Exhibit 10.16
At Market Issuance Sales
Agreement
July 14, 2009
Wm Smith &
Co.
1700 Lincoln
Street, Suite 2545
Denver CO
80203
Ladies and
Gentlemen:
Peregrine Pharmaceuticals, Inc. a
Delaware corporation (the “ Company ”), confirms
its agreement (this “ Agreement ”) with Wm Smith
& Co., a Colorado corporation (“ Wm Smith
”), as follows:
1. Issuance and
Sale of Shares . The Company agrees that, from time
to time during the term of this Agreement, on the terms and subject
to the conditions set forth herein, it may issue and sell through
Wm Smith, acting as agent and/or principal, up to $25,000,000 of
shares (the “ Shares ”) of the Company’s
common stock, par value $0.001 per share (the “ Common
Stock ”). Notwithstanding anything to the
contrary contained herein, the parties hereto agree that compliance
with the limitations set forth in this Section 1 on the number of
Shares issued and sold under this Agreement shall be the sole
responsibility of the Company and that Wm Smith shall have no
obligation in connection with such compliance. The
issuance and sale of Shares through Wm Smith will be effected
pursuant to the Registration Statement (as defined below) filed by
the Company and declared effective by the Securities and Exchange
Commission (the “ Commission ”), although
nothing in this Agreement shall be construed as requiring the
Company to use the Registration Statement to issue Common Stock or
Preferred Stock.
The Company intends to file, in
accordance with the provisions of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively,
the “ Securities Act ”), with the Commission a
registration statement on Form S-3, including a base prospectus,
with respect to equity and other offerings, including the Shares,
and which incorporates by reference documents that the Company has
filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “ Exchange
Act ”). The Company will, if necessary,
prepare a prospectus supplement (the “ Prospectus
Supplement ”) to the base prospectus to be included as
part of such registration statement. The Company will
furnish to Wm Smith, for use by Wm Smith, copies of the prospectus
included as part of such registration statement, as supplemented by
any Prospectus Supplement, relating to the
Shares. Except where the context otherwise requires,
such registration statement, as amended when it becomes effective,
including all documents filed as part thereof or incorporated by
reference therein, and including any information contained in a
Prospectus (as defined below) subsequently filed with the
Commission pursuant to Rule 424(b) under the Securities Act and
also including any other registration statement filed pursuant to
Rule 462(b) under the Securities Act, collectively, are herein
called the “ Registration Statement ,” and the
base prospectus, including all documents incorporated therein by
reference, included in the Registration Statement, as it may be
supplemented by the Prospectus Supplement, in the form in which
such prospectus and/or Prospectus Supplement is filed by the
Company with the Commission pursuant to Rule 424(b) under the
Securities Act is herein called the “ Prospectus
.” Any reference herein to the Registration Statement, the
Prospectus or any amendment or supplement thereto shall be deemed
to refer to and include the documents incorporated by reference
therein (including, without limitation, all reports filed by the
Company under Section 13(a) of 15(d) of the Securities Exchange Act
of 1934 since the end of the Company’s fiscal year ended
April 30, 2007), and any reference herein to the terms
“amend,” “amendment” or
“supplement” with respect to the Registration Statement
or the Prospectus shall be deemed to refer to and include the
filing after the execution hereof of any document with the
Commission deemed to be incorporated by reference
therein. For purposes of this Agreement, all references
to the Registration Statement, the Prospectus or to any amendment
or supplement thereto shall be deemed to include any copy filed
with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System, or if applicable, the Interactive
Data Electronic Application system when used by the Commission
(collectively, “ EDGAR ”).
2. Placements
. Each time that the Company wishes to issue and sell
Shares hereunder (each, a “ Placement ”), it
will notify Wm Smith by email notice (or other method mutually
agreed to in writing by the Parties) of the number of Shares (the
“ Placement Shares ”) to be issued, the type of
Shares, the time period during which sales are requested to be
made, any limitation on the number of Shares that may be sold in
any one day and any minimum price below which sales may not be made
(a “ Placement Notice ”), the form of which is
attached hereto as Schedule 1. The Placement Notice
shall originate from any of the individuals from the Company set
forth on Schedule 3 (with a copy to each of the other individuals
from the Company listed on such schedule), and shall be addressed
to each of the individuals from Wm Smith set forth on Schedule 3,
as such Schedule 3 may be amended from time to time. The
Placement Notice shall be effective unless and until (i) Wm
Smith declines to accept the terms contained therein as a result of
any suspension or limitation of trading in the Placement Shares or
in securities generally on the Exchange or any occurrence or event
that causes a material adverse change in the operation or prospects
of the Company, (ii) the entire amount of the Placement Shares
have been sold, (iii) the Company suspends or terminates the
Placement Notice or (iv) the Agreement has been terminated
under the provisions of Section 12. The amount of any
commission to be paid by the Company to Wm Smith in connection with
the sale of the Placement Shares shall be calculated in accordance
with the terms set forth in Schedule 2. It is expressly
acknowledged and agreed that neither the Company nor Wm Smith will
have any obligation whatsoever with respect to a Placement or any
Placement Shares unless and until the Company delivers a Placement
Notice to Wm Smith and Wm Smith does not decline such Placement
Notice pursuant to the terms set forth above, and then only upon
the terms specified therein and herein. In the event of
a conflict between the terms of this Agreement and the terms of a
Placement Notice, the terms of the Placement Notice will
control.
3. Sale of
Placement Shares by Wm Smith . Subject to the terms
and conditions herein set forth, upon the Company’s issuance
of a Placement Notice, and unless the sale of the Placement Shares
described therein has been declined, suspended, or otherwise
terminated in accordance with the terms of this Agreement, Wm Smith
will use its commercially reasonable efforts consistent with its
normal trading and sales practices to sell such Placement Shares up
to the amount specified, and otherwise in accordance with the terms
of such Placement Notice. Wm Smith will provide written
confirmation to the Company no later than the opening of the
Trading Day (as defined below) immediately following the Trading
Day on which it has made sales of Placement Shares hereunder
setting forth the number of Placement Shares sold on such day, the
compensation payable by the Company to Wm Smith pursuant to Section
2 with respect to such sales, and the Net Proceeds (as defined
below) payable to the Company. Wm Smith may sell
Placement Shares by any method permitted by law deemed to be an
“at the market” offering as defined in Rule 415 of the
Securities Act, including without limitation sales made directly on
the NASDAQ Capital Market (the “ Exchange ”), on
any other existing trading market for the Common Stock or to or
through a market maker. Wm Smith may also sell Placement
Shares in privately negotiated transactions, subject to approval by
the Company. The Company acknowledges and agrees that
(i) there can be no assurance that Wm Smith will be successful
in selling Placement Shares, and (ii) Wm Smith will incur no
liability or obligation to the Company or any other person or
entity if it does not sell Placement Shares for any reason other
than a failure by Wm Smith to use its commercially reasonable
efforts consistent with its normal trading and sales practices to
sell such Placement Shares as required under this Section
3. For the purposes hereof, “ Trading Day
” means any day on which Common Stock is purchased and sold
on the principal market on which the Common Stock is listed or
quoted.
4. Suspension of
Sales . The Company or Wm Smith may, upon notice to
the other party in writing (including by email correspondence to
each of the individuals of the other Party set forth on Schedule 3,
if receipt of such correspondence is actually acknowledged by any
of the individuals to whom the notice is sent, other than via
auto-reply) or by telephone (confirmed immediately by verifiable
facsimile transmission or email correspondence to each of the
individuals of the other Party set forth on Schedule 3), suspend
any sale of Placement Shares; provided, however, that such
suspension shall not affect or impair either party’s
obligations with respect to any Placement Shares sold hereunder
prior to the receipt of such notice. Each of the Parties
agrees that no such notice under this Section 4 shall be effective
against the other unless it is made to one of the individuals named
on Schedule 3 hereto, as such Schedule may be amended from time to
time.
5. Settlement
.
(a) Settlement of
Placement Shares . Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement
Shares will occur on the third (3rd) Trading Day (or such earlier
day as is industry practice for regular-way trading) (each, a
“ Settlement Date ”) following the respective
Point of Sale (as defined below). The amount of proceeds
to be delivered to the Company on a Settlement Date against receipt
of the Placement Shares sold (the “ Net Proceeds
”) will be equal to the aggregate sales price received by Wm
Smith at which such Placement Shares were sold, after deduction for
(i) Wm Smith’s commission for such sales payable by the
Company pursuant to Section 2 hereof, (ii) any other amounts
due and payable by the Company to Wm Smith hereunder pursuant to
Section 7(g) (Expenses) hereof, and (iii) any transaction fees
imposed by any governmental or self-regulatory organization in
respect of such sales.
(b) Delivery of
Placement Shares . On or before each Settlement
Date, the Company will, or will cause its transfer agent to,
electronically transfer the Placement Shares being sold by
crediting Wm Smith’s or its designee’s account at The
Depository Trust Company through its Deposit and Withdrawal at
Custodian System (" DWAC ") or by such other means of
delivery as may be mutually agreed upon by the parties hereto which
in all cases shall be freely tradeable, transferable, registered
shares in good deliverable form. On each Settlement
Date, Wm Smith will deliver the related Net Proceeds in same day
funds to an account designated by the Company on, or prior to, the
Settlement Date. Wm Smith will be responsible for
obtaining DWAC instructions or instructions for delivery by other
means with regard to the transfer of Placement Shares being
sold. The Company agrees that if the Company, or its
transfer agent (if applicable), defaults in its obligation to
deliver Placement Shares on a Settlement Date, the Company agrees
that in addition to and in no way limiting the rights and
obligations set forth in Section 10(a) (Indemnification and
Contribution) hereto, it will (i) hold Wm Smith harmless
against any loss, claim, damage, or expense (including reasonable
legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company and (ii) pay to Wm
Smith any commission to which it would otherwise have been entitled
absent such default.
6. Representations
and Warranties of the Company . The Company
represents and warrants to, and agrees with, Wm Smith that as of
the date of this Agreement (except with respect to Sections 6(a),
6(b), 6(c), 6(d) and 6(e), which shall be as of the date the first
Placement Notice is given hereunder) and as of each Representation
Date (as defined in Section 7(m) below) on which a certificate is
required to be delivered pursuant to Section 7(m) of this
Agreement, as the case may be, except as may be disclosed in the
Registration Statement or a Disclosure Schedule delivered in
connection herewith:
(a) Registration
Statement and Prospectus . The Company and, assuming
no act or omission on the part of Wm Smith that would make such
statement untrue, the transactions contemplated by this Agreement
meet the requirements for and comply with the conditions for the
use of Form S-3 under the Securities Act. The
Registration Statement has been filed with the Commission and has
been declared effective under the Securities Act. The
Registration Statement or Prospectus has named Wm Smith as an
underwriter, acting as principal and/or agent, that the Company
might engage in the section entitled “Plan of
Distribution.” The Company has not received, and has no
notice of, any order of the Commission preventing or suspending the
use of the Registration Statement, or threatening or instituting
proceedings for that purpose. The Registration Statement
and the offer and sale of Shares as contemplated hereby meet the
requirements of Rule 415 under the Act and comply in all
material respects with said Rule. Any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement have been so
described or filed. Copies of the Registration
Statement, the Prospectus, and any such amendments or supplements
and all documents incorporated by reference therein that were filed
with the Commission on or prior to the date the first Placement
Notice is given hereunder, or are available through EDGAR, to Wm
Smith and their counsel. The Company has not distributed
and, prior to the later to occur of each Settlement Date and
completion of the distribution of the Placement Shares, will not
distribute any offering material in connection with the offering or
sale of the Placement Shares other than the Registration Statement
and the Prospectus and any Issuer Free Writing Prospectus (as
defined below) to which Wm Smith has consented. The
Common Stock is currently listed on the NASDAQ Capital Market under
the trading symbol “PPHM”. Except as
disclosed in the Registration Statement, the Company has not, in
the 12 months preceding the date the first Placement Notice is
given hereunder, received notice from the Exchange to the effect
that the Company is not in compliance with the listing or
maintenance requirements. Except as disclosed in the
Registration Statement, the Company 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.
(b) No Misstatement
or Omission . The Registration Statement, when it
became or becomes effective, and the Prospectus, and any amendment
or supplement thereto, on the date of such Prospectus or amendment
or supplement, conformed or will conform in all material respects
with the requirements of the Securities Act. At each
Settlement Date, the Registration Statement and the Prospectus, as
of such date, will conform in all material respects with the
requirements of the Securities Act. The Registration
Statement, when it became or becomes effective, did not, or will
not, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The
Prospectus and any amendment or supplement thereto, on the date
thereof and at each Point of Sale, did not or will not include an
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not
misleading. The documents incorporated by reference in
the Prospectus or any Prospectus Supplement did not, and any
further documents filed and incorporated by reference therein will
not, when filed with the Commission, contain an untrue statement of
a material fact or omit to state a material fact required to be
stated in such document or necessary to make the statements in such
document, in light of the circumstances under which they were made,
not misleading. The foregoing shall not apply to
statements in, or omissions from, any such document made in
reliance upon, and in conformity with, information furnished to the
Company by Wm Smith specifically for use in the preparation
thereof. “ Point of Sale ” means, for
a Placement, the time at which an acquiror of Placement Shares
entered into a contract, binding upon such acquiror, to acquire
such Shares.
(c) Conformity with
Securities Act and Exchange Act . The documents
incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto, when such
documents were or are filed with the Commission under the
Securities Act or the Exchange Act or became or become effective
under the Securities Act, as the case may be, conformed or will
conform in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable.
(d) Financial
Information . The consolidated financial statements
and the related notes thereto included or incorporated by reference
in the Registration Statement and the Prospectus comply with the
applicable requirements of the Act and the Exchange Act, as
applicable, and present fairly, the financial position of the
Company as of the dates indicated and the results of its operations
and the changes in its consolidated cash flows for the periods
specified; such financial statements have been prepared in
conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods covered thereby (except
(i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim
financial statements, to the extent that they may not include
footnotes or may be condensed or summary statements), and the other
financial information included or incorporated by reference in the
Registration Statement and the Prospectus has been derived from the
accounting records of the Company and presents fairly the
information shown thereby. Any pro forma financial
statements or data included or incorporated by reference in the
Registration Statement and the Prospectus comply with the
requirements of Regulation S-X of the Securities Act, including,
without limitation, Article 11 thereof, and the assumptions
used in the preparation of such pro forma financial statements and
data are reasonable, the pro forma adjustments used therein are
appropriate to give effect to the circumstances referred to therein
and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of those statements and
data. No other financial statements or schedules of the
Company or any other entity are required by the Act to be included
in the Registration Statement or the Prospectus. All
disclosures contained in the Registration Statement, the Pricing
Disclosure Materials and the Prospectus regarding “non-GAAP
financial measures” (as such term is defined by Item 10 of
Regulation S-K under the Act) comply with Regulation G of the
Exchange Act and Item 10 of Regulation S-K under the Act, to the
extent applicable. The Company does not have any
material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations and any
“variable interest entities” within the meaning of
Financial Accounting Standards Board Interpretation No. 46), not
disclosed in the Registration Statement, the Pricing Disclosure
Materials and the Prospectus.
(e) Conformity with
EDGAR Filing . The Prospectus delivered to Wm Smith
for use in connection with the sale of the Placement Shares
pursuant to this Agreement will be identical to the versions of the
Prospectus created to be transmitted to the Commission for filing
via EDGAR, except to the extent permitted by Regulation
S-T.
(f)
Organization . The Company is, and will be, duly
organized, validly existing as a corporation and in good standing
under the laws of its jurisdiction of organization. The
Company is, and will be, duly licensed or qualified as a foreign
corporation for transaction of business and in good standing under
the laws of each other jurisdiction in which its ownership or lease
of property or the conduct of its businesses requires such license
or qualification, and has all corporate power and authority
necessary to own or hold its properties and to conduct its business
as described in the Registration Statement and the Prospectus,
except where the failure to be so qualified or in good standing or
have such power or authority would not, individually or in the
aggregate, have a material adverse effect or would reasonably be
expected to have a material adverse effect on or affecting the
business, properties, management, consolidated financial position,
stockholders’ equity or results of operations of the Company
(a “ Material Adverse Effect ”).
(g)
Subsidiaries . Other than Avid Bioservices, Inc.,
the Company has no “Significant Subsidiaries” (as such
term is defined in Rule 1-02 of Regulation S-X.
(h) No Violation or
Default . The Company is not (i) in violation
of its charter or by-laws or similar organizational documents;
(ii) in default, and no event has occurred that, with notice
or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company is a party or
by which the Company is bound or to which any of the property or
assets of the Company is subject; or (iii) in violation of any
law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority,
except, in the case of each of clauses (ii) and (iii) above, for
any such violation or default that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect. To the Company’s knowledge, no other party
under any material contract or other agreement to which it is a
party is in default in any respect thereunder where such default
would have a Material Adverse Effect.
(i) No Material
Adverse Change . Except as set forth in or otherwise
contemplated by the Registration Statement (exclusive of any
amendment thereof) or the Prospectus (exclusive of any supplement
thereto), since the date of the most recent financial statements of
the Company included or incorporated by reference in the
Registration Statement and the Prospectus and prior to each
Settlement Date, (i) there has not been and will not have been
any change in the capital stock of the Company (except for changes
in the number of outstanding shares of Common Stock of the Company
due to the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, shares of Common
Stock outstanding on the date hereof) or long-term debt of the
Company or any dividend or distribution of any kind declared, set
aside for payment, paid or made by the Company on any class of
capital stock, that has resulted in or that would reasonably be
expected to result in a Material Adverse Effect to the Company
taken as a whole; (ii) other than this Agreement or the
Company’s Loan and Security Agreement dated December 9, 2008
with Blue Crest Capital Finance, L.P. (the “Loan
Agreement”), the Company has not entered and will not enter
into any transaction or agreement, not in the ordinary course of
business, that is material to the Company taken as a whole or
incurred and will not incur any liability or obligation, direct or
contingent, not in the ordinary course of business, that is
material to the Company taken as a whole; (iii) there has not been
any material adverse change in the business, properties,
management, financial position, stockholders’ equity, or
results of operations of the Company, taken as a whole; and
(iv) the Company has not sustained any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court
or arbitrator or governmental or regulatory authority.
(j)
Capitalization . The issued and outstanding
shares of capital stock of the Company have been validly issued,
are fully paid and nonassessable and, other than as disclosed in or
contemplated by the Registration Statement or the Prospectus, are
not subject to any preemptive rights, rights of first refusal or
similar rights. The Company has an authorized, issued
and outstanding capitalization as set forth in the Registration
Statement and the Prospectus as of the dates referred to therein
(other than the grant of additional options under the
Company’s existing stock option plans, or changes in the
number of outstanding shares of Common Stock of the Company due to
the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, shares of Common
Stock outstanding on the date hereof) and such authorized capital
stock conforms to the description thereof set forth in the
Registration Statement and the Prospectus. The
description of the securities of the Company in the Registration
Statement and the Prospectus is complete and accurate in all
material respects. Except as disclosed in or
contemplated by the Registration Statement or the Prospectus, as of
the date referred to therein, or as contemplated by the Loan
Agreement, the Company does not have outstanding any options to
purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or exchangeable for, or
any contracts or commitments to issue or sell, any shares of
capital stock or other securities.
(k) Authorization;
Enforceability . The Company has full legal right,
power and authority to enter into this Agreement and perform the
transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Company and is
a legal, valid and binding agreement of the Company enforceable in
accordance with its terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable
principles and (ii) the indemnification and contribution
provisions of Section 10 hereof may be limited by federal or state
securities laws and public policy considerations in respect
thereof.
(l) Authorization
of Placement Shares . The Placement Shares, when
issued and delivered pursuant to the terms approved by the Board of
Directors or a duly designated committee thereof, against payment
therefor as provided herein, will be duly and validly authorized
and issued and fully paid and nonassessable, free and clear of any
pledge, lien, encumbrance, security interest or other claim,
including any statutory or contractual preemptive rights, resale
rights, rights of first refusal or other similar rights, and will
be registered pursuant to Section 12 of the Exchange
Act. The Placement Shares, when issued, will conform in
all material respects to the description thereof set forth in or
incorporated into the Prospectus.
(m) No Consents
Required . No consent, approval, authorization,
order, registration or qualification of or with any court or
arbitrator or governmental or regulatory authority is required for
the execution, delivery and performance by the Company this
Agreement, the issuance and sale by the Company of the Placement
Shares, except for the registration of the Placement Shares under
the Act and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under applicable
state securities laws or by the by-laws and rules of the Financial
Industry Regulatory Authority (“ FINRA ”) or the
Exchange in connection with the sale of the Placement Shares by Wm
Smith.
(n) No Preferential
Rights . Except as set forth in or contemplated by
the Registration Statement and the Prospectus, (i) no person,
as such term is defined in Rule 1-02 of Regulation S-X promulgated
under the Securities Act (each, a “ Person ”),
has the right, contractual or otherwise, to cause the Company to
issue or sell to such Person any shares of Common Stock or shares
of any other capital stock or other securities of the Company,
(ii) no Person has any preemptive rights, resale rights,
rights of first refusal, or any other rights (whether pursuant to a
“poison pill” provision or otherwise) to purchase any
shares of Common Stock or shares of any other capital stock or
other securities of the Company, (iii) no Person has the right to
act as an underwriter or as a financial advisor to the Company in
connection with the offer and sale of the Shares, and (iv) no
Person has the right, contractual or otherwise, to require the
Company to register under the Securities Act any shares of Common
Stock or shares of any other capital stock or other securities of
the Company, or to include any such shares or other securities in
the Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Placement Shares as
contemplated thereby or otherwise.
(o) Independent
Public Accountant . Ernst & Young LLP, whose
reports on the consolidated financial statements of the Company are
filed with the Commission on Form 10-Ks for the periods ended April
30, 2009, April 30, 2008 and April 20, 2007 (the "
Accountant "), which reports are incorporated by reference
as part of the Registration Statement and the Prospectus, is and,
during the periods covered by its reports, was independent public
accountants within the meaning of the Securities Act and the Public
Company Accounting Oversight Board (United States). To
the Company’s knowledge, after due and careful inquiry, the
Accountant is not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act of 2002 (the “
Sarbanes-Oxley Act ”) with respect to the
Company.
(p) Enforceability
of Agreements . To the knowledge of the Company, all
agreements between the Company and third parties expressly
referenced in the Prospectus are legal, valid and binding
obligations of the Company enforceable in accordance with their
respective terms, except to the extent that (i) enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights
generally and by general equitable principles and (ii) the
indemnification provisions of certain agreements may be limited be
federal or state securities laws or public policy considerations in
respect thereof and except for any unenforceability that,
individually or in the aggregate, would not unreasonably be
expected to have a Material Adverse Effect.
(q) No
Litigation . Except as set forth in the Registration
Statement or the Prospectus, there are no legal, governmental or
regulatory actions, suits or proceedings pending, nor, to the
Company’s knowledge, any legal, governmental or regulatory
investigations, to which the Company is a party or to which any
property of the Company is the subject that, individually or in the
aggregate, if determined adversely to the Company, would reasonably
be expected to have a Material Adverse Effect or materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement; to the Company’s knowledge,
no such actions, suits or proceedings are threatened or
contemplated by any governmental or regulatory authority or
threatened by others; and (i) there are no current or pending
legal, governmental or regulatory investigations, actions, suits or
proceedings that are required under the Act to be described in the
Prospectus that are not so described; and (ii) there are no
contracts or other documents that are required under the Act to be
filed as exhibits to the Registration Statement that are not so
filed.
(r) Licenses and
Permits . Except as set forth in the Registration
Statement or the Prospectus, the Company possesses or has obtained,
and at each Settlement Date will possess and will have obtained,
all licenses, certificates, consents, orders, approvals, permits
and other authorizations issued by, and have made all declarations
and filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the
ownership or lease of its properties or the conduct of its business
as described in the Registration Statement and the Prospectus (the
“ Permits ”), except where the failure to
possess, obtain or make the same would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. Except as disclosed in the Registration
Statement or the Prospectus, the Company has not received written
notice of any proceeding relating to revocation or modification of
any such Permit and does not have any reason to believe that such
Permit will not be renewed in the ordinary course, except where the
failure to obtain any such renewal would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
(s) Market
Capitalization . As of the close of trading on
the Exchange on the Trading Day immediately prior to the date
of this Agreement and the Trading Day immediately prior to the date
of each Placement Notice (i) the aggregate market value of the
outstanding voting and non-voting common equity (as defined in
Securities Act Rule 405) of the Company held by persons other than
affiliates of the Company (pursuant to Securities Act Rule 144,
those that directly, or indirectly through one or more
intermediaries, control, or are controlled by, or are under common
control with, the Company) (the “ Non-Affiliate
Shares ”), was equal to or greater than $75 million
(calculated by multiplying (x) the price at which the common equity
of the Company was last sold on the Exchange on the Trading Day
immediately prior to the date of this Agreement times (y) the
number of Non-Affiliate Shares); or (ii) the aggregate market value
of securities sold by or on behalf of the Company as set forth on
Schedule 4 during the previous 12 calendar months, including the
Placement Shares, is no more than one-third the aggregate market
value of the Non-Affiliate Shares.
(t) No Material
Defaults . The Company has not defaulted on any
installment on indebtedness for borrowed money or on any rental on
one or more long-term leases, which defaults, individually or in
the aggregate, could reasonably be expected to have a Material
Adverse Effect. The Company has not filed a report
pursuant to Section 13(a) or 15(d) of the Exchange Act since the
filing of its last Annual Report on Form 10-K, indicating that it
(i) has failed to pay any dividend or sinking fund installment
on preferred stock or (ii) has defaulted on any installment on
indebtedness for borrowed money or on any rental on one or more
long-term leases, which defaults, individually or in the aggregate,
could reasonably be expected to have a Material Adverse
Effect.
(u) Certain Market
Activities . Neither the Company, nor any of its
respective directors, officers or controlling persons has taken,
directly or indirectly, any action designed, or that has
constituted or might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.
(v) Broker/Dealer
Relationships . Neither the Company nor any of its
related entities (i) is required to register as a
“broker” or “dealer” in accordance with the
provisions of the Exchange Act or (ii) directly or indirectly
through one or more intermediaries, controls or is a “person
associated with a member” or “associated person of a
member” (within the meaning of Article I of the NASD Manual
administered by FINRA).
(w) No Reliance
. The Company has not relied upon Wm Smith or legal
counsel for Wm Smith for any legal, tax or accounting advice in
connection with the offering and sale of the Placement
Shares.
(x) Taxes
. The Company has filed all federal, state, local and
foreign tax returns which have been required to be filed and paid
all taxes shown thereon through the date hereof, to the extent that
such taxes have become due and are not being contested in good
faith. Except as otherwise disclosed in or contemplated
by the Registration Statement or the Prospectus, no tax deficiency
has been determined adversely to the Company which has had, or
would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company has no
knowledge of any federal, state or other governmental tax
deficiency, penalty or assessment which has been or might be
asserted or threatened against it which could have a Material
Adverse Effect.
(y) Title to Real
and Personal Property . Except as set forth in the
Registration Statement or the Prospectus, the Company has good and
valid title in fee simple to all items of real property and good
and valid title to all personal property described in the
Registration Statement or Prospectus as being owned by it that are
material to the business of the Company, in each case free and
clear of all liens, encumbrances and claims, except those that
(i) do not materially interfere with the use made and proposed
to be made of such property by the Company or (ii) would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Any real property described in
the Registration Statement or Prospectus as being leased by the
Company is held by it under valid, existing and enforceable leases,
except those that (A) do not materially interfere with the use
made or proposed to be made of such property by the Company or
(B) would not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect.
(z) Intellectual
Property . Except as set forth in the Registration
Statement or the Prospectus, the Company owns or possesses adequate
enforceable rights to all patents, patent applications, trademarks
(both registered and unregistered), service marks, trade names,
trademark registrations, service mark registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information,
systems or procedures) (collectively, the “ Intellectual
Property ”), necessary for the conduct of its business as
conducted as of the date hereof, except to the extent that the
failure to own or possess adequate rights to such Intellectual
Property would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and to the Company's
knowledge there are no interference proceedings against any of the
Company’s patents or patent applications; to the Company's
knowledge, the Company has not been notified that the Company's
activities allegedly infringe any patent held by any third party;
there are no pending, or to the Company’s knowledge,
threatened judicial proceedings or interference proceedings
challenging the Company’s rights in or to or the validity of
the scope of any of the Company’s patents, patent
applications or proprietary information; to the Company's knowledge
no other entity or individual has any right or claim in any of the
Company’s patents, patent applications or any patent to be
issued therefrom by virtue of any contract, license or other
agreement entered into between such entity or individual and the
Company or by any non-contractual obligation, other than by written
licenses granted by the Company.
(aa) Reserved
.
(bb) Environmental
Laws . Except as set forth in the Registration
Statement or the Prospectus, the Company (i) is in compliance
with any and all applicable federal, state, local and foreign laws,
rules, regulations, decisions and orders relating to the protection
of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively,
“ Environmental Laws ”); (ii) has received
and is in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct
their respective businesses as described in the Registration
Statement and the Prospectus; and (iii) has not received
notice of any actual or potential liability for the investigation
or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except, in the
case of any of clauses (i), (ii) or (iii) above, for any such
failure to comply or failure to receive required permits, licenses,
other approvals or liability as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(cc) Disclosure
Controls . The Company maintains systems of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15
and 15d-15) for the Company and designed such disclosure controls
and procedures to ensure that material information relating to the
Company is made known to the certifying officers by others within
those entities, particularly during the period in which the
Company’s Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, as the case may be, is being prepared. The
Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of
a date within 90 days prior to the filing date of the Form 10-K for
the fiscal year ended April 30, 2008 (such date, the “
Evaluation Date ”). The Company presented
in its Form 10-K for the fiscal year ended April 30, 2008 the
conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations
as of the Evaluation Date. Since the Evaluation Date,
there have been no significant changes in the Company’s
internal controls (as such term is defined in Item 307(b) of
Regulation S-K under the Act) or, to the Company’s knowledge,
in other factors that could significantly affect the
Company’s internal controls.
(dd)
Sarbanes-Oxley . To the knowledge of the Company,
there is and has been no failure on the part of the Company and any
of the Company’s directors or officers, in their capacities
as such, to comply with any applicable provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated
thereunder. Each of the principal executive officer and
the principal financial officer of the Company (or each former
principal executive officer of the Company and each former
principal financial officer of the Company as applicable) has made
all certifications required by Sections 302 and 906 of the
Sarbanes-Oxley Act with respect to all reports, schedules, forms,
statements and other documents required to be filed by it or
furnished by it to the Commission. For purposes of the
preceding sentence, “principal executive officer” and
“principal financial officer” shall have the meanings
given to such terms in the Sarbanes-Oxley Act.
(ee) Finder’s
Fees . The Company has not incurred any liability
for any finder’s fees, brokerage commissions or similar
payments in connection with the transactions herein contemplated,
except as may otherwise exist with respect to Wm Smith pursuant to
this Agreement.
(ff) Labor
Disputes . No labor disturbance by or dispute with
employees of the Company exists or, to the knowledge of the
Company, is threatened which would reasonably be expected to result
in a Material Adverse Effect.
(gg) Investment
Company Act . The Company, after giving effect to the offering
and sale of the Placement Shares, will not be an “investment
company” or an entity “controlled” by an
“investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended (the “
Investment Company Act ”).
(hh) Operations
. The operations of the Company are and have been
conducted at all times in compliance with applicable financial
record keeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions to which the Company is
subject, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “
Money Laundering Laws ”), except as would not
reasonably be expected to result in a Material Adverse Effect; and
no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company, threatened.
(ii) Off-Balance
Sheet Arrangements . There are no transactions,
arrangements and other relationships between and/or among the
Company, and/or, to the knowledge of the Company, any of its
affiliates and any unconsolidated entity, including, but not
limited to, any structural finance, special purpose or limited
purpose entity (each, an “ Off Balance Sheet
Transaction ”) that could reasonably be expected to
affect materially the Company’s liquidity or the availability
of or requirements for its capital resources, including those Off
Balance Sheet Transactions described in the Commission’s
Statement about Management’s Discussion and Analysis of
Financial Conditions and Results of Operations (Release
Nos. 33-8056; 34-45321; FR-61), required to be described
in the Prospectus which have not been described as
required.
(jj) Underwriter
Agreements . The Company is not a party to any
agreement with an agent or underwriter for any other
“at-the-market” or continuous equity
transaction.
(kk) ERISA
. To the k
