SECURITIES PURCHASE
AGREEMENT
This Securities
Purchase Agreement (this “Agreement” ) is dated
as of June 8, 2009, by and among Oxygen Biotherapeutics, Inc., a
Delaware corporation (the “Company” ), and the
investors identified on the signature pages hereto (each, an
“Investor” and collectively, the
“Investors” ).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to exemptions from registration available under Section 4(2) of the
Securities Act (as defined below) and Rule 506 promulgated
thereunder, the Company desires to issue and sell to each Investor,
and each Investor, severally and not jointly, desires to purchase
from the Company certain securities of the Company, as more fully
described in this Agreement.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the
Investors agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions
. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms
shall have the meanings indicated in this Section 1.1:
“Action” means any action, suit, inquiry, notice
of violation, proceeding (including any partial proceeding such as
a deposition) or investigation pending or threatened in writing
against or affecting the Company or any of its properties before or
by any court, arbitrator, governmental or administrative agency,
regulatory authority (federal, state, county, local or foreign),
stock market, stock exchange or trading facility.
“Additional Commitment Shares” means (a)
40,000,000 shares of Common Stock if the Warrant Condition is not
satisfied as of the Initial Closing Date, or (b) means 60,000,000
shares of Common Stock if the Warrant Condition is satisfied as of
the Initial Closing Date, as that number of shares (either
40,000,000 or 60,000,000) is adjusted from time to time pursuant to
Section 2.3 hereof.
“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. With respect to an
Investor, any investment fund or managed account that is managed on
a discretionary basis by the same investment manager as such
Investor will be deemed to be an Affiliate of such Investor.
“Business
Day” means any day except Saturday, Sunday and any day
that is a federal legal holiday or a day on which banking
institutions in the state of North Carolina are authorized or
required by law or other governmental action to close.
“Commission” means the Securities and Exchange
Commission.
Common
Stock” means the common stock of the Company, $0.0001 par
value per share, and any securities into which such common stock
may hereafter be reclassified.
“Disclosure Materials” means the SEC Disclosure
Documents and the Company’s Schedules to this Agreement,
collectively.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
“GAAP” means U.S. generally accepted accounting
principles.
“Initial
Closing” shall have the meaning assigned to such term in
Section 2.1 hereof.
“Initial
Closing Date” shall have the meaning assigned to such
term in Section 2.1 hereof.
“Installment Notice” shall have the meaning
assigned to such term in Section 2.2(a) hereof.
“Installment Payment” means an amount in US
dollars equal to the number of Additional Commitment Shares to be
sold and purchased at each of the Subsequent Closing multiplied by
the Share Purchase Price in effect at the time of each such
Subsequent Closing.
“Installment Shares” means the total number of
Additional Commitment Shares, as the same may be adjusted from time
to time pursuant to Section 2.3, multiplied by the Milestone
Ratio.
“Intellectual Property Rights” means the
ownership or right to use patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights,
licenses and other similar rights in connection with the respective
businesses of the Company and the Subsidiaries as described in the
SEC Disclosure Documents.
“Investor
Nominee” has the meaning set forth in Section 4.10.
“Investor
Party” has the meaning set forth in Section 4.5.
“Knowledge” means, with respect to any statement
made to the knowledge of a party, that the statement is based upon
actual knowledge of the officers of such party having
responsibility for the matter or matters that are the subject of
the statement, after due inquiry.
“Lien” means any lien, charge, encumbrance,
security interest, right of first refusal, preemptive right or
other restrictions of any kind.
“Losses” has the meaning set forth in Section
4.5.
“Material Adverse Effect” means any of (i) a
material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and
adverse effect on the results of operations, assets, prospects,
business or condition (financial or
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otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) an adverse impairment to
the Company’s ability to perform on a timely basis its
obligations under any Transaction Document.
“Milestone” means any one of the product
development, product licensing, or regulatory events listed on
Appendix A attached hereto (and incorporated herein by this
reference).
“Milestone
Ratio” means that portion of the Additional Commitment
Shares allocated to each Milestone, which is listed on Appendix A
attached hereto.
“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.
“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.
“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
Disclosure Documents” has the meaning set forth in
Section 3.1(g).
“Securities Act” means the Securities Act of
1933, as amended.
“Share
Purchase Price” means $0.25 per share of Common Stock, as
the same may adjusted from time to time pursuant to Section
2.3.
“Shares” means the aggregate number of shares of
Common Stock that may be purchased and sold under Section 2.1 and
Section 2.2, which is, in the aggregate, a minimum of 60,000,000
shares and a maximum of 80,000,000 shares, as that number of shares
is adjusted from time to time pursuant to Section 2.3 hereof.
“Short
Sales” include, without limitation, all “short
sales” as defined in Rule 200 promulgated under Regulation
SHO under the Exchange Act and all types of direct and indirect
stock pledges, forward sale contracts, options, puts, calls, swaps
and similar arrangements (including on a total return basis), and
sales and other transactions through non-US broker dealers or
foreign regulated brokers; provided, that in no event shall the
sale of any Shares to be received but not yet delivered pursuant to
a pending Subsequent Closing be deemed a Short Sale.
“Subsequent Closing” shall have the meaning
assigned to such term in Section 2.2(b) hereof.
“Subsequent Closing Date” shall have the meaning
assigned to such term in Section 2.2(b) hereof.
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“Trading
Market” means whichever of the New York Stock Exchange,
the American Stock Exchange, the NASDAQ Stock Market, or OTC
Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.
“Transaction Documents” means this Agreement and
any other documents or agreements executed in connection with the
transactions contemplated hereunder.
“Warrant
Condition” means the holders of Company warrants
outstanding as of the date hereof to purchase 60,000,000 shares of
Common Stock at prices ranging from $0.245 per share to $0.47 per
share have tendered to the Company signed agreements pursuant to
which they agree to exchange said warrants for cash and Common
Stock pursuant to the offer described in Section 4.8 hereof.
ARTICLE I.
PURCHASE AND SALE
2.1
Initial
Installment . At the Initial Closing (defined below), the
Company shall deliver or cause to be delivered to the Investors
20,000,000 shares of Common Stock, and the Investors shall deliver
or cause to be delivered to the Company by wire transfer to an
account designated in writing by the Company prior to the Initial
Closing US$5,000,000. The closing on this initial sale and purchase
(the “ Initial Closing ”) shall take place at
the offices of Parsons, Behle & Latimer, 201 South Main Street,
Suite 1800, Salt Lake City, Utah 84111 (i) at 1:00 p.m. local time
on July 10, 2009, or (ii) at such other time and place or on such
date as the Investors and the Company may agree upon (the “
Initial Closing Date ”).
2.2
Subsequent
Installments . After the sale and purchase of Common Stock
pursuant to Section 2.1 and subject to the terms and conditions of
this Agreement, the Company shall sell and issue to the Investors
and the Investors shall be obligated to purchase from the Company
the Additional Commitment Shares at the Share Purchase Price.
Additional closings shall be held from time to time after the
Initial Closing with respect to the Additional Commitment Shares on
the terms and conditions set forth in this Section 2.2.
(a) In the event any one
of the Milestones is achieved, the Company shall promptly give
written notice to the Investors in the form attached hereto as
Appendix B (the “Installment Notice”).
(b) On the 20th Business
Day following the date on which an Installment Notice is given to
the Investors, a closing (a “ Subsequent Closing
”) shall take place at the offices of Parsons, Behle &
Latimer, 201 South Main Street, Suite 1800, Salt Lake City, Utah
84111 (i) at 1:00 p.m. local time on that date, or (ii) at such
other time and place or on such date as the Investors and the
Company may agree upon (a “ Subsequent Closing Date
”), and at each such Subsequent Closing the Company shall
deliver or cause to be delivered to the Investors the Installment
Shares, and the Investors shall deliver or cause to be delivered to
the Company by wire transfer to an account designated in writing by
the Company prior to each Subsequent Closing the Installment
Payment.
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(c) The obligation of the
Investors to purchase any of the Additional Commitment Shares not
previously purchased under this Section 2.2 shall terminate in
accordance with the terms set forth in Appendix A.
2.3
Certain
Adjustments . If the Company: (a) pays a stock dividend or
otherwise make a distribution or distributions on shares of its
outstanding Common Stock, (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 (i) the Share
Purchase Price (as previously adjusted) shall be adjusted to an
amount equal to the Share Purchase Price (as previously adjusted)
multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any)
outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event (excluding treasury
shares, if any), and (ii) the number of Additional Commitment
Shares that are or may be sold to the Investors (as previously
adjusted) shall be adjusted to an amount equal to that number of
shares multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding immediately after such
event (excluding treasury shares, if any) and the denominator shall
be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event. Any adjustment
made pursuant to this Section 2.3 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 reclassification.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and
Warranties of the Company . The Company hereby makes the
following representations and warranties to each Investor:
(a)
Organization and
Qualification . The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite power and
authority to own and use its properties and assets and to carry on
its business as currently conducted. The Company is not in
violation of any of the provisions of its certificate of
incorporation, bylaws or other organizational or charter documents.
The Company 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, individually or in the aggregate, have or
reasonably be expected to result in 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.
(b)
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
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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. 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 as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
(c)
No Conflicts .
The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict
with or violate any provision of the Company’s certificate 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 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 debt or otherwise) or other
understanding to which the Company is a party or by which any
property or asset of the Company is bound or affected, or (iii)
result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any
property or asset of the Company is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(d)
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) the shareholder action
contemplated by Section 4.9, and (ii) the filing of a Notice of
Sale of Securities on Form D with the Commission under Regulation D
of the Securities Act and under applicable state securities
statutes pertaining to the purchase and sale contemplated by this
Agreement.
(e)
Issuance of the
Shares . The Shares have been, or will be as of the Initial
Closing Date and each Subsequent Closing Date, duly authorized and,
when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. Except as provided for
in Section 4.9, below, the Company has reserved from its duly
authorized capital stock the Shares issuable pursuant to this
Agreement. The Common Stock of the Company and the Shares are not
subject to any preemptive or similar rights to subscribe for or
purchase securities.
(f)
Capitalization .
The number of shares and type of all authorized, issued and
outstanding capital stock of the Company, and all shares of Common
Stock reserved for issuance under the Company’s various
option and incentive plans, is as set forth in Schedule
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3.1(f). No securities of the Company
are entitled to preemptive or similar rights, and 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. Except as disclosed on
Schedule 3.1(f) , there are no outstanding options,
warrants, scrip 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 the
Company’s capital stock, or contracts, commitments,
understandings or arrangements by which the Company is or may
become bound to issue additional shares of its capital stock, or
securities or rights convertible or exchangeable into shares of
Common Stock. Except as disclosed on Schedule 3.1(f) , the
issue and sale of the Shares to the Investors will not, immediately
or with the passage of time, obligate the Company to issue shares
of Common Stock or other securities to any Person (other than the
Investors) 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
non-assessable, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe
for or purchase any capital stock of the Company. 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 to the Investors. Except as contemplated by
Section 4.8, there are no stockholder agreements, voting
agreements, or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or,
to the Knowledge of the Company, between or among any of the
Company’s stockholders.
(g)
SEC Disclosure
Documents; Financial Statements . The Company has filed all
reports required to be filed by the Company under the Securities
Act and the Exchange Act for the twenty-four months preceding the
date of this Agreement and will file all reports required to be
filed by the Company under the Securities Act and the Exchange Act
through the last Subsequent Closing Date (such reports, as amended,
collectively, the “SEC Disclosure Documents” ).
As of their respective dates, the SEC Disclosure Documents have
complied or will comply 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 Disclosure Documents, when filed, contained or will
contain 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 Disclosure Documents 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 and were (and will be) prepared in
accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in
all material respects the financial position of the Company 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 year-end audit adjustments. The Company
maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP and
the applicable requirements of the Exchange Act.
(h)
Press Releases .
The press releases disseminated by the Company during the two (2)
years preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or
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necessary in order to make the
statements therein, in light of the circumstances under which they
were made not misleading.
(i)
Material Changes
. Except as set forth in Schedule 3.1(i) , since the date of
the latest unaudited financial statements included within the SEC
Disclosure Documents, (i) there has been no event, occurrence or
development that has had or that, individually or in the aggregate,
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, (B) liabilities not required to be reflected in
the Company’s financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, and
(C) other liabilities that would not, individually or in the
aggregate, have a Material Adverse Effect, (iii) the Company has
not altered its method of accounting or the identity of its
auditors, (iv) except as contemplated by Section 4.8, 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, other than dividends paid in the ordinary course on
outstanding series of the Company’s preferred stock, and (v)
the Company has not issued any equity securities to any officer,
director or Affiliate, except Common Stock issued in the ordinary
course as dividends on outstanding preferred stock and pursuant to
existing Company stock option plans or executive and director
compensation arrangements. The Company does not have pending before
the Commission any request for confidential treatment of
information.
(j)
Litigation .
There is no Action that (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction
Documents or (ii) that could, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. Neither the
Company nor any director or officer thereof (in his or her capacity
thereof), is or has been during the ten-year period prior to the
date hereof 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 (in his or her
capacity as such).
(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.
(l)
Compliance . The
Company (i) is not in default under or in violation of (and no
event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company
under), nor has the Company received notice of a claim that it is
in default under or that it is in violation of, any indenture, loan
or credit agreement or any other agreement or instrument to which
it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any order of any court, arbitrator or governmental
body, or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except
in each case of (i),
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(ii) and (iii) above as could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the Sarbanes-Oxley Act of 2002,
as amended, and the rules and regulations thereunder, that are
applicable to it, except where such noncompliance, individually or
in the aggregate, could not have or reasonably be expected to
result in a Material Adverse Effect.
(m)
Regulatory
Permits . The Company possesses all certificates,
authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct
its businesses as described in the SEC Disclosure Documents, except
where the failure to possess such permits could not, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, and the Company has not received any
notice of proceedings relating to the revocation or modification of
any such permits.
(n)
Title to Assets .
The Company does not own any real property. The Company has good
and marketable title in all personal property owned by it that is
material to its business, free and clear of all Liens, except for
Liens described in Schedule 3.1(n) and 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. Any real property and facilities held
under lease by the Company are held under valid, subsisting and
enforceable leases of which the Company is in compliance, except as
could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.
(o)
Patents and
Trademarks . The Company has, or has the right to use, all
Intellectual Property Rights that are necessary or material for use
in connection with its business and which the failure to so have
could, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. The Company has
not received a written notice that the Intellectual Property Rights
used by the Company violat
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