AVANIR PHARMACEUTICALS, INC.
12,500,000 SHARES OF COMMON STOCK
CONTROLLED EQUITY
OFFERING SM
CANTOR
FITZGERALD & CO.
499 Park Avenue
New York, NY 10022
AVANIR
PHARMACEUTICALS, INC., a Delaware corporation (the “
Company ”), confirms its agreement (this
“ Agreement ”) with Cantor Fitzgerald
& Co. (“ CF&Co ”), 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 CF&Co, acting as agent and/or principal, up to
12,500,000 shares (the “ Placement Shares
”) of the Company’s common stock, par value $0.0001 per
share (the “ Common Stock ”), with gross
proceeds of up to $35,000,000. Notwithstanding anything to the
contrary contained herein, the parties hereto agree that compliance
with the limitation set forth in this Section 1 on the
number of Placement Shares issued and sold under this Agreement
shall be the sole responsibility of the Company, and CF&Co
shall have no obligation in connection with such compliance,
provided that CF&Co strictly follows the trading instructions
provided pursuant to any Placement Notice. The issuance and sale of
Placement Shares through CF&Co 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 (as defined below) to issue Common
Stock.
The
Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (collectively, the “ Securities
Act ”), with the Commission a Registration Statement
on Form S-3 (No. 333-158665), including a base
prospectus, relating to certain securities, including the Placement
Shares to be issued from time to time by the Company, 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
promulgated thereunder (collectively, the “ Exchange
Act ”). The Company has prepared a prospectus
supplement specifically relating to the Common Stock (the “
Prospectus Supplement ”) to the base prospectus
included as part of such registration statement. The Company has
furnished to CF&Co, for use by CF&Co, copies of the
prospectus included as part of such registration statement, as
supplemented by the Prospectus Supplement, relating to the
Placement Shares. Except where the context otherwise requires,
such
1
registration
statement, as amended when it became 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 or deemed to be a part of
such registration statement pursuant to Rule 430B or 462(b) of
the Securities Act, as well as any comparable successor
registration statement filed by the Company for the sale of shares
of its Common Stock, including the Placement Shares, collectively
are herein called the “ Registration Statement
.” 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 have most
recently been 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, 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 either the Electronic Data Gathering Analysis and
Retrieval System or Interactive Data Electronic Applications
(collectively “ IDEA ”).
2.
Placements . Each time that the Company wishes to issue and
sell the Placement Shares hereunder (each, a “
Placement ”), it will notify CF&Co by email
notice (or other method mutually agreed to in writing by the
parties) (a “ Placement Notice ”)
containing the parameters in accordance with which it desires the
Placement Shares to be sold, which shall at a minimum include the
number of Placement Shares to be issued, the time period during
which sales are requested to be made, any limitation on the number
of Placement Shares that may be sold in any one Trading Day (as
defined in Section 3 ) and any minimum price below
which sales may not be made, a form of which containing such
minimum sales parameters necessary is attached hereto as
Schedule 1 . The Placement Notice shall
originate from any of the individuals from the Company set forth on
Schedule 2 (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 CF&Co set forth on
Schedule 2 , as such
Schedule 2 may be amended from time to time. The
Placement Notice shall be effective upon receipt by CF&Co
unless and until (i) in accordance with the notice
requirements set forth in Section 4 , CF&Co
declines to accept the terms contained therein for any reason, in
its sole discretion, (ii) the entire amount of the Placement
Shares have been sold, (iii) in accordance with the notice
requirements set forth in Section 4 , the Company suspends
or terminates the Placement Notice, (iv) the Company issues a
subsequent Placement Notice with parameters superseding those on
the earlier dated Placement Notice, or (iv) the Agreement has
been terminated under the provisions of Section 11 .
The amount of any discount, commission or other compensation to be
paid by the Company to CF&Co in connection with the sale of the
Placement Shares shall be calculated in accordance with the terms
set forth in Schedule 3 . It is expressly
acknowledged and agreed that neither the Company nor CF&Co will
have any obligation whatsoever with respect to a Placement or any
Placement Shares unless and until the Company delivers a Placement
Notice to CF&Co and CF&Co does not decline such Placement
Notice pursuant to the terms set forth above, and then only upon
the
2
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 CF&Co . 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,
CF&Co, for the period specified in the Placement Notice, will
use its commercially reasonable efforts consistent with its normal
trading and sales practices and applicable state and federal laws,
rules and regulations and the rules of the NASDAQ Global Market
(the “ Exchange ”), to sell such
Placement Shares up to the amount specified, and otherwise in
accordance with the terms of such Placement Notice. CF&Co will
provide written confirmation to the Company (including by email
correspondence) no later than the opening of the Trading Day (as
defined below) next 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 CF&Co with respect to such sales pursuant to
Section 2 , and the Net Proceeds (as defined below)
payable to the Company, with an itemization of deductions made by
CF&Co (as set forth in Section 5(a) ) from gross
proceeds for the Placement Shares that it receives from such sales.
CF&Co 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 Exchange, on any other existing trading
market for the Common Stock or to or through a market maker. With
the prior express written consent of the Company, which may be
provided in its Placement Notice, CF&Co may also sell Placement
Shares in privately negotiated transactions. During the term of
this Agreement and notwithstanding anything to the contrary herein,
CF&Co agrees that in no event will it or any CF&Co
Affiliate engage in any market making, bidding, stabilization or
other trading activity with regard to the Common Stock if such
activity would be prohibited under Regulation M or other
anti-manipulation rules under the Securities Act. The Company
acknowledges and agrees that (i) there can be no assurance
that CF&Co will be successful in selling Placement Shares, and
(ii) CF&Co 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 CF&Co 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 shares of
the Common Stock are purchased and sold on the principal market on
which the Common Stock is listed or quoted.
4.
Suspension of Sales . The Company or CF&Co 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 2 , 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 2 ),
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 2 hereto, as such
schedule may be amended from time to time.
3
(a) Settlement
of Placement Shares . Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement
Shares will occur on the third (3 rd )
Business Day (or such earlier day as is industry practice for
regular-way trading) following the date on which such sales are
made (each, a “ Settlement Date ” and the
first such settlement date, the “ First Delivery
Date ”). 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 CF&Co at
which such Placement Shares were sold, after deduction for
(i) CF&Co’s commission, discount or other
compensation for such sales payable by the Company pursuant to
Section 2 hereof, (ii) any other amounts due and
payable by the Company to CF&Co 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
CF&Co’s or its designee’s account (provided
CF&Co shall have given the Company written notice of such
designee at least one Business Day prior to the Settlement Date) at
The Depository Trust Company through its Deposit and Withdrawal at
Custodian System 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, CF&Co will deliver
the related Net Proceeds in same-day funds to an account designated
by the Company on, or prior to, the Settlement Date. 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 will, in addition to and in no way
limiting the rights and obligations set forth in
Section 9(a) (Indemnification and Contribution),
(i) hold CF&Co 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 CF&Co any commission, discount, or
other compensation to which it would otherwise have been entitled
absent such default; provided , however , that the
Company shall not be obligated to so indemnify and reimburse
CF&Co if the Placement Shares are not timely delivered due to
(i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange, the American
Stock Exchange or the NASDAQ Stock Market; (ii) a general
moratorium on commercial banking activities declared by either
federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services
in the United States; (iii) an outbreak or escalation of
hostilities or acts of terrorism involving the United States or a
declaration by the United States of a national emergency or war; or
(iv) any other calamity or crisis or any change in financial,
political or economic conditions in the United States or
elsewhere.
6.
Representations and Warranties of the Company . The Company
represents and warrants to, and agrees with, CF&Co that as of
each Applicable Time (as defined in Section 20(a)
):
(a) Compliance
with Registration Requirements . The Registration Statement has
been filed with the Commission under the Securities Act and
declared effective by the Commission under the Securities Act. The
Company has complied with all requests of the Commission for
additional or supplemental information. No stop order suspending
the effectiveness of the
4
Registration
Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the Company’s
knowledge, are contemplated or threatened by the Commission. The
Company satisfied all applicable requirements for the use of Form
S-3 under the Securities Act when the Registration Statement was
filed. The Commission has not issued an order preventing or
suspending the use of the base prospectus, any Free Writing
Prospectus (as defined below) or the Prospectus relating to the
proposed offering of the Placement Shares and no proceedings for
such purpose have been instituted or are pending or, to the
Company’s knowledge, are contemplated or threatened by the
Commission. The Prospectus delivered to CF&Co for use in
connection with the offering of Placement Shares was, at the time
of such delivery, identical to the electronically transmitted
copies thereof filed with the Commission pursuant to IDEA, except
to the extent permitted by Regulation S-T. At the respective
times each part of the Registration Statement and each amendment
thereto became effective or was deemed effective, as the case may
be, the Registration Statement complied and will comply in all
material respects with the Securities Act and did not and 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 immediately preceding
sentence does not apply to statements in or omissions from the
Registration Statement or any amendments or supplements thereto
based upon and in conformity with written information furnished to
the Company by CF&Co specifically for use therein.
(b) Delivery of
Offering Materials . The Company has delivered to CF&Co, or
made available through IDEA, one complete copy of the Registration
Statement and of each consent of experts filed as a part thereof,
and conformed copies of the Registration Statement (without
exhibits), and the Prospectus, as amended or supplemented, in such
quantities and at such places as CF&Co has reasonably
requested.
(c)
Prospectus . Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such
amendment or supplement was issued, as of the date hereof and at
each Applicable Time, as the case may be, included or will include
an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The foregoing sentence does not apply to
statements in or omissions from the Prospectus or any amendments or
supplements thereto based upon and in conformity with written
information furnished to the Company by CF&Co specifically for
use therein.
(d) Financial
Information . The financial statements of the Company, together
with the related schedules and notes thereto, set forth or included
or incorporated by reference in the Registration Statement and the
Prospectus fairly present, in all material respects, the financial
condition of the Company as of and at the dates indicated and the
results of operations, changes in financial position,
stockholders’ equity and cash flows for the periods therein
specified. Such financial statements, schedules, and notes are in
conformity with GAAP as consistently applied in the United States
throughout the periods involved (except as otherwise stated
therein). Any selected financial data included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the information shown therein and, to the extent based upon
or derived from the financial statements, have been compiled on a
basis consistent with the financial statements presented therein.
Any pro forma financial statements of the Company, and the related
notes thereto, included or incorporated by reference in
the
5
Registration
Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the
Commission’s rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the basis
described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein. The Company does not have any material
liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the Registration
Statement and the Prospectus. No other financial statements are
required to be set forth or to be incorporated by reference in the
Registration Statement or the Prospectus under the Securities
Act.
(e)
Incorporated Documents . Each document incorporated or
deemed to be incorporated by reference in the Registration
Statement or the Prospectus heretofore filed, at the time it was or
hereafter is filed with the Commission, conformed and will conform
when filed in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder;
no such document when it was filed (or, if an amendment with
respect to any such document was filed, when such amendment was
filed), contained an 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 not misleading; and no such
document, when it is filed, will contain an untrue statement of a
material fact or will omit to state a material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
(f)
Distribution of Materials; Free Writing Prospectuses . The
Company is not an “ineligible issuer” in connection
with the offering pursuant to Rules 164, 405 and 433 under the
Securities Act. The Company has not, directly or indirectly,
distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the
Placement Shares other than the Prospectus and other materials, if
any, permitted under the Securities Act to be distributed. Each
“issuer free writing prospectus” (a “ Free
Writing Prospectus ”), as defined in Rule 433
under the Securities Act (“ Rule 433
”), relating to the Placement Shares that (i) was
required to be filed with the Commission by the Company or
(ii) is exempt from filing pursuant to Rule 433(d)(5)(i),
in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in
the Company’s records pursuant to Rule 433(g), as of its
issue date and as of each Applicable Time (as defined in
Section 20 below), did not, does not and will not
include any information that conflicted, conflicts or will conflict
with the information contained in the Registration Statement or the
Prospectus, including any incorporated document deemed to be a part
thereof that has not been superseded or modified. The foregoing
sentence does not apply to statements in or omissions from any Free
Writing Prospectus based upon and in conformity with written
information furnished to the Company by CF&Co specifically for
use therein. The Company has satisfied or will satisfy the
conditions in Rule 433 to avoid a requirement to file with the
Commission any electronic road show.
(g)
Organization . The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the state of Delaware with full corporate power and authority
necessary to own, hold, lease and/or operate its assets and
properties and to conduct the business in which it is engaged and
as described in the Registration Statement and Prospectus; and the
Company is duly qualified as a foreign entity to transact business
and is in
6
good standing
in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure, individually or in
the aggregate, to be so qualified and be in good standing would not
have a material adverse effect on (i) the consolidated
business, operations, assets, properties, financial condition,
reputation, prospects, or results of operations of the Company and
any subsidiaries which may be incorporated or formed from time to
time (the “ Subsidiaries ”) taken as a
whole, (ii) the transactions contemplated hereby, or
(iii) the ability of the Company to perform its obligation
under this Agreement (collectively, a “ Material
Adverse Effect ”). The Company has full corporate
power and authority necessary to enter into and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. The Company is in compliance with the laws,
orders, rules, regulations and directives applicable to it, except
for any noncompliance that, individually, or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
Complete and correct copies of the certificate of incorporation and
of the bylaws of the Company and all amendments thereto have been
delivered or made available to CF&Co.
(h)
Subsidiaries . The Company has no “significant
subsidiaries” (as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Securities Act). The
Company does not own, directly or indirectly, any shares of stock
or any other equity interests or long-term debt securities of any
corporation, firm, partnership, joint venture, association or other
entity.
(i) No
Violation or Default . Neither the Company nor any of its
Subsidiaries is (i) in violation of any provision of its charter or
bylaws or similar organizational documents, (ii) in default in any
respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due
performance or observance of any term, covenant, or condition of
any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or by
which it is bound or to which any of its property or assets is
subject, (iii) in violation in any respect of any statute,
law, rule, regulation, ordinance, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company,
its Subsidiaries or any of its properties, as applicable
(including, without limitation, those administered by the Food and
Drug Administration of the U.S. Department of Health and Human
Services (the “ FDA ”) or by any foreign,
federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA), or
(iv) in violation of any rule or regulation of any
self-regulating organization or other non-governmental regulatory
authority (including, without limitation, the rules and regulations
of the Exchange) except, with respect to clauses (ii), (iii), and
(iv), any violations or defaults which, singularly or in the
aggregate, would not reasonably be expected to result in a Material
Adverse Effect . The execution, delivery and performance of
this Agreement, the issuance and sale of the Placement Shares and
the consummation of the transactions contemplated hereby will not
conflict with, or result in any breach of or constitute a default
under (nor constitute any event which with notice, lapse of time or
both would result in any breach of, or constitute a default under),
(i) any provision of the charter, bylaws or organizational
documents, as the case may be, of the Company or any of its
Subsidiaries, (ii) any provision of any contract, license,
repurchase agreement, management agreement, indenture, mortgage,
deed of trust, bank loan or credit agreement, note, lease
or
7
other evidence
of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries, or any of
their respective assets or properties may be bound or affected,
except for any breach or default that, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect, (iii) any federal, state, local or foreign
law, regulation or rule or any decree, judgment or order applicable
to the Company or any of its Subsidiaries, or (iv) any rule or
regulation of any self-regulating organization or other
non-governmental regulatory authority (including, without
limitation, the rules and regulations of the Exchange), except for
any breach or default that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse
Effect.
(j)
Capitalization . As of September 30, 2008, the Company
had an authorized, issued and outstanding capitalization as set
forth on its balance sheet included in the Company’s Annual
Report on Form 10-K for the fiscal year ended September 30,
2008. All of the issued and outstanding shares of capital stock of
the Company have been duly and validly authorized and issued and
are fully paid and non-assessable, have been issued in compliance
with all federal and state securities laws and were not issued in
violation of any preemptive right, resale right, right of first
refusal or similar right.
(k)
Authorization; Enforceability . 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 9 hereof may be limited by
federal or state securities laws and public policy considerations
in respect thereof.
(l) Capital
Stock and Placement Shares in Proper Form . The capital stock
of the Company, including the Placement Shares, conforms in all
material respects to the description thereof contained in the
Registration Statement and the Prospectus. The holders of the
Placement Shares will not be subject to personal liability under
the Delaware General Corporation Law by reason of being such
holders.
(m)
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 non-assessable, 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.
(n) Consents
and Permits . (1) The Company and its Subsidiaries have
made all filings, applications and submissions required by, and
possesses all approvals, licenses, certificates, certifications,
clearances, consents, exemptions, marks, notifications, orders,
permits and other authorizations issued by, the appropriate
federal, state or foreign regulatory authorities (including,
without limitation, the FDA, and any other foreign, federal, state
or local government or regulatory authorities performing functions
similar to those performed by the FDA) necessary for the ownership
or lease of their respective properties or to conduct
its
8
businesses as
described in the Registration Statement and the Prospectus
(collectively, “ Permits ”), except for
such Permits the failure of which to possess, obtain or make the
same would not reasonably be expected to have a Material Adverse
Effect; and neither the Company nor any of its Subsidiaries has
received any written notice of proceedings relating to the
limitation, revocation, cancellation, suspension, modification or
non-renewal of any such Permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect, and has any reason to believe that
any such license, certificate, permit or authorization will not be
renewed in the ordinary course. (2) No approval,
authorization, consent or order of or filing with any national,
state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the issuance and
sale of the Placement Shares or the consummation by the Company of
the transactions contemplated hereby (including, without
limitation, the Exchange, or approval of the stockholders of the
Company (including as may be required pursuant to Rule 5635 of
the NASDAQ Marketplace Rules)), other than (i) registration of
the Placement Shares under the Securities Act, (ii) any
necessary qualification under the securities or blue sky laws of
the various jurisdictions in which the Placement Shares are being
offered by CF&Co, (iii) filing of any reports under the
Exchange Act, or (iv) such approvals as may be required by the
Conduct Rules of the Financial Industry Regulatory Authority, Inc.
(“ FINRA ”).
(o) No
Preferential Rights . Except as set forth in 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) except as disclosed to
CF&Co or its agents in connection with the transactions
contemplated hereby, 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 Placement 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.
(p) Independent
Public Accountant . KMJ Corbin & Company, LLP, whose report
on the financial statements of the Company is filed with the
Commission as part of the Registration Statement and the
Prospectus, are and, during the periods covered by their report,
were (i) an independent public accounting firm within the
meaning of the Securities Act, (ii) a registered public
accounting firm (as defined in Section 2(a)(12) of the
Sarbanes-Oxley Act), and (iii) not in violation of the auditor
independence requirements of the Sarbanes-Oxley Act.
(q)
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,
9
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
other potentially unenforceable term that, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect.
(r) No
Litigation . Except as disclosed in the Registration Statement
and the Prospectus, there are no actions, suits, claims,
investigations, inquiries or proceedings pending or, to the
Company’s knowledge, threatened, to which either the Company
or, to the Company’s knowledge, its Subsidiaries, nor any of
their respective officers or directors, is a party or of which any
of their respective properties or other assets is subject at law or
in equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or
agency, or before any self-regulating organization or other
non-governmental regulatory authority (including, without
limitation, the Exchange), which if resolved adversely to the
Company or any Subsidiary would, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.
(s) Regulatory
Filings . Neither the Company nor any of its Subsidiaries has
failed to file with the applicable regulatory authorities
(including, without limitation, the FDA or any foreign, federal,
state or local governmental or regulatory authority performing
functions similar to those performed by the FDA) any required
filing, declaration, listing, registration, report or submission,
except for such failures that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect;
all such filings, declarations, listings, registrations, reports or
submissions were in compliance with applicable laws when filed and
no deficiencies have been asserted by any applicable regulatory
authority with respect to any such filings, declarations, listings,
registrations, reports or submissions, except for any deficiencies
that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(t) Market
Capitalization . As of the date of this Agreement, the
aggregate market value of the Company’s voting stock held by
nonaffiliates of the Company was equal to or greater than
$100 million.
(u) No Material
Changes . Subsequent to the respective dates as of which
information is given in, or incorporated by reference into, the
Registration Statement and the Prospectus, there has not been
(i) any change, development or event that has caused, or could
reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Effect, (ii) any change in the number of
authorized shares of capital stock, (iii) any transaction that
is material to the Company and its Subsidiaries taken as a whole,
or (iv) any obligation or liability, direct or contingent
(including any off-balance sheet obligations), incurred by the
Company or its Subsidiaries, that is material to the Company and
its Subsidiaries taken as a whole.
(v) No Material
Defaults . Neither the Company nor any of its Subsidiaries 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. 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
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.
(w) Certain
Market Activities . Neither the Company nor, to the
Company’s knowledge, any of its Subsidiaries, nor, to the
Company’s knowledge, any of their 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.
(x)
Broker/Dealer Relationships . Neither the Company nor any of
its Subsidiaries or any 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
FINRA member” or “associated person of a FINRA
member” (within the meaning of Article I of the Bylaws
of the NASD).
(y) No
Reliance . The Company has not relied upon CF&Co or legal
counsel for CF&Co for any legal, tax or accounting advice in
connection with the offering and sale of the Placement
Shares.
(z) Taxes .
The Company and, to the Company’s knowledge, any of its
Subsidiaries has filed on a timely basis (taking into account all
applicable extensions) all necessary federal, state, local and
foreign income and franchise tax returns, if any such returns were
required to be filed, through the date hereof and have paid all
taxes shown as due thereon except for any failure to file or pay
which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. No tax deficiency has
been asserted against the Company or, to the Company’s
knowledge, any of its Subsidiaries, nor does the Company know of
any tax deficiency that is likely to be asserted against any such
entity that, if determined adversely to any such entity, could
reasonably be expected to have a Material Adverse Effect. All tax
liabilities, if any, are adequately provided for on the books of
the Company and, to the Company’s knowledge, any of its
Subsidiaries, except for such tax liabilities that, individually or
in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(aa)
Intellectual Property . Except as set forth in the
Prospectus, the Company and its Subsidiaries own, possess, license
or have other rights to use all foreign and domestic patents,
patent applications, trade and service marks, trade and service
mark registrations, trade names, copyrights, licenses, inventions,
trade secrets, technology, Internet domain names, know-how and
other intellectual property (collectively, the “
Intellectual Property ”), necessary for the
conduct of their respective businesses as now conducted or as
proposed in the Prospectus to be conducted except to the extent
that the failure to own, possess, license or otherwise hold
adequate rights to use such Intellectual Property would not,
individually or in the aggregate, have a Material Adverse Effect.
Except as set forth in the Prospectus, (a) there are no rights
of third parties to any such Intellectual Property owned by the
Company and its Subsidiaries; (b) to the Company’s
knowledge, there is no infringement by third parties of any such
Intellectual Property; (c) to the Company’s knowledge,
there is no pending or threatened action, suit, proceeding or claim
by others challenging the Company’s and its
Subsidiaries’
11
rights in or to
any such Intellectual Property, and the Company is unaware of any
facts which could form a reasonable basis for any such action,
suit, proceeding or claim; (d) to the Company’s
knowledge, there is no pending or threatened action, suit,
proceeding or claim by others challenging the validity or scope of
any such Intellectual Property; (e) there is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding
or claim by others that the Company and its Subsidiaries infringe
or otherwise violate any patent, trademark, copyright, trade secret
or other proprietary rights of others; (f) to the
Company’s knowledge, there is no third-party U.S. patent or
published U.S. patent application which contains claims for which
an Interference Proceeding (as defined in 35 U.S.C. § 135) has
been commenced against any patent or patent application described
in the Prospectus as being owned by or licensed to the Company;
(g) the Company and its Subsidiaries have complied with the
terms of each agreement pursuant to which Intellectual Property has
been licensed to the Company or such Subsidiary, and all such
agreements are in full force and effect; (h) to the
Company’s knowledge, there is no prior art that may render
any patent application within the Intellectual Property
unpatentable that has not been disclosed to the U.S. Patent and
Trademark Office; (i) to the Company’s knowledge, the
manufacture, use or sale of the product candidates described in the
Prospectus as under development by the Company or its Subsidiaries
falls or would fall within the scope of one or more claims of one
or more patents or patent applications owned by, or exclusively
licensed to, the Company or its Subsidiaries; and (j) to the
Company’s knowledge, each issued patent was validly issued
under the laws of the country that issued it, except, in the case
of any of clauses (b), (c), (d) and (e) above, for any
such infringement by third parties or any such pending or
threatened suit, action, proceeding or claim as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(bb) Clinical
Studies . The clinical, pre-clinical and other studies and
tests conducted by or on behalf of or sponsored by the Company and
its Subsidiaries were and, if still pending, are being conducted in
accordance in all material respects with all statutes, laws, rules
and regulations, as applicable (including, without limitation,
those administered by the FDA or by any foreign, federal, state or
local governmental or regulatory authority performing functions
similar to those performed by the FDA). The descriptions in the
Registration Statement and Prospectus of the results of such
studies and tests are accurate and complete in all material
respects. Except as set forth in the Prospectus, neither the
Company nor any of its Subsidiaries has received any notices or
other correspondence from the FDA or any other foreign, federal,
state or local governmental or regulatory authority performing
fu
|
