FINAL SETTLEMENT AGREEMENT
This Final Settlement Agreement (the “ Final Agreement ”) is dated this 25 th day of August 2011, to be effective as of August 19, 2011 (the “ Effective Date ”), is being entered into among Radient Pharmaceuticals Corporation (“ RPC ” or the “ Company ”), Whalehaven Capital Fund, Ltd. (“ Whalehaven ”) and Alpha Capital Anstalt (“ Alpha Capital ,” and together with Whalehaven, the “ Plaintiffs ” or the “ Holder(s) ”). The Company and the Holders are hereinafter sometimes collectively referred to as the “ Parties .”
WHEREAS, Plaintiffs are the holders of notes, Common Stock and warrants issued by RPC (the “ Issued Securities ”) and have the right to receive additional shares of RPC Common Stock pursuant to a Settlement Agreement among the parties dated as of May 9, 2011 (the “ Original Settlement Agreement ”), as amended by an Amendment to Settlement Agreement dated May 23, 2011 (the “ Amendment Agreement ” and together with the Original Settlement Agreement, the “ Settlement Agreement ”); and
WHEREAS , a dispute has arisen regarding RPC’s performance under the Issued Securities and the Settlement Agreement; and
WHEREAS , the parties have signed a Memorandum of Understanding on August 19, 2011 (the “ MOU ”) wherein the parties reached an agreement in principle to amend and restate in their entirety the terms of the Settlement Agreement, the notes issued pursuant thereto and settle certain claims the Plaintiffs have against RPC, subject to the execution of this Final Agreement and the Additional Court Order;
NOW, THEREFORE , in consideration of the mutual undertakings herein set forth, the parties agree as follows:
Definitions. In addition to the other terms defined herein, when used in this Agreement, the following terms shall have the following respective meanings:
§ “ 2011 Noteholders Consents ” shall have the meaning set forth in Section 10(b) of this Final Agreement.
§ “ Additional Court Order ” shall mean the additional order of the Court approving this Final Agreement and the transactions contemplated hereby, in substantially the form of Exhibit A annexed hereto and made a part hereof.
§ “ Affiliate ” shall have the same meaning as that term is defined in Rule 405 promulgated under the Securities Act.
§ “ Beneficially Owned ” “ Beneficially Owning ” or “ Beneficial Ownership ” shall have the same meaning as such terms are defined or interpreted in Section 13(d) promulgated under the Exchange Act and the rules and regulations thereunder, including Regulation 13d-3.
§ “ Business Days ” shall mean any day of the week (other than Saturdays or Sundays) when national banks in New York, New York are open for the transaction of business.
§ “ Common Stock ” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
§ “ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
§ “ Converted Alpha Capital Notes ” means notes aggregating $1,616,380.92 that were converted by Alpha Capital as part of the Initial Share Conversions into an aggregate of 11,886,000 Settlement Shares.
§ “ Converted Whalehaven Notes ” means notes aggregating $1,239,415.76 that were converted by Whalehaven as part of the Initial Share Conversions into an aggregate of 9,114,000 Settlement Shares.
§ “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
§ “ Initial Share Conversions ” means (a) the aggregate of 217,000 Settlement Shares issued by the Company to the Whalehaven on May 26, 2011 pursuant to the Initial Settlement Agreement and 8,897,000 Settlement Shares issued by the Company to Whalehaven on June 29, 2011 upon conversion of the Converted Whalehaven Notes, and (b) the aggregate of 283,000 Settlement Shares issued by the Company to Alpha Capital on May 26, 2011 pursuant to the Initial Settlement Agreement and 11,603,000 Settlement Shares issued by the Company to Alpha Capital on June 29, 2011 upon conversion of the Converted Alpha Capital Notes.
§ “ Installment Amount ” shall have the meaning ascribed thereto in the Notes.
§ “ Installment Payment Date ” shall have the meaning ascribed thereto in the Notes.
§ “ Maturity Date ” shall meaning ascribed thereto in the Notes.
§ “ MOU ” means the Memorandum of Understanding among the Parties dated August 19, 2011.
§ “ Maximum Percentage ” shall mean the Beneficial Ownership of 9.99% of the aggregate number of shares of the Common Stock outstanding.
§ “ Non-Restricted Shares ” means shares of RPC Common Stock that are freely tradable, delivered without any restrictive legend and immediately resellable upon receipt by the Holder thereof pursuant to Rule 144(b)(1)(i) under the Securities Act of 1933, as amended, after November 2, 2011 without any additional holding period, volume limitations or manner of sale restrictions.
§ “ Notes ” shall mean the convertible promissory notes issued to the Holders pursuant to this Final Agreement in the form of Exhibit B annexed hereto and made a part hereof.
§ “ Optional Conversion ” shall mean the election by either or both Holders to effect one or more additional conversions of all or any portion of their respective Note into Common Stock pursuant to Section 2.1(a) of the Note.
§ “ RPC Security ” shall have the meaning ascribed to it in Section 8 of this Final Agreement.
§ “ Settlement Amount ” shall mean the aggregate sum of $10,912,055 payable by the Company to the Plaintiffs under the Settlement Agreement and this Final Agreement, as to Alpha Capital in the amount of $6,176,223.13 and as to Whalehaven in the amount of $4,735,831.87.
§ “ Settlement Shares ” shall mean the collective reference all of the shares of Common Stock of the Company issued and issuable to the Holders under the Settlement Agreement and this Final Agreement in respect of payment of the Settlement Amount (a) upon any Optional Conversion(s) of the Notes, (b) on each Installment Payment Date in respect of an Installment Amount, (c) in connection with the “True Up Shares” (as defined in Section 3 of this Final Agreement, and (d) in respect of the shares of Common Stock issued in connection with the Initial Share Conversions of the Converted Alpha Capital Notes and the Converted Whalehaven Notes.
§ “ Trading Day ” means a day on which the principal market upon which the Common Stock is traded or listed is open.
§ “ Trading Period ” means the period commencing on November 2, 2011 and ending January 3, 2012.
§ “ VWAP ” means, as reported by Bloomberg, the volume weighted average price of the Common Stock on the principal market upon which such Common Stock is listed or traded during the applicable period stated therefor.
1. Execution of Notes. RPC, immediately upon receipt of the Additional Court Order approving this Final Agreement and the 2011 Noteholders Consents, shall execute and deliver to Plaintiffs the Notes in the respective principal amounts as to each of Whalehaven and Alpha Capital that is set for on Exhibit B hereto.
2. Release . Immediately upon receipt of the 2011 Noteholders Consents and the Additional Court Order, the Plaintiffs shall execute and deliver to the Company the release agreement in the form of Exhibit C annexed hereto and made a part hereof (the “ Release Agreement ”).
3. True Up Shares During the Trading Period . At any time during the Trading Period, each of Whalehaven and Alpha Capital may, on one occasion only (which need not be the same time for Whalehaven and Alpha Capital), request that the Company deliver to such Holder additional Non-Restricted Shares of Common Stock (the “ True Up Shares ”), calculated as follows:
(b) With respect to Whalehaven, first, the $1,239,415.76 of Converted Whalehaven Notes shall be divided by the Section 3 VWAP. The result thereof shall be deemed the “ Adjusted Whalehaven Initial Share Conversions ”. There shall be deducted from such Adjusted Whalehaven Initial Share Conversions, the 9,114,000 Settlement Shares previously issued to Whalehaven pursuant to the Initial Share Conversions, and the difference shall be the True Up Shares issuable to Whalehaven. RPC shall, deliver within five (5) Trading Days after request by Whalehaven, such number of additional True Up Shares to Whalehaven which shall be Non-Restricted Shares.
(c) With respect to Alpha Capital, first, the $1,616,380.92 of Converted Alpha Capital Notes shall be divided by the Section 3 VWAP. The result thereof shall be deemed the “ Adjusted Alpha Capital Initial Share Conversions ”. There shall be deducted from such Adjusted Alpha Capital Initial Share Conversions, the 11,886,000 Settlement Shares previously issued to Alpha Capital pursuant to the Initial Share Conversions, and the difference shall be the True Up Shares issuable to Alpha Capital. RPC shall, deliver within five (5) Trading Days after request by Alpha Capital, such number of additional True Up Shares to Alpha Capital which shall be Non-Restricted Shares.
The True Up Shares to be delivered pursuant to this Section 3 shall be delivered subject to the restrictions in Section 8 below. All True Up Shares to be delivered pursuant to this Section 3 shall be in addition to any Common Stock delivered, or required to be delivered by RPC pursuant to the Settlement Agreement or pursuant to the Notes. Notwithstanding the foregoing, the Company’s obligation to issue Non-Restricted Shares as True Up Shares is subject to (i) compliance by the respective Holder with the provisions of Section 5 and Section 8 of this Final Agreement, and (ii) delivery by such Holder to the Company and its legal counsel customary seller’s representation letters, at the time of issuance of such True Up Shares and upon any resales thereof. In the event that the provisions of Section 8 are applicable to some or all of the True Up Shares, then, to the extent so applicable, the calculation of such True Up Shares shall be made as at the date such calculation would have otherwise been required to have been made, but the delivery of such True Up Shares shall be postponed to one or more future dates selected by such Holder; provided, that such delivery or deliveries would not violate Section 8.
4. Non-Affiliate Status. As of the date hereof, the Company is not aware of any basis for any assertion by RPC for either Plaintiff to be an Affiliate of the Company since August 2, 2011.
5. Independent Status. Each Plaintiff hereby represents and warrants that they are acting independently and not as a “group” as defined in Section 13(d) of the Exchange Act, and as a result the Beneficial Owner Limitation shall be calculated individually as to each Plaintiff, respectively. The Company agrees that based on the foregoing representation and warranty, and subject to the Plaintiffs’ continued representations as to the accuracy thereof, the Company shall not, in the absence of either (a) a court order, (b) a pending legal proceeding brought by any unaffiliated third party against either Plaintiff, or (c) correspondence from the Securities and Exchange Commission alleging that either Plaintiff is an Affiliate, claim or take any action based on the allegation that the Plaintiffs are acting as a group or are Affiliates of each other.