering any
or
all of the Registrable Securities or the initiation of any Proceedings for
that
purpose; (iv) of the receipt by the Company of any notification with respect
to
the suspension of the qualification or exemption from qualification of any
of
the Registrable Securities for sale in any jurisdiction, or the initiation
or
threatening of any Proceeding for such purpose; (v) of the occurrence of any
event or passage of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any statement made
in
a Registration Statement or Prospectus or any document incorporated or deemed
to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus,
as
the case may be, it will not contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading; and (vi) the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes
may
be material and that, in the determination of the Company, makes it not in
the
best interest of the Company to allow continued availability of the Registration
Statement or Prospectus; provided that any and all of such information shall
remain confidential to each Holder until such information otherwise becomes
public, unless disclosure by a Holder is required by law; provided,
further,
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.
(e)
Use
its
commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.
(f)
Furnish
to each Holder, without charge, at its request, at least one conformed copy
of
each such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(g)
Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request in connection with
resales by the Holder of Registrable Securities. Subject to the terms of this
Agreement, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto, except after the giving
on
any notice pursuant to Section 3(d).
(h) Prior
to
any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale
by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax
in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.
(i) If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be
in
such denominations and registered in such names as any such Holders may
request.
(j) Upon
the
occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement
or
amendment, including a post-effective amendment, to a Registration Statement
or
a supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If
the Company notifies the Holders in accordance with clauses (ii) through (v)
of
Section 3(d) above to suspend the use of any Prospectus until the requisite
changes to such Prospectus have been made, then the Holders shall suspend use
of
such Prospectus. The Company will use its commercially reasonable efforts to
ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this
Section 3(j) to suspend the availability of a Registration Statement and
Prospectus, for a period not to exceed 75 days (which need not be consecutive
days) in any 12 month period.
(k) Comply
with all applicable rules and regulations of the Commission.
(l) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by
such
Holder and, if required by the Commission, the person thereof that has voting
and dispositive control over the Shares. During any periods that the Company
is
unable to meet its obligations hereunder with respect to the registration of
the
Registrable Securities solely because any Holder fails to furnish such
information within five Trading Days of the Company’s request, any
liquidated
damages that are accruing at such time as to such Holder only shall be tolled
and any Event that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is delivered to the
Company.
4.
Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The
fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
Trading Market on which the Common Stock is then listed for trading, and (B)
in
compliance with applicable state securities or Blue Sky laws reasonably agreed
to by the Company in writing (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination
of
the eligibility of the Registrable Securities for investment under the laws
of
such jurisdictions as requested by the Holders), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities), (iii) messenger, telephone and delivery expenses,
(iv)
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of
the
Registrable Securities on any securities exchange as required hereunder. In
no
event shall the Company be responsible for any broker or similar commissions
or
any legal fees or other costs of the Holders.
5.
Indemnification
(a)
Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, agents and employees of
each
of them, each Person who controls any such Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or
any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus
or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (i) such
untrue statements or omissions are based solely upon information regarding
such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and
expressly
approved in writing by such Holder expressly for use in a Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto (it being understood that the Holder has approved Annex
A
hereto for this purpose) or (ii) in the case of an occurrence of an event of
the
type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(d). The Company shall notify
the
Holders promptly of the institution, threat or assertion of any Proceeding
arising from or in connection with the transactions contemplated by this
Agreement of which the Company is aware.
(b)
Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, to the extent arising out of or based
solely upon: (x) such Holder's failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus,
or
any form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion
in
such Registration Statement or such Prospectus or (ii) to the extent that (1)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for
use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use
in
the Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or such form of Prospectus
or
in any amendment or supplement thereto or (2) in the case of an occurrence
of an
event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder
of
an outdated or defective Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Holder of the Advice contemplated in Section 6(d). In no event shall
the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation.
(c)
Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity
is
sought (the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and
only)
to
the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall reasonably believe
that a material conflict of interest is likely to exist if the same counsel
were
to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party,
the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of one separate counsel shall be at the expense
of the Indemnifying Party). The Indemnifying Party shall not be liable for
any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of
any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability on claims that are the subject matter of such
Proceeding.
(d)
Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in this Agreement, any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall
be
required
to contribute, in the aggregate, any amount in excess of the amount by which
the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud
by
such Holder.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6. Reports
Under Exchange Act.
With a
view to making available to the Holder the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the SEC that may
at
any time permit a Holder to sell Registrable Shares of the Company to the public
without registration, the Company agrees to:
|
(a)
|
Make
and keep public information available, as those terms are used in
SEC Rule
144, at all times;
|
|
(b)
|
File
with the SEC in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange
Act;
|
|
(c)
|
Furnish
to any Holder, so long as the Holder owns any Registrable Shares,
forthwith on request, (i) a written statement by the Company that
it has
complied with the reporting requirements of SEC Rule 144, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents
so
filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation
of
the SEC that permits the selling of any such securities without
registration; and
|
|
(d)
|
Undertake
any additional actions reasonably necessary to maintain the availability
of the use of Rule 144.
|
7.
Miscellaneous
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each other Holder or the Company, as the case may be,
in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
(b) Compliance.
Each
Holder, severally and not jointly, covenants and agrees that it will comply
with
the prospectus delivery requirements of the Securities Act as applicable to
it
in connection with sales of Registrable Securities pursuant to the Registration
Statement.
(c) Discontinued
Disposition.
Each
Holder, severally and not jointly, agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence
of
any event of the kind described in Section 3(d), such Holder will forthwith
discontinue disposition of such Registrable Securities under a Registration
Statement until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement, or until it is advised in
writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company will use its commercially reasonable efforts
to ensure that the use of the Prospectus may be resumed as promptly as it
practicable. The Company agrees and acknowledges that any periods during which
the Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section
2(b).
(d) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and each Holder of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to
the
rights of Holders and that does not directly or indirectly affect the rights
of
other Holders may be given by Holders of all of the Registrable Securities
to
which such waiver or consent relates; provided,
however,
that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(e) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be delivered as set forth in the Purchase Agreement.
(f) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of all of the Holders of the then-outstanding
Registrable Securities. Each Holder may assign their respective rights hereunder
in the manner and to the Persons as permitted under the Purchase
Agreement.
(g) No
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has entered, as of the date hereof,
nor
shall the Company or any of its subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities, that would
have the effect of impairing the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof.
(h) Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the
party
executing (or on whose behalf such signature is executed) the same with the
same
force and effect as if such facsimile signature were the original
thereof.
(i)
Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined with the provisions of the Purchase
Agreement.
(j) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(k) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(l) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(m) Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible
in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at
any
closing, and no action taken by any Holder pursuant hereto or thereto, shall
be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled
to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to
be
joined as an additional party in any proceeding for such purpose.
********************
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
| XENOMICS, INC. | ||
| |
|
|
| By: | ||
|
|
||
|
Name:
Title:
|
||
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
[PURCHASER’S
SIGNATURE PAGE]
Name
of
Investing Entity: __________________________
Signature
of Authorized Signatory of Investing Entity:
__________________________
Name
of
Authorized Signatory: _________________________
Title
of
Authorized Signatory: __________________________
[SIGNATURE
PAGES CONTINUE]
ANNEX
A
Plan
of Distribution
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock
or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any
or
all of their shares of common stock or interests in shares of common stock
on
any stock exchange, market or trading facility on which the shares are traded
or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale,
or at
negotiated prices.
The
selling stockholders may use any one or more of the following methods when
disposing of shares or interests therein:
-
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
-
block
trades in which the broker-dealer will attempt to sell the shares as agent,
but
may position and resell a portion of the block as principal to facilitate the
transaction;
-
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
-
an
exchange distribution in accordance with the rules of the applicable
exchange;
-
privately negotiated transactions;
-
short
sales;
-
through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
-
broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
-
a
combination of any such methods of sale; and
-
any
other method permitted pursuant to applicable law.
The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock, from time to time, under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as
selling
stockholders under this prospectus. The selling stockholders also may transfer
the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
In
connection with the sale of our common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
aggregate proceeds to the selling stockholders from the sale of the common
stock
offered by them will be the purchase price of the common stock less discounts
or
commissions, if any. Each of the selling stockholders reserves the right to
accept and, together with their agents from time to time, to reject, in whole
or
in part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering. Upon any
exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The
selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that they meet the criteria and conform to the requirements of that
rule.
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements
of
the Securities Act.
To
the
extent required, the shares of our common stock to be sold, the names of the
selling stockholders, the respective purchase prices and public offering prices,
the names of any agents, dealer or underwriter, any applicable commissions
or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this
prospectus.
In
order
to comply with the securities laws of some states, if applicable, the common
stock may be sold in these jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the common stock may not be
sold
unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied
with.
We
have
advised the selling stockholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of shares in the market and to
the
activities of the selling stockholders and their affiliates. In addition, we
will make copies of this prospectus (as it may be supplemented or amended from
time to time) available to the selling stockholders for the purpose of
satisfying the prospectus delivery requirements of the Securities Act. The
selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We
have
agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to
the
registration of the shares offered by this prospectus.
We
have
agreed with the selling stockholders to keep the registration statement of
which
this prospectus constitutes a part effective until the earlier (i) the date
that
is two (2) years after the last day of the calendar month following the month
in
which the effective date of the registration statement occurs, (ii) the date
when the selling stockholder may sell all securities registered under the
registration statement under Rule 144 without volume or other restrictions
or
limits or (iii) the date the selling stockholders no longer own any of the
securities registered under the registration statement.
Annex
B
XENOMICS,
INC.
SELLING
STOCKHOLDERS’ QUESTIONNAIRE
The
following information is requested from you in connection with the preparation
and filing by Xenomics, Inc. (the “Company”) of a Registration Statement on Form
SB-2 or other appropriate form (the “Registration Statement”) with the
Securities and Exchange Commission (the “SEC”) covering the sale of shares of
the Company’s common stock by certain stockholders.
We
would
appreciate your answering all of the questions included in this questionnaire,
even though your answers may be in the negative, so that the Company will have
a
record of your responses for use in connection with the preparation of the
Registration Statement. It
is
requested that you give careful attention to each question and that you complete
this questionnaire personally.
In
order
to assist you in completing this questionnaire, certain terms used herein are
defined in the appendix which is attached to this questionnaire. Each of such
defined terms has been bolded
and italicized
for
identification. The term “person,” as used in this questionnaire, means any
natural person, company, government or political subdivision, agency or
instrumentality of a government.
After
you have completed the following questionnaire, please send the completed
questionnaire by facsimile ((212) 930-9725) or overnight courier as soon as
possible to the attention of Jeffrey Fessler at Sichenzia Ross Friedman Ference
LLP, 1065 Avenue of the Americas, New York, New York
10018.
*********************
General
Information
1.
Please
provide your full name and address or the full name and address of the entity
on
whose behalf you are completing this questionnaire. The address may be a
business, mailing or residence address.
| Name: | |
| Address: |
Securities
Holdings
1.
Please
fill in all blanks in the following questions related to your beneficial
ownership
of the
Company’s common stock. Generally, the term “beneficial
ownership”
refers
to any direct or indirect interest in the securities which entitles you to
any
of the rights or benefits of ownership, even though you may not be the holder
of
record of the securities. For example, securities held in “street name” over
which you exercise voting or investment power would be considered beneficially
owned
by you.
Other examples of indirect ownership include ownership by a partnership in
which
you are a partner or by an estate or trust of which you or any member of your
immediate
family
is a
beneficiary. Ownership of securities held in the names of your spouse, minor
children or other relatives who live in the same household may be attributed
to
you.
If
you
have any reason to believe that any interest in securities of the Company which
you may have, however remote, is a beneficial interest, please describe such
interest. For purposes of responding to this questionnaire, it is preferable
to
err on the side of inclusion rather than exclusion. Where the SEC’s
interpretation of beneficial
ownership
would
require disclosure of you interest or possible interest in certain securities
of
the Company, and you believe that you do not actually possess the attributes
of
beneficial
ownership,
an
appropriate response is to disclose the interest and at the same time disclaim
beneficial
ownership
of the
securities.
Please
indicate the amount of common stock of the Company or any of its subsidiaries
which you beneficially
owned
as of
the date hereof.
For
each
holding:
|
·
|
State
the nature of the holding (i.e.,
held in your own name, jointly, as a trustee or beneficiary of a
trust, as
a custodian, as an executor, in discretionary accounts, by your spouse
or
minor children, by a partnership of which you are a partner, etc.),
and
|
|
·
|
State
whether you are the beneficial
owner
by
reason of (i) sole voting power, (ii) shared voting power, (iii)
sole
investment power, (iv) shared investment power, (v) the right to
acquire
stock within 60 days of the end of the calendar year, and/or (vi)
the
right to acquire stock with the purpose of changing or influencing
control.
|
|
·
|
Indicate
in the Remarks column whether you have sole or shared voting or investment
power with respect to any such securities, and in what capacity
(i.e.,
individual, general partner, trustee) you have such power or
powers.
|
|
·
|
If
you wish to disclaim beneficial
ownership
of
any shares listed, so indicate by writing the word “Disclaim” in the
Remarks column below; and you understand that such shares will be
shown
separately from your beneficial holdings and an appropriate disclaimer
set
forth.
|
|
·
|
If
any of the shares listed are subject to any claim, encumbrance, pledge
or
lien, so indicate in the Remarks
column.
|
|
Number
of
Shares
|
Registered
in
the
Name of
|
Beneficially
Owned
by
|
Remarks
|
Shares
Voted
|
Shares
to be Sold
|
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|
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|
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|
|
|
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|
________
|
_______________
|
_______________
|
_______________
|
________
|
|
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|
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|
|
|
|
|
|||||
|
________
|
_______________
|
_______________
|
_______________
|
________
|
|
|||||
|
|
|
|
|
|
|
|||||
|
________
|
_______________
|
_______________
|
_______________
|
________
|
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|
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|
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To
the
best of my knowledge, all persons (including myself and my associates
and
including corporations, partnerships, trusts, associations and other such
groups) who beneficially
own
more
than 5% of any class of the Company’s stock are described below:
|
Name
of
Beneficial
Owner
|
Class
of Shares
Beneficially
Owned
|
Holder
of
Voting
or
Investment
Power
|
5
No
Adverse Interest
All
interests I or my associates
have or
will have that are adverse to the Company interests in any pending or
contemplated legal proceeding or government investigation to which the Company
is or will be a party (or to which its property may be subject) are described
below:
6
Voting
Arrangement
All
voting trusts or similar agreements or arrangements
of which
I have knowledge under which more than 5% of the Company’s outstanding common
stock, on an as converted basis, is held or to be held are described below:
|
Names
and Addresses of Voting Trustees
|
Voting
Rights and Other Powers
Under
Trust, Agreement or Arrangement
|
|||
7
Change
in Control
All
arrangements
of which
I have knowledge, including any pledge by any person of securities of the
Company, the operations of which may at a subsequent date result in a change
in
control
of the
Company, are described below:
8
Transactions
with the Company
1.
Information
regarding all material
interests of yours or your associates in any actual or proposed transaction
during the last three fiscal years to which the Company was or is to be a party
and that are identified under “Securities Holdings” above) is provided below.
Further,
no such transaction need be described if:
(a)
the
amount involved (including all periodic installments in the case of any lease
or
other agreement provided for periodic payments or installments and including
the
value of all transactions In a series of similar transactions) does not exceed
$60,000;
(b)
the
rates
or charges involved in the transaction are fixed by law or governmental
authority or determined by competitive bids;
(c)
the
services involved are as a bank depositary of funds, transfer agent, registrar,
trustee under a trust indenture or other similar service;
(d)
my
interest arises solely from my ownership of securities of the Company and I
received no extra or special benefit not shared on a pro rata basis by all
other
holders of securities in the same class;
(e)
my
interest in the corporation that is a party to the transaction is solely as
a
director; or
(f)
my
interest arose solely as an officer and/or director of the Company (e.g., my
compensation arrangement with the Company).
Description:
9
Affiliation
with Accountants or attorneys
Described
below is any interest, affiliation or connection you have with the firm of
Sichenzia Ross Friedman Ference LLP, Lazar Levine & Felix LLP or any other
law firm or accounting firm that has been retained by the Company during the
last three fiscal years or is proposed to be retained by the Company:
10
Contracts
with the Company
Described
below are all contracts with the Company or in which the Company has a
beneficial interest, or to which the Company has succeeded by assumption or
assignment, to which you or any of your associates
is a
party, which are to be performed in whole or in part at or after the date of
the
proposed filing of the Registration Statement, or which were made not more
than
two years prior thereto:
11
NASD-RELATED
QUESTIONS
(1) Are
you
(i) a “member” of the National Association of Securities Dealers, Inc.
(“NASD”),
(ii)
an “affiliate” of a member of the NASD, (iii) a “person associated with a
member” or “associated person of a member” of the NASD or (iv) associated with
an “underwriter or related person” with respect to the proposed initial public
offering for the Company?
| Yes No |
For
the
sole purpose of this Question: (i) the NASD defines a “member” as being either
any broker or dealer admitted to membership in the NASD or any officer or
partner of such a member or the executive representative of such member or
the
substitute for such representative; (ii) the term “affiliate” means a person
that directly, or indirectly through one or more intermediaries, controls,
or is
controlled by, or is in common control with the person specified. Persons who
have acted or are acting on behalf or for the benefit of a person include,
but
are not necessarily limited to, directors, officers, employees, agents,
consultants and sales representatives; (iii) the NASD defines a “person
associated with a member” or “associated person of a member” as being every sole
proprietor, partner, officer, director or branch manager of any member, or
any
natural person occupying a similar status or performing similar functions,
or
any natural person engaged in the investment banking or securities business
who
is directly or indirectly controlling or controlled by such member (for example,
any employee), whether or not any such person is registered or exempt from
registration with the NASD; and (iv) the term “underwriter or related person”
includes, with respect to a proposed offering, underwriters, underwriters’
counsel, financial consultants and advisers, finders, members of the selling
or
distribution group, and any and all other persons associated with or related
to
any such persons.
If
yes,
kindly describe such relationship (whether direct or indirect) and please
respond to Questions (2) and (3) below; if no, please proceed to Question
(4).
(2) Please
set forth information as to all purchases and acquisitions (including contracts
for purchase or acquisition) of securities of the Company by you, regardless
of
the time acquired or the source from which derived:
|
Seller
or Prospective Seller |
Amount
and Nature of Securities |
Price
or Other
Consideration
|
Date
|
(3) In
connection with your direct or indirect affiliation or association with a
“member” of the NASD as set forth above in Question (1), please furnish the
identity of such NASD member and any information, if known, as to whether such
NASD member intends to participate in any capacity in this proposed initial
public offering, including the details of such participation:
12
(4) Please
describe any underwriting compensation and arrangement or any dealings known
to
you between any “underwriter or related person”, “member” of the NASD,
“affiliate” of a member of the NASD, “person associated with a member”, or
“associated person of a member” of the NASD on the one hand and the Company or
controlling shareholder thereof on the other hand, other than information
relating to the proposed initial public offering of the Company:
(5) Please
set out below any information, if known, as to whether any “member” of the NASD,
any “underwriter or related person”, “affiliate” or a member of the NASD,
“person associated with a member” or “associated person of a member” of the NASD
may receive any portion of the net offering:
13
I
understand that material misstatements or the omission of material facts in
the
Registration Statement may give rise to civil and criminal liabilities to the
Company, to each officer and director of the Company signing the Registration
Statement and other persons signing the Registration Statement. I will notify
you and the Company of any misstatement of a material fact in the Registration
Statement or any amendment thereto, and of the omission of any material fact
necessary to make the statements contained therein not misleading, as soon
as
practicable after a copy of the Registration Statement or any such amendment
has
been provided to me.
I
confirm
that the foregoing statements are correct, to the best of my knowledge and
belief.
Dated: ___________.
|
Very
truly yours,
|
||
| (Signature) | ||
|
|
||
| (Typed or Printed Name) |
14
Definitions
The
term
“arrangement”
means
any plan, contract, authorization or understanding whether or not set forth
in a
formal document.
The
term
“associate”
as used
throughout this questionnaire, means (a) any corporation or organization (other
than the Company) of which I am an officer, director or partner or of which
I
am, directly or indirectly, the beneficial owner of 5% or more of any class
of
equity securities, (b) any trust or other estate in which I have a substantial
beneficial interest or as to which I serve as trustee or in a similar capacity,
(c) my spouse, (d) any relative of my spouse or any relative of mine who has
the
same home as me or who is a director or officer or key executive of the Company,
(e) any partner, syndicate member or person with whom I have agreed to act
in
concert with respect to the acquisition, holding, voting or disposition of
shares of the Company’s securities.
The
term
“beneficially
owned”
when
used in connection with the ownership of securities, means (a) any interest
in a
security which entitles me to any of the rights or benefits of ownership even
though I may not be the owner of record or (b) securities owned by me directly
or indirectly, including those held by me for my own benefit (regardless of
how
registered) and securities held by others for my benefit (regardless of how
registered), such as by custodians, brokers, nominees, pledgees, etc., and
including securities held by an estate or trust in which I have an interest
as
legatee or beneficiary, securities owned by a partnership of which I am a
partner, securities held by a personal holding company of which I am a
stockholder, etc., and securities held in the name of my spouse, minor children
and any relative (sharing the same home). A “beneficial owner” of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or
shares:
(a)
voting
power which includes the power to vote, or to direct the voting of, such
security; and/or
(b)
investment
power which includes the power to dispose, or to direct the disposition, of
such
security.
The
term
“control”
means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
The
term
“immediate
family”
means
any relationship by blood, marriage or adoption, not more remote than first
cousin.
The
term
“material,”
when
used in this questionnaire to qualify a requirement for the furnishing of
information as to any subject, limits the information required to those matters
as to which an average prudent investor ought reasonably to be informed before
purchasing the Common Stock of the Company.
15
Exhibit
99.1
Xenomics
Closes $2.77 Million Financing to Accelerate Development of Risk-Free
Noninvasive Medical Testing Technology
NEW
YORK--(BUSINESS WIRE)--July 15, 2005--Xenomics, Inc. (OTCBB:XNOM
-
News),
a
developer of next-generation medical DNA technologies, announced today the
closing of a private placement totaling $2.77 million, whose proceeds will
help
to fund the Company’s efforts to develop advanced medical diagnostic tests for a
range of diseases and genetic conditions, and to fund preparations toward
product regulatory approval and commercialization.
Xenomics
is developing a groundbreaking new class of safe, noninvasive and highly
accurate diagnostic tests based on its proprietary Transrenal-DNA (Tr-DNA)
technology platform.
“This
financing will reinforce and sustain Xenomics’ innovative program to develop and
deliver improved medical diagnostic tests based on our proprietary
Transrenal-DNA technology,” said Dr. Randy White, CEO of Xenomics. “We believe
that our proprietary Transrenal-DNA diagnostic platform technology will provide
a new, higher level of healthcare industry standards for the improved detection
of HIV, tuberculosis, malaria, Down syndrome and many other conditions.
”
The
latest financing follows two previous financings that Xenomics has closed
this
year. In April, the Company
closed the second traunche of a two-traunche financing that raised a total
of
approximately $6 million for Xenomics R&D efforts through 2006. Dr. White
noted, “Based on the proceeds from those financings, our
capital resources were sufficient to carry Xenomics’ R&D operations through
to the end of next year,” said Dr. White. “The latest funding enables us to
accelerate our efforts to develop Tr-DNA diagnostic tests for an increasingly
broad range of applications.”
The
total raised from the private placement was $2,771,000. As part of the
transaction, Xenomics sold 277, 100 shares of Series A Convertible Preferred
Stock, which is convertible to common stock at $2.15 per share. In addition,
investors received 386,651 warrants to purchase common stock at $3.25 per
share
exercisable anytime within 5 years. Xenomics also paid selling commissions
of
$226,680 and issued 105,432 warrants to selling agents to purchase common
stock
at an exercise price of $3.25 per share.
Xenomics'
non-invasive Transrenal-DNA (Tr-DNA) technology uses simple, easily obtained
urine samples to diagnose disease and genetic health conditions. The Company's
proprietary Tr-DNA technology involves the analysis of fragments of DNA that
have moved from the blood stream through the kidneys, where they accumulate
in
urine. Xenomics' scientists were the first to detect this DNA material in
urine
samples. Most existing medical DNA diagnostic tests use blood or tissue samples
from more invasive tissue biopsies, which are more
difficult
to obtain. In ongoing studies, many of the prototype Xenomics tests under
development have demonstrated or are expected to provide a number of advantages
over currently available medical technology, including diagnostic accuracy,
lower cost, greater ease-of-use, and significantly earlier detection
capabilities.
Other
important advantages of Xenomics’ Tr-DNA diagnostic testing technology include
safety for both patients and medical professionals The urine specimens used
in
Tr-DNA tests are safer and simpler to collect than blood samples, because
blood
is potentially infectious and widely considered to be a biological hazard
to
patients and healthcare workers, whereas urine is not.
The
securities issued in the private placement have not been registered under
the
Securities Act of 1933, as amended. Accordingly, these securities may not
be
offered or sold in the United States, except pursuant to the effectiveness
of a
registration statement or an applicable exemption from the registration
requirements of the Securities Act. Xenomics has agreed to file a registration
statement covering resale of the shares of common stock underlying the preferred
stock and warrants by the private placement investors. This press release
shall
not constitute an offer to sell or the solicitation of an offer to buy the
securities.
About
Xenomics, Inc.
Xenomics
is a molecular diagnostic company that focuses on the development of DNA-based
tests using Transrenal DNA (Tr-DNA). Xenomics' patented technology uses safe
and
simple urine collection and can be applied to a broad range of applications,
including prenatal testing, tumor detection and monitoring, tissue
transplantation, infectious disease detection, genetic testing for forensic
identity determination, drug development, and research to counter bioterrorism.
Scientists from Xenomics were the first to report that fragments of DNA from
normal cell death cross the kidney barrier and can be detected in urine.
The
Company believes that its technology will open significant new markets in
the
molecular diagnostics field. Xenomics has three issued U.S. patents covering
different applications of the technology for molecular diagnostics and genetic
testing and a pending European patent for the same applications. The Company
has
organized a joint venture to conduct research on infectious disease detection
with the National Institute for Infectious Diseases (Instituto Nazionale
per le
Malattie Infettive "Lazarus Spallanzani") in Rome, in the form of a new R&D
company called SpaXen Italia, S.R.L. For more information, please visit
http://xenomics.com.
For
more investor-specific information, including daily and historical Company
stock
quote data and recent news releases, please visit http://www.trilogy-capital.com/tcp/xenomics.
To
read or download the Company's Investor Fact Sheet visit http://www.trilogy-capital.com/tcp/xenomics/factsheet.html.
To
view an online video about Xenomics technology and products, visit http://www.trilogy-capital.com/tcp/xenomics/video.html.
A
TV
news report about the Company's next-generation prenatal tests can be viewed
at
http://www.trilogy-capital.com/tcp/xenomics/ny1_video.html.
Forward-Looking
Statements
Certain
statements made in this press release are forward looking. Such statements
are
indicated by words such as "expect," "might," "should," "anticipate" and
similar
words indicating uncertainty in facts and figures. Although Xenomics believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations reflected in
such
forward-looking statements will prove to be correct. As discussed in the
periodic reports of Xenomics, as filed with the Securities and Exchange
Commission, actual results could differ materially from those projected in
the
forward-looking statements as a result of the following factors, among others:
uncertainties associated with product development, the risk that Xenomics
will
not obtain approval to market its products, the risk that Xenomics' technology
will not gain market acceptance, the risks associated with dependence upon
key
personnel, and the need for additional financing.
_____________
Contact:
Xenomics,
Inc.
Randy
White, 212-297-0808
or
Trilogy
Capital Partners, Inc. (Investor Relations)
Paul
Karon, 800-342-1467
paul@trilogy-capital.com