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Exhibit 10.1
SECURITIES PURCHASE
AGREEMENT
SECURITIES
PURCHASE AGREEMENT (this “ Agreement ”), dated
as of January 10, 2005, by and among GENETRONICS BIOMEDICAL
CORPORATION, a corporation organized under the laws of the State of
Delaware (the “ Company ”), and the purchasers
(the “ Purchasers ”) set forth on the execution
pages hereof (the “ Execution Pages ”).
WHEREAS:
A. The Company and each Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Regulation D
(“ Regulation D ”), as promulgated by the United
States Securities and Exchange Commission (the “ SEC
”) under the Securities Act of 1933, as amended (the “
Securities Act ”).
B. Each Purchaser desires to purchase, severally and not
jointly, subject to the terms and conditions stated in this
Agreement, (i) shares of the Company’s common stock,
$0.001 par value (the “ Common Stock ”) and
(ii) warrants in the form attached hereto as
Exhibit A (including any warrants issued in replacement
thereof, the “ Warrants ”), to acquire shares of
Common Stock. The shares of Common Stock issuable upon exercise of
or otherwise pursuant to the Warrants are referred to herein as the
“ Warrant Shares .”
C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement in the form attached hereto as
Exhibit B (the “ Registration Rights Agreement
”) pursuant to which the Company has agreed to provide
certain registration rights under the Securities Act and the rules
and regulations promulgated thereunder, and applicable state
securities laws.
D. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto and the Escrow Agent (as defined in
the Escrow Agreement) are executing and delivering an Escrow
Agreement in the form attached hereto as Exhibit C (the
“ Escrow Agreement ”) pursuant to which the
parties hereto have agreed to place the Shares in an escrow account
in accordance with the terms hereof and thereof.
NOW,
THEREFORE, the Company and the Purchasers hereby agree as
follows:
1. CERTAIN
DEFINITIONS .
For
purposes of this Agreement, the following terms shall have the
meanings ascribed to them as provided below:
“
Affiliate ” or “Affiliates” means,
with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control
with, such Person.
“
Business Day ” shall mean any day on which the
principal United States securities exchange or trading market on
which the Common Stock is listed or traded.
“
Investment Amount ” shall mean the dollar amount to be
invested in the Company pursuant to this Agreement by a Purchaser,
as set forth on the Execution Page hereto executed by such
Purchaser.
“
Person ” means an individual, corporation,
partnership, limited liability company, trust, business trust,
association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority
or any other form of entity not specifically listed herein.
“
Securities ” shall mean the Shares, the Warrants and
the Warrant Shares.
“
Shares ” means the shares of Common Stock to be issued
and sold by the Company and purchased by the Purchasers at the
Signing.
“Transaction Documents” means this Agreement,
the Warrants, the Notes, the Registration Rights Agreements, the
Escrow Agreement, the Transfer Agent Instructions and any other
documents or agreements executed in connection with the
transactions contemplated hereunder.
“
Transfer Agent ” means American Stock Transfer &
Trust Company, or any other transfer agent selected by the
Company.
“
Transfer Agent Instructions ” means the Transfer Agent
Instructions, executed by the Company and delivered to and
acknowledged in writing by the Transfer Agent .
2. PURCHASE AND
SALE OF SHARES AND WARRANTS .
a.
Generally . Except as otherwise provided in this
Section 2 and subject to the satisfaction (or waiver) of the
conditions set forth in Section 6 and Section 7 below,
each Purchaser shall purchase the number of Shares and Warrants
determined as provided in this Section 2, and the Company shall
issue and sell such number of Shares and Warrants to each Purchaser
for such Purchaser’s Investment Amount as provided below. The
Company’s agreement with each of the Purchasers is a separate
agreement, and the sale of the Securities to each of the Purchasers
is a separate sale.
b.
Number of Shares and Warrants; Form of Payment; Delivery of
Shares .
i. On
the date hereof, the Company shall sell and each Purchaser shall
buy (A) the number of Shares as is equal to the quotient of
(I) such Purchaser’s Investment Amount divided by (II)
$4.05 and (B) Warrants exercisable for a number of shares of
Common Stock equal to 33% of the number of Shares referred to in
subclause (A) above. On the date hereof, and subject to
payment of the Tranche A Investment Amount (as defined below), the
Company will deliver the Warrants to each such Purchaser.
ii. On the date hereof, each Purchaser shall pay a
non-refundable amount equal to twenty percent (20%) of its
Investment Amount (i) in lawful money of the United States of
America in same day funds by wire transfer to the Company, in
accordance with the Company’s written wiring instructions or
(ii) with shares of the Holder’s Series C
Cumulative Convertible Preferred Stock valued at the Liquidation
Preference (as defined in the Certificate of Designations, Rights
and Preferences of Series C Cumulative Convertible Preferred
Stock of the Holder) thereof plus any accrued and unpaid dividends
thereon, at the principal office of the Holder located at 11199
Sorrento Valley Road, San Diego, CA 92121, or at such other place
as Holder may designate in writing (the “ Tranche A
Investment Amount ”), and a duly executed full recourse
promissory note in the form attached hereto as
Exhibit D (the “Note” ) representing
the remaining eighty percent (80%) of its Investment Amount,
against delivery to the Escrow Agent of certificates representing
the Shares being purchased by such Purchaser, and the Company shall
deliver such Shares to the Escrow Agent against delivery of such
Purchaser’s Investment Amount. Each Purchaser’s Shares
delivered to the Escrow Agent pursuant to the terms of this
Agreement shall be held by the Escrow Agent until such time as all
outstanding principal due under such Purchaser’s Note has
been paid in full to the Company, which shall be no later than the
September 30, 2005, unless paid earlier further to the default
provisions set forth in Section 3 of the Note or further to
the mandatory prepayment provisions in Section 4 of the Note
(collectively, the “Due Date” or the
“Closing Date” ) or by way of voluntary
prepayment. In the event that all outstanding principal due under a
Purchaser’s Note has not been paid in full by the Due Date,
such Purchaser’s Tranche A Investment Amount shall
automatically be forfeited and such Purchaser’s Shares held
by the Escrow Agent in such amount as calculated in
Section 2(b)(i) shall automatically be cancelled and
certificates representing such Shares shall be returned to the
Company. Nothing in this Section 2(b) shall prevent the exercise of
the Warrants and to acquire the Warrant Shares.
iii. If all outstanding principal due under the Notes shall be
paid in full by the Due Date, the Escrow Agent will deliver
certificates representing the Shares to each of the Purchasers in
such amounts as referred to above in Section 2(b)(i) and such
additional shares as provided for in Section 8(n) no later than
3:00 p.m. California time on the third Business Day following the
Due Date or such other date or time as the Purchasers and the
Company may mutually agree.
3. THE
PURCHASER’S REPRESENTATIONS AND WARRANTIES .
Each
Purchaser severally and not jointly represents and warrants to the
Company as follows:
a.
Purchase for Own Account . The Purchaser is purchasing the
Securities for the Purchaser’s own account and not with a
present view towards the distribution thereof. The Purchaser
understands that the Purchaser must bear the economic risk of this
investment indefinitely, unless the Securities are registered
pursuant to the Securities Act and any applicable state securities
or blue sky laws or an exemption from such registration is
available, and that the Company has no present intention of
registering any such Securities other than as contemplated by the
Registration Rights Agreement. Notwithstanding anything in this
Section 3(a) to the contrary, by making the foregoing
representation, the Purchaser does not agree to hold the Securities
for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption from
registration under the Securities Act and any applicable state
securities laws; provided , that in the case of any transfer
of the Securities pursuant to an exemption, such transfer is made
in accordance with the provisions of Section 3(e).
b.
Information . The Purchaser has been furnished all materials
(excluding any material nonpublic information) relating to the
business, finances and operations of the Company and its
subsidiaries and materials relating to the offer and sale of the
Securities that have been requested by the Purchaser. The Purchaser
has been afforded the opportunity to ask questions of the Company
and has received what the Purchaser believes to be satisfactory
answers to any such inquiries. The Purchaser understands that its
investment in the Securities involves a high degree of risk.
c.
Governmental Review . The Purchaser understands that no
United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or
endorsement of the Securities.
d.
Authorization; Enforcement . The Purchaser has the requisite
power and authority to enter into and perform its obligations under
this Agreement and to purchase the Securities in accordance with
the terms hereof. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Purchaser and
is a valid and binding agreement of the Purchaser enforceable
against the Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other laws affecting creditors’
rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law
or in equity).
e.
Transfer or Resale . The Purchaser understands that
(i) except as provided in the Registration Rights Agreement,
the Securities have not been and are not being registered under the
Securities Act or any state securities laws, and may not be
transferred unless (a) subsequently registered thereunder or
sold pursuant to Rule 144(k) under the Securities Act, or
(b) the Purchaser shall have delivered to the Company an
opinion of counsel reasonably acceptable to the Company (which
opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that
the Securities to be sold or transferred may be sold or transferred
under an exemption from such registration, and (ii) neither
the Company nor any other Person is under any obligation to
register such Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any
exemption thereunder, in each case, other than pursuant to the
Registration Rights Agreement.
f.
Legends . The Purchaser understands that the Securities may
bear a restrictive legend in substantially the following form:
[NEITHER] THESE
SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES
REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED
UNDER AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THOSE LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES [AND
THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES] MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
Certificates evidencing Securities shall not be required to contain
such legend or any other legend (i) while a Registration
Statement covering the resale of such Securities is effective under
the Securities Act provided the Purchasers at the time any of the
Purchasers request a removal of the Legend on any certificate
evidencing all or any portion of any of the Securities or to
transfer any of the same, it (or a broker acting on such
Purchaser’s behalf) provides to the Company (or to the
Transfer Agent on the Company’s behalf), reasonable written
assurances to the effect that any of the Securities, sold or to be
sold by such Purchasers have been, or will be, sold in accordance
with the plan of distribution set forth in the Prospectus and in
compliance with the prospectus delivery requirements under the
Securities Act., or (ii) following any sale of such Securities
pursuant to Rule 144, or (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is
not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by
the Staff of the SEC). The Company shall cause its counsel to issue
the legal opinion included in the Transfer Agent Instructions to
the Transfer Agent on the Effective Date . Following
the Effective Date or at such earlier time as a legend is no longer
required for certain Securities, the Company will no later than
three Business Days following the delivery by a Purchaser to the
Company or the Transfer Agent of a legended certificate
representing such Securities, deliver or cause to be delivered to
such Purchaser a certificate representing such Securities that is
free from all restrictive and other legends. The Company may not
make any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions on
transfer set forth in this Section.
The
Company acknowledges and agrees that a Purchaser may from time to
time pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement or other
loan or financing arrangement secured by the Securities and, if
required under the terms of such agreement, loan or arrangement,
such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of the
pledgee, secured party or pledgor shall be required in connection
therewith, but such legal opinion may be required in connection
with a subsequent transfer following default by the Purchaser
transferee of the pledge. Further, no notice shall be required of
such pledge. At the appropriate Purchase
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