Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): December 4, 2009
ZIOPHARM
Oncology, Inc.
(Exact
Name of Registrant as Specified in Charter)
Delaware
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0-32353
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84-1475672
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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1180
Avenue of the Americas
19th
Floor
New
York, NY
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10036
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(646) 214-0700
(Registrant’s
telephone number, including area code)
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following
provisions:
o
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425).
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12).
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b)).
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c)).
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Item
1.01 Entry into a Material
Definitive Agreement.
On
December 4, 2009, ZIOPHARM Oncology, Inc. (the “Company”), entered into an
underwriting agreement (the “Underwriting Agreement”) in which JMP Securities
LLC and Rodman & Renshaw, LLC agreed to serve as co-lead managers (together,
the “Underwriters”) in connection with a public offering and sale by the Company
of 15,484,000 units (each a “Unit,” and collectively, the “Units”) at a price to
the public of $3.10 per unit. Each Unit sold in the Offering will consist of one
share of the Company’s common stock (the “Common Stock”) and a warrant to
purchase .50 of a share of Common Stock at a price of $4.02 per share (the
“Investor Warrants”). The shares of common stock and warrants will be
immediately separable and will be issued separately. The Investor
Warrants will be exercisable at any time after the date of issuance and will
expire on the fifth anniversary of issuance.
In
addition, under the terms of the Underwriting Agreement, we have agreed to issue
additional warrants to purchase up to 464,520 shares of Common Stock to the
Underwriters as underwriting compensation (the “Underwriters’
Warrants”). The Underwriters’ Warrants will be exercisable, through
either a cash or cashless feature, commencing six months after the date of
issuance and will expire on the fifth anniversary of issuance. The Underwriters’
Warrants and underlying shares of common stock will not be exercised, sold,
transferred, assigned, or hypothecated or be the subject of any hedging, short
sale, derivative, put or call transaction that would result in the effective
economic disposition of the Underwriters’ Warrants by any person for a period of
180 days from issuance of the Underwriters’ Warrants on the closing date of the
offering in accordance with Financial Industry Regulatory Authority (“FINRA’)
Rule 5110.
The
closing of the offering is expected to take place on or about December 9, 2009,
subject to the satisfaction of customary closing conditions. Gross
proceeds from the sale of Units to be sold pursuant to the Underwriting
Agreement will be $48.0 million, before deducting the Underwriters’ fees and
estimated offering expenses. The net offering proceeds to the Company, after
deducting the Underwriter’s fees and other estimated offering expenses payable
by the Company, are expected to be approximately $45.2 million.
A copy of
the Underwriting Agreement, the form of Investor Warrant and form of
Underwriters’ Warrant are attached hereto as Exhibits 1.1, 4.1 and 4.2
respectively, and each is incorporated herein by reference.
The
offering of Units and Underwriters’ Warrants is being made pursuant to a
prospectus supplement filed with the Securities and Exchange Commission, in
connection with a shelf takedown from the Company’s registration statements on
Form S-3 (File No. 333-161453 and 333-163517). A copy of the opinion
of Maslon Edelman Borman & Brand, LLP relating to the legality of the
issuance and sale of the securities being offered is attached as Exhibit 5.1
hereto.
The
foregoing descriptions of the Underwriting Agreement, the form of Investor
Warrant and the form of Underwriter Warrant do not purport to be complete and
are qualified in their entirety by reference to the exhibits hereto, which are
incorporated herein by reference. The benefits of the representations and
warranties set forth in such documents are not intended only and do not
constitute continuing representations and warranties of the Company to any
future or other investors.
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Financial
Statements and Exhibits.
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(d)
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Exhibits
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Exhibit No.
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Description
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1.1
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Underwriting
Agreement dated December 4, 2009 between ZIOPHARM Oncology, Inc. and JMP
Securities LLC, as representative of the several underwriters named
thererin
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4.1
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Form
of investor common stock purchase warrant (included as Exhibit E to the
Underwriting Agreement filed as Exhibit 1.1 to this Form
8-K)
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4.2
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Form
of common stock purchase warrant issued to underwriters
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5.1
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Opinion
of Maslon Edelman Borman & Brand, LLP
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23.1
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Consent
of Maslon Edelman Borman & Brand, LLP (included as part of
Exhibit 5.1)
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99.1
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Press
Release, dated December 3, 2009
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99.2
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Press
Release, dated December 4,
2009
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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ZIOPHARM
Oncology, Inc.
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By:
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/s/
Richard Bagley
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Date:
December 8, 2009
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Name:
Richard Bagley
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Title:
President, Chief Operating Officer and Chief Financial
Officer
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INDEX OF
EXHIBITS
Exhibit No.
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Description
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1.1
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Underwriting
Agreement dated December 4, 2009 between ZIOPHARM Oncology, Inc. and JMP
Securities LLC, as representative of the several underwriters named
thererin
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4.2
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Form
of common stock purchase warrant issued to underwriters
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5.1
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Opinion
of Maslon Edelman Borman & Brand, LLP
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99.1
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Press
Release, dated December 3, 2009
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99.2
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Press
Release, dated December 4,
2009
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Unassociated Document
Exhibit
1.1
15,484,000
Shares
Warrants
to Purchase 7,742,000 Shares
ZIOPHARM
Oncology, Inc.
Common
Stock
($0.001
par value)
UNDERWRITING
AGREEMENT
December
4, 2009
JMP
Securities LLC
As
representative of the several underwriters set forth on
Schedule I attached
hereto
600
Montgomery Street, Suite 1100
San
Francisco, CA 94111
Ladies
and Gentlemen:
ZIOPHARM
Oncology, Inc., a Delaware corporation (the “Company”),
proposes, subject to the terms and conditions stated in this Underwriting
Agreement (this “Agreement”),
to issue and sell to the several underwriters set forth on Schedule I attached
hereto (the “Underwriters”)(i)
an aggregate of 15,484,000 shares of the Company’s common stock, $0.001 par
value per share (the “Common
Stock”) and (ii) warrants (in the form attached hereto as Exhibit E, the “Warrants”)
to purchase up to an aggregate of 7,742,000 shares of Common Stock in units
(each a “Unit”)
consisting of (A) one share of Common Stock and (B) one Warrant to
purchase 0.50 of a share of Common Stock. The aggregate of 15,484,000
shares of Common Stock so proposed to be sold is hereinafter referred to as the
“Shares”
and the number of shares of Common Stock issuable upon exercise of the Warrants
is hereinafter referred to as the “Warrant
Shares.” The Warrant Shares, together with the Shares and the
Warrants, are referred to herein as the “Securities.” The
Securities are more fully described in the Registration Statement (as defined
herein). This is to confirm the agreement between the Company and JMP
Securities LLC, as representative (the “Representative”)
of the several Underwriters concerning the offering, issuance and sale of the
Units.
1. Sale,
Purchase, Delivery and Payment for the Units
. On
the basis of the representations, warranties and agreements of the Company
herein contained, and subject to the terms and conditions set forth in this
Agreement:
(a) The
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of $2.9326 per Unit, the number of Units set forth opposite the
name of such Underwriter under the column "Number of Units to be Purchased from
the Company" on Schedule I to this
Agreement, subject to adjustment in accordance with Section 10 hereof
(the “Offering”).
(b) Payment
of the purchase price for, and delivery of, the Units shall be made at a closing
(the “Closing”)
at the offices of Maslon Edelman Borman & Brand, LLP, counsel for the
Company, located at 3300 Wells Fargo Center, 90 South Seventh Street,
Minneapolis, MN, at 11:00 A.M., New York time, on December 9, 2009 or
at such other time and date as the Representative and the Company determine
pursuant to Rule 15c6-1(a) under the Exchange Act (such date of payment and
delivery being herein referred to as the “Closing
Date”).
(c) Payment
shall be made to the Company by wire transfer of immediately available funds
against delivery of the respective Shares and Warrants to the Representative for
the respective accounts of the Underwriters.
(d) The
Units shall be registered in such names and shall be in such denominations as
the Representatives shall request at least two full business days before the
Closing Date. The Shares shall be delivered by or on behalf of the
Company to the Representative through the facilities of the Depository Trust
Company for the account of such Underwriter. The Warrants shall be
delivered by or on behalf of the Company to the Representative in physical,
certificated form.
(e) As
additional compensation for services rendered, on the Closing Date, the Company
shall issue to the Underwriters warrants to purchase an aggregate number of
shares of Common Stock equal to three percent (3.0%) of the Shares sold in the
Offering (the “Underwriter
Warrants”). The Underwriter Warrants, which shall be in
substantially the form attached hereto as Exhibit E but shall
be exercisable, pursuant to cash or cashless exercise, from and after six months
following the date of issuance, are included in the term “Warrants”
as used herein, and the number of shares of Common Stock issuable upon exercise
of the Underwriter Warrants is included in the term “Warrant
Shares” as used herein.
2. Registration
Statement and Prospectus
. The
Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”)
a registration statement on Form S-3 (File No. 333-161453) under the
Securities Act of 1933, as amended (the “Securities
Act”) and the published rules and regulations thereunder (the “Rules and
Regulations”) adopted by the Commission, including a base prospectus
relating thereto (the “Base
Prospectus”), and such amendments and supplements thereto as may have
been required to the date of this Agreement. Such registration
statement, at any given time, including amendments thereto to such time, the
exhibits and any schedules thereto at such time, the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities
Act at such time and the documents and information otherwise deemed to be a part
thereof or included therein by Rule 430B under the Securities Act or
otherwise pursuant to the Rules and Regulations at such time, is herein called
the “Registration Statement.” If the Company files an abbreviated
registration statement to register additional Units pursuant to Rule 462(b)
under the Rules and Regulations (the “462(b)
Registration Statement”), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration Statement, as
amended from time to time. The Registration Statement at the time it
originally became effective is herein called the “Initial
Registration Statement.”
The
Company proposes to file with the Commission pursuant to Rule 424 under the
Securities Act a final prospectus supplement to the Base Prospectus relating to
the Units, the form in which it shall be filed with the Commission pursuant to
Rule 424(b) (including the Base Prospectus as so supplemented) is
hereinafter called the “Prospectus.” Any
preliminary form of Prospectus or prospectus subject to completion which is
filed or used in the Offering prior to filing of the Prospectus (including the
Base Prospectus as so supplemented) is hereinafter called a “Preliminary
Prospectus.”
Unless
otherwise stated herein, any reference herein to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), on or before the last to occur of the time the Registration
Statement became effective with respect to the Underwriters pursuant to
Rule 430B under the Securities Act (the “Effective
Time”), the date of the Preliminary Prospectus (if any), or the date of
the Prospectus, and any reference herein to the terms “amend,” “amendment,” or
“supplement” with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
document filed under the Exchange Act after the Effective Time, the date of such
Preliminary Prospectus or the date of the Prospectus, as the case may be, which
is incorporated therein by reference.
3. Representations
and Warranties of the Company. The Company represents and
warrants to, and agrees with, the Underwriters as follows:
(a) Preliminary
Prospectus. No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing or the time of first use within the meaning of
the Rules and Regulations, conformed in all material respects to the
requirements of the Securities Act and the Rules and Regulations, and did 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, in
the light of the circumstances under which they were made, not misleading;
except that the foregoing shall not apply to statements in or omissions from any
Preliminary Prospectus made in reliance upon, and in conformity with,
information relating to the Underwriters furnished in writing to the Company by
the Representative, expressly for use in the preparation thereof, which
information the parties hereto agree is limited to the Underwriters’ Information
(as defined in Section 8).
(b) Registration
Statement. The Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto have been
declared effective by the Commission under the Securities Act or have become
effective pursuant to Rule 462 under the Rules and Regulations within three
years of the date hereof. The Company has responded to all requests,
if any, of the Commission for additional or supplemental information with
respect to the Registration Statement, any Rule 462(b) Registration
Statement or any post-effective amendment thereto. No stop order
suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge of the
Company, are contemplated or threatened by the Commission. The
Company is currently eligible to use Form S-3 pursuant to General Instruction
I.B.1. of Form S-3.
(c) Compliance with
Securities Act Requirements. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendment thereto, at the time it became effective (including each deemed
Effective Time), at all other subsequent times until the expiration of the
Prospectus Delivery Period (as defined below), and at the Closing Date (as
hereinafter defined), conformed and will conform in all material respects with
the applicable requirements and provisions of the Securities Act, the Rules and
Regulations and the Exchange 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;
except that the foregoing shall not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or any amendments or supplements thereto, made
in reliance upon, and in conformity with, information relating to the
Underwriters furnished in writing to the Company by the Representative,
expressly for use in the preparation thereof, which information the parties
hereto agree is limited to the Underwriters’ Information.
(d) Contents of
Prospectus. The Prospectus, as amended or supplemented, as of
its date, or the time of first use within the meaning of the Rules and
Regulations, at all subsequent times until the expiration of the Prospectus
Delivery Period, and at the Closing Date, conformed and will conform in all
material respects with the applicable requirements and provisions of the
Securities Act and the Rules and Regulations and did not and will not contain
any untrue statement of a material fact or 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; except that the
foregoing shall not apply to statements in or omissions from the Prospectus, or
any amendments or supplements thereto, made in reliance upon, and in conformity
with, information relating to the Underwriters furnished in writing to the
Company by the Representative, expressly for use in the preparation thereof,
which information the parties hereto agree is limited to the Underwriters’
Information.
(e) Incorporated
Documents. Each of the documents incorporated by reference in
the Registration Statement and the Prospectus, when they became effective or
were filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and did not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(f) Not an Ineligible
Issuer. (A) At the earliest time after the filing of the
Registration Statement that the Company or another offering participant made a
bona fide offer (within the meaning of Rule 164(h)(2) under the Securities
Act) of the Units and (B) as of the date hereof, the Company was not and is
not an “ineligible issuer,” as defined in Rule 405 under the Securities Act
(without taking account of any determination by the Commission pursuant to
Rule 405 that it is not necessary that the Company be considered an
ineligible issuer), nor an “excluded issuer” as defined in Rule 164 under
the Securities Act.
(g) Time of
Sale Disclosure
Package. As of the Time of Sale (as defined below), neither
(A) the Issuer General Free Writing Prospectus(es) (as defined below)
issued at or prior to the Time of Sale, the Statutory Prospectus (as defined
below) and the information included on Schedule II
hereto, all considered together (collectively, the “Time of Sale
Disclosure Package”), nor (B) any individual Issuer Limited-Use Free
Writing Prospectus (as defined below), when considered together with the Time of
Sale Disclosure Package, included as of the Time of Sale any untrue statement of
a material fact or omits or omitted as of the Time of Sale to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from any
Statutory Prospectus included in the Registration Statement or any Issuer Free
Writing Prospectus based upon and in conformity with written information
furnished to the Company by the Representative specifically for use therein,
which information the parties hereto agree is limited to the Underwriters’
Information. As used in this paragraph and elsewhere in this
Agreement:
(i) “Time of
Sale” means 8:30 A.M. New York time on the date of this
Agreement.
(ii) “Statutory
Prospectus” means the Preliminary Prospectus, if any, and the Base
Prospectus, each as amended and supplemented immediately prior to the Time of
Sale, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof. For purposes of
this definition, information contained in a form of prospectus that is deemed
retroactively to be a part of the Registration Statement pursuant to
Rule 430B under the Securities Act shall be considered to be included in
the Statutory Prospectus as of the actual time that form of prospectus is filed
with the Commission pursuant to Rule 424(b) under the Securities
Act.
(iii) “Issuer Free
Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 under the Securities Act, relating to the Units that
(1) is required to be filed with the Commission by the Company, or
(2) is exempt from filing pursuant to Rule 433(d)(5)(i) under the
Securities Act because it contains a description of the Units or of the offering
that does not reflect the final terms, 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) under the
Securities Act.
(iv) “Issuer General
Free Writing Prospectus” means any Issuer Free Writing Prospectus that is
intended for general distribution to prospective investors, as evidenced by its
being specified in Schedule III
hereto.
(v) “Issuer
Limited-Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is not an Issuer General Free Writing Prospectus.
(h) Conflict with
Registration Statement. Each Issuer Free Writing Prospectus,
as of its issue date and at all subsequent times through the Prospectus Delivery
Period or until any earlier date that the Company notified or notifies the
Underwriters as described in Section 4(d),
did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the Registration
Statement, any Statutory Prospectus or the Prospectus. The foregoing
sentence does not apply to statements in or omissions from any Issuer Free
Writing Prospectus based upon and in conformity with written information
furnished in writing to the Company by the Representative expressly for use
therein, which information the parties hereto agree is limited to the
Underwriters’ Information.
(i) Free Writing
Prospectuses. Each Issuer Free Writing Prospectus satisfied,
as of its issue date and at all subsequent times through the Prospectus Delivery
Period, all other applicable conditions to use thereof as set forth in
Rules 164 and 433 under the Securities Act.
(j) Distributed
Materials. The Company has not distributed and will not
distribute any prospectus or other offering material in connection with the
Offering other than any Preliminary Prospectus, the Time of Sale Disclosure
Package or the Prospectus or other materials, if any, permitted under the
Securities Act to be distributed by the Company; provided, however, that,
except as set forth on Schedule III,
the Company has not made and will not make any offer relating to the Units that
would constitute a “free writing prospectus” as defined in Rule 405 under
the Securities Act, except in accordance with the provisions of Section 4(q) of
this Agreement.
(k) Financial
Statements. The financial statements of the Company, together
with the related notes, set forth or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and fairly present the financial condition
of the Company as of the dates indicated and the results of operations and
changes in cash flows for the periods therein specified in conformity with U.S.
generally accepted accounting principles consistently applied throughout the
periods involved (in the case of unaudited interim financial statements, subject
to normal year-end adjustments and the exclusion of footnotes); and the
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein. No other financial
statements or schedules are required to be included in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus.
(l) Independent
Accountants. To the Company’s knowledge, Caturano and Company,
P.C., which has expressed its opinion with respect to the financial statements
and schedules filed as a part of, or incorporated by reference in, the
Registration Statement and included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
is an independent public accounting firm within the meaning of the Securities
Act and the Rules and Regulations and such accountants are not in violation of
the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley
Act”).
(m) Organization. The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware. Each of the
Subsidiaries (as defined below), if any, has been duly organized and is validly
existing as a corporation or other entity in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Company
and its Subsidiaries has full power and authority to own its properties and to
conduct its business as currently being conducted and as described in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
and is duly qualified to do business as a foreign corporation or other entity in
good standing in each jurisdiction in which it owns or leases real property or
in which the conduct of its business requires such qualification except where
the failure to be so qualified would not have a material adverse effect upon the
business, prospects, properties, operations, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole (“Material Adverse
Effect”).
(n) Absence of
Material Changes. Except as contemplated in the Time of
Sale Disclosure Package and in the Prospectus, subsequent to the respective
dates as of which information is given in the Time of Sale Disclosure Package,
neither the Company nor any of its Subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock; and there has not been any material
change in the capital stock (other than a change in the number of outstanding
shares of Common Stock due to the issuance of shares upon the exercise of
outstanding options or warrants or sale of shares pursuant to any employee stock
purchase plan of the Company existing on the date hereof), or any material
change in the short term or long term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock,
of the Company or any of its Subsidiaries (other than grants of stock options or
other equity awards pursuant to any equity incentive plan or employee stock
purchase plan of the Company existing on the date hereof), or any material
adverse change in the financial condition, business, prospects, property,
operations or results of operations of the Company and its Subsidiaries, taken
as a whole (“Material Adverse
Change”).
(o) Legal
Proceedings. Except as set forth in the Time of Sale
Disclosure Package and in the Prospectus, there is not pending or, to the
knowledge of the Company, threatened or contemplated, any action, suit or
proceeding to which the Company or any of its Subsidiaries is a party or of
which any property or assets of the Company is the subject before or by any
court or governmental agency, authority or body, or any arbitrator, which,
individually or in the aggregate, would reasonably be likely to result in a
Material Adverse Change.
(p) Contracts. There
are no statutes or regulations applicable to the Company or contracts or
documents to which the Company is a party or which it is aware that are required
to be described in the Registration Statement, in the Time of Sale Disclosure
Package and in the Prospectus or be filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations that have not
been so described or filed.
(q) Due Authorization
and Enforceability. The Company has full power and authority
to enter into this Agreement and to authorize, issue and sell the Units as
contemplated by this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid,
legal and binding obligation of the Company, enforceable in accordance with its
terms, except as rights to indemnity hereunder may be limited by federal or
state securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
(r) No
Conflict. The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions herein
contemplated by the Company will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, (A) any statute
or any order, rule, regulation or decree of any court or governmental agency or
body having jurisdiction over the Company or any of its properties, (B) any
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its property is subject, except in the case of (A) and (B),
to such extent as individually or in the aggregate, would not reasonably be
likely to have a Material Adverse Effect, or (C) the Company’s certificate
of incorporation, as amended and restated (the “Certificate of
Incorporation”), or amended and restated bylaws (the “Bylaws”).
(s) No Consents
Required. Except for the registration of the Securities
under the Securities Act and the Exchange Act, including as may be required with
respect to the listing of the Shares and Warrant Shares on the NASDAQ Capital
Market or as may be required under state securities or blue sky laws in
connection with the Offering or as may be required under the rules and
regulations of the Financial Industry Regulatory Authority or that would not
have a Material Adverse Effect, no consent, approval, authorization or order of,
or filing with, any court or governmental administrative or regulatory agency or
body is required for the execution, delivery and performance of this Agreement
by the Company or for the consummation of the transactions contemplated hereby
by the Company.
(t) Capitalization. All
of the issued and outstanding shares of capital stock of the Company, including
the outstanding shares of Common Stock, are duly authorized and validly issued,
fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities that
have not been waived in writing or satisfied. As of the respective
times indicated therein, the Company had an authorized and outstanding
capitalization as set forth in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus. The capital stock of the
Company, including the Common Stock, conforms in all material respects to the
description thereof in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus. All of the issued and
outstanding shares of capital stock of each of the Company’s Subsidiaries have
been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus and except for any
directors’ qualifying shares, the Company owns of record and beneficially, free
and clear of any security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such stock. Except as
described in the Registration Statement, in the Time of Sale Disclosure Package
and in the Prospectus, there are no options, warrants, agreements, contracts or
other rights in existence to purchase or acquire from the Company or any
Subsidiary of the Company any shares of the capital stock of the Company or any
Subsidiary of the Company.
(u) The Shares,
Warrants and Warrant Shares.. The Shares which may be sold
hereunder by the Company have been duly authorized and, when issued, delivered
and paid for in accordance with the terms of this Agreement, will have been
validly issued and will be fully paid and nonassessable and will conform to the
description thereof contained in the Time of Sale Disclosure Package and the
Prospectus. The Warrants have been duly authorized, and when executed
and delivered by the Company, will constitute valid and binding obligations of
the Company enforceable in accordance with their terms, except that such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
creditors’ rights generally. The Warrant Shares has been duly authorized and
reserved for issuance pursuant to the terms of the Warrants, and when issued by
the Company upon valid exercise of the Warrants and payment of the exercise
price, will be duly and validly issued, fully paid and nonassessable and free of
any preemptive or similar rights and will conform to the description thereof
contained in the Time of Sale Disclosure Package and the
Prospectus.
(v) Preemptive
Rights. Except as otherwise stated in the Registration
Statement, in the Time of Sale Disclosure Package and in the Prospectus, there
are no statutory or contractual preemptive rights or other rights to subscribe
for or to purchase, any shares of Common Stock pursuant to the Company’s
Certificate of Incorporation, Bylaws or any agreement or other instrument to
which the Company is a party or by which the Company is bound.
(w) Registration
Rights. Neither the filing of the Registration Statement nor
the offering or sale of the Units as contemplated by this Agreement gives rise
to any rights for or relating to the registration of any shares of Common Stock
or other securities of the Company which have not been waived.
(x) Lock-Up
Agreements. The Company has received and caused to be
delivered to the Underwriters copies of the executed Lock-Up Agreements,
substantially in the form of Exhibit A hereto
(the “Lock-Up
Agreements”) executed by each person listed on Exhibit B
hereto, and such Lock-Up Agreements shall be in full force and effect on the
Closing Date.
(y) Permits. The
Company and each of its Subsidiaries holds, and is operating in compliance in
all material respects with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any governmental or
self regulatory body required for the conduct of its business (collectively, the
“Permits”),
except where the failure to so hold or noncompliance, individually or in the
aggregate, would not reasonably be likely to have a Material Adverse Effect; all
such Permits are valid and in full force and effect except where the failure to
be valid or in full force and effect would not reasonably be likely to have a
Material Adverse Effect; and the Company and each of its Subsidiaries is in
compliance in all material respects with all applicable federal, state, local
and foreign laws, regulations, orders and decrees.
(z) Good Title to
Property. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property described in the Registration Statement, in the
Time of Sale Disclosure Package and in the Prospectus as being owned by them
other than Intellectual Property, which is covered by Section 3(aa)
hereof, in each case free and clear of all liens, claims, security interests,
other encumbrances or defects except such as (i) are described in the Time of
Sale Disclosure Package and in the Prospectus or (ii) do not materially and
adversely affect the value of such property and do not materially interfere with
the use made or proposed to be made of each property by the Company or such
Subsidiary. Any real property held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with only such exceptions with respect to any particular lease as are not
material and do not interfere in any material respect with the use made and
proposed to be made of such property by the Company and its
Subsidiaries.
(aa) Intellectual
Property. Except as described in the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus, the Company and its
Subsidiaries own, possess or can acquire on reasonable terms all Intellectual
Property (as defined below) or rights thereto necessary for the conduct of the
business of the Company and its Subsidiaries as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus as now
conducted, except to the extent such failure to own, possess or acquire such
Intellectual Property would not result, individually or in the aggregate, in a
Material Adverse Change. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus or as would
not be reasonably likely to result, individually or in the aggregate, in a
Material Adverse Change (A) there is no infringement, misappropriation or
violation by third parties of any such Intellectual Property, except as such
infringement, misappropriation or violation would not result in a Material
Adverse Change; (B) there is no pending or, to the knowledge of the Company
and its Subsidiaries, threatened in writing action, suit, proceeding or claim by
others challenging the rights of the Company and its Subsidiaries in or to any
such Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim, that would, individually or in the
aggregate, together with any other claims in this Section 3(aa)
result in a Material Adverse Change; (C) the Intellectual Property owned by
the Company and its Subsidiaries and, to the knowledge of the Company, the
Intellectual Property licensed to the Company and its Subsidiaries has not been
adjudged by a court of competent jurisdiction invalid or unenforceable, in whole
or in part, and there is no pending or, to the Company's knowledge, threatened
in writing action, suit, proceeding or claim by others challenging the validity
or scope of any such Intellectual Property; and (D) there is no pending or,
to the Company's knowledge, threatened in writing action, suit, proceeding or
claim by others that the Company or its Subsidiaries infringe, misappropriate or
otherwise violate any Intellectual Property or other proprietary rights of
others, the Company and its Subsidiaries have not received any written notice of
such claim and the Company is unaware of any other facts which would form a
reasonable basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 3(aa)
result in a Material Adverse Change. To the Company's knowledge, all
material technical information developed by and belonging to the Company and its
Subsidiaries which has not been patented has been kept confidential or has only
been disclosed subject to confidentiality obligations which, to the Company’s
knowledge, have not been materially breached. The Company is not a
party to or bound by any options, licenses or agreements with respect to the
Intellectual Property that are required to be set forth in the Registration
Statement, in the Time of Sale Disclosure Package and in the Prospectus and are
not described therein. The term “Intellectual
Property” as used herein means all patents, patent applications, trade
and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property.
(bb) No
Violation. Neither the Company nor any of its Subsidiaries is
(A) in violation of its respective certificates of incorporation or bylaws
or (B) in breach of or otherwise in default, and no event has occurred
which, with notice or lapse of time or both, would constitute such a default in
the performance of any material obligation, agreement or condition contained in
any bond, debenture, note, indenture, loan agreement or any other material
contract, lease or other instrument to which it is subject or by which any of
them may be bound, or to which any of the material property or assets of the
Company or any of its Subsidiaries is subject except, with respect to clause
(B), for any breach or default as would not, individually or in the aggregate,
result in a Material Adverse Effect.
(cc) Taxes. The
Company and its Subsidiaries (A) have timely filed (or requested in good faith
an extension to the filing of) all federal, state, local and foreign income and
franchise tax returns required to be filed and (B) are not in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any which the Company or any of its
Subsidiaries is contesting in good faith except, in the case of (A) and (B) to
such extent as, individually or in the aggregate, would not reasonably be likely
to have a Material Adverse Effect.
(dd) Trading Market;
Exchange Act Registration. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act and is included or approved for inclusion
on the NASDAQ Capital Market and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the NASDAQ Capital
Market nor has the Company received any notification that the Commission, the
NASDAQ Capital Market or the Financial Industry Regulatory Authority is
contemplating terminating such registration or listing. The Company
has complied in all material respects with the applicable requirements of the
NASDAQ Capital Market for maintenance of inclusion of the Common Stock
thereon. The Company has filed a listing application with the NASDAQ
Capital Market in respect of the Shares and Warrant Shares.
(ee) Subsidiaries. Other
than the subsidiaries of the Company listed in Schedule IV
hereto (each a “Subsidiary”
and collectively, the “Subsidiaries”),
the Company, directly or indirectly, owns no capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust or other entity.
(ff) Accounting
Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management’s general or
specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with U.S. generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management’s
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Except as described
in the Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus, since the most recent audit of the effectiveness of the Company’s
internal control over financial reporting, there has been (1) no material
weakness in the Company’s internal control over financial reporting (whether or
not remediated) and (2) no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
(gg) Broker’s
Fee. Other than as contemplated by this Agreement, the Company
has not incurred any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(hh) Insurance. The
Company carries, or is covered by, insurance in such amounts and covering such
risks as is customary for companies engaged in similar businesses in similar
industries.
(ii) Investment
Company. The Company is not and, after giving effect to the
offering and sale of the Units, will not be an “investment company,” as such
term is defined in the Investment Company Act of 1940, as amended.
(jj) Use of Form
S-3. As of the date the Initial Registration Statement was
filed and as of the date hereof, the Company satisfied and, as of the Closing
Date, the Company will satisfy, the applicable conditions for use of
Form S-3, set forth in the General Instructions thereto.
(kk) Sarbanes-Oxley. The
Company and, to the knowledge of the Company, its directors and officers, in
their capacities as such, are in compliance in all material respects with all
applicable provisions of the Sarbanes-Oxley Act and the rules and regulations of
the Commission thereunder.
(ll) Disclosure
Controls. The Company has established and maintains
“disclosure controls and procedures” (as defined in Rules 13a-15 and 15d-15
under the Exchange Act) and such controls and procedures are effective, at the
reasonable assurance level, in ensuring that material information relating to
the Company, including its Subsidiaries, is made known to the principal
executive officer and the principal financial officer of the
Company.
(mm) No Price
Stabilization. Neither the Company nor any Subsidiary nor, to
the Company’s knowledge, any of their respective officers, directors, affiliates
or controlling persons has taken, directly or indirectly, any action designed
to or that might be reasonably expected to cause or result in, or
which has constituted or which might reasonably be expected to constitute the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Units.
(nn) No Labor
Disputes. No labor problem or dispute with the employees of
the Company exists, or, to the Company’s knowledge, is threatened or imminent,
which would reasonably be expected to result in a Material Adverse
Change. The Company is not aware that any key employee or significant
group of employees of the Company plans to terminate employment with the
Company.
(oo) Defined Benefit
Plans. Neither the Company nor any of the Subsidiaries has
maintained or contributed to a defined benefit plan as defined in
Section 3(35) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). No
plan maintained or contributed to by the Company that is subject to ERISA (an
“ERISA
Plan”) (or any trust created thereunder) has engaged in a “prohibited
transaction” within the meaning of Section 406 of ERISA or Section 4975 of
the Code that could subject the Company or any of the Subsidiaries to any
material tax penalty on prohibited transactions and that has not adequately been
corrected. Each ERISA Plan is in compliance in all material respects
with all reporting, disclosure and other requirements of the Code and ERISA as
they relate to such ERISA Plan, except for any noncompliance which would not
result in the imposition of a material tax or monetary penalty. With
respect to each ERISA Plan that is intended to be “qualified” within the meaning
of Section 401(a) of the Code, either (A) a determination letter (or
opinion letter, if applicable) has been issued by the Internal Revenue Service
stating that such ERISA Plan and the attendant trust are qualified thereunder,
or (B) the remedial amendment period under Section 401(b) of the Code
with respect to the establishment of such ERISA Plan has not ended and a
determination letter application will be filed with respect to such ERISA Plan
prior to the end of such remedial amendment period. Neither the
Company nor any of the Subsidiaries has ever completely or partially withdrawn
from a “multiemployer plan,” as defined in Section 3(37) of
ERISA.
(pp) Compliance with
Environmental Laws. The Company and its Subsidiaries
(A) are in compliance with any and all applicable foreign, federal, state
and local laws, orders, rules, regulations, directives, decrees and judgments
relating to the use, treatment, storage and disposal of hazardous or toxic
substances or waste and protection of human health and safety or the environment
which are applicable to their businesses (“Environmental
Laws”), (B) have received and are in compliance with all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct its business; and (C) have 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 clauses (A), (B) and (C) of this Section 3(pp) as
would not, individually or in the aggregate, have a Material Adverse
Effect.
(qq) No Undisclosed
Relationships. No relationship, direct or indirect, exists
between or among the Company and any of its Subsidiaries on the one hand and the
directors, officers, stockholders, customers or suppliers of the Company or any
of its Subsidiaries or any of their affiliates on the other hand, which is
required to be described in the Registration Statement, in the Time of Sale
Disclosure Package and the Prospectus or a document incorporated by reference
therein and which has not been so described.
(rr) Forward-Looking
Statements. No forward-looking statements (within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in either the Time of Sale Disclosure Package or the Prospectus
has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
(ss) Minute
Books. The minute books of the Company and any of its
Subsidiaries, representing all existing records of all meetings and actions of
the board of directors (including, Audit, Compensation and Nomination/Corporate
Governance Committees) and stockholders of the Company and any of its
Subsidiaries (collectively, the “Corporate
Records”) from January 1, 2006 through the date of the latest meeting and
action have been made available to the Underwriters or counsel for the
Underwriters. All such Corporate Records accurately reflect, in all
material respects, all transactions referred to in such Corporate
Records. There are no material transactions, agreements or other
actions that have been consummated by the Company or any of the Subsidiaries
that are not properly approved and/or recorded in the Corporate Records of the
Company and the Subsidiaries.
(tt) Foreign Corrupt
Practices. Neither the Company nor, to the Company’s
knowledge, any other person associated with or with the authority to act on
behalf of the Company, including without limitation any director, officer, agent
or employee of the Company or its Subsidiaries has, directly or indirectly,
while acting on behalf of the Company or its Subsidiaries (A) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or failed to disclose fully any
contribution in violation of law, (B) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof, (C) violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended or (D) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payments.
(uu) Statistical or
Market-Related Data. Any statistical, industry-related and
market-related data included or incorporated by reference in the Registration
Statement, a Statutory Prospectus, the Time of Sale Disclosure Package or the
Prospectus, are based on or derived from sources that the Company reasonably and
in good faith believes to be reliable and accurate, and such data agree with the
sources from which they are derived.
(vv) Audit
Committee. The Company’s Board of Directors has validly appointed an
audit committee whose composition satisfies the requirements of
Section 10A-3 of the Exchange Act and the rules and regulations of the
NASDAQ Capital Market and the Board of Directors and/or the audit committee has
adopted a charter that satisfies the requirements of Section 10A-3 of the
Exchange Act and the rules and regulations of the NASDAQ Capital
Market.
(ww) Shareholder
Approval. No approval of the shareholders of the Company under
the rules and regulations of the NASDAQ Capital Market is required for the
Company to issue and deliver to the Underwriters the Units.
Any
certificate signed by any officer of the Company and delivered to the
Underwriters or to counsel for the Underwriters in connection with
the Offering shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
4. Covenants
. The
Company covenants and agrees with the Underwriters as follows:
(a) Filing of
Prospectuses. During the period beginning on the date hereof
and ending on the later of the Closing Date or such date as the Prospectus is no
longer required by law to be delivered (or in lieu thereof the notice referred
to in Rule 173(a) under the Securities Act is no longer required to be
provided), in connection with the Offering by the Underwriters or any dealer
(the “Prospectus
Delivery Period”), prior to amending or supplementing the Registration
Statement in connection with the Offering (including any Rule 462(b)
Registration Statement), the Time of Sale Disclosure Package or the Prospectus,
the Company shall furnish to the Underwriters for review a copy of each such
proposed amendment or supplement, and the Company shall not file any such
proposed amendment or supplement to which the Underwriters or counsel to the
Underwriters reasonably objects.
(b) Filing of
Amendments. After the date of this Agreement, if in connection
with the Offering, the Company shall promptly advise the Underwriters in writing
(i) of the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and date of
any filing of any post-effective amendment to the Registration Statement or any
amendment or supplement to any Preliminary Prospectus, the Time of Sale
Disclosure Package or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending its use or the use of any
Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus or
any Issuer Free Writing Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at
any time, the Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b), 430A and
430B, as applicable, under the Securities Act and will use its reasonable
efforts to confirm that any filings made by the Company under Rule 424(b),
Rule 433 or Rule 462 were received in a timely manner by the
Commission (without reliance on Rule 424(b)(8) or
Rule 164(b)).
(c) Continued
Compliance with Securities Laws. During the Prospectus
Delivery Period, the Company will comply as far as it is able with all
applicable requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time to time in
force, and by the Exchange Act so far as necessary to permit the continuance of
sales of or dealings in the Units as contemplated by the provisions hereof, the
Time of Sale Disclosure Package and the Prospectus. If during such
period any event occurs as a result of which the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time of Sale
Disclosure Package) would include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances then existing, not misleading, or if during such period it
is necessary or appropriate in the good faith opinion of the Company or its
counsel or the Underwriters or counsel to the Underwriters to amend the
Registration Statement or supplement the Prospectus (or, if the Prospectus is
not yet available to prospective purchasers, the Time of Sale Disclosure
Package) to comply with the Securities Act or to file under the Exchange Act any
document which would be deemed to be incorporated by reference in the Prospectus
in order to comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Underwriters (and the Underwriters agree to cease any such
use promptly upon such notification) and the Company will use reasonable best
efforts to amend the Registration Statement or supplement the Prospectus (or, if
the Prospectus is not yet available to prospective purchasers, the Time of Sale
Disclosure Package) or file such document (at the expense of the Company) so as
to correct such statement or omission or effect such compliance.
(d) Conflicting
Issuer Free Writing Prospectus. If at any time following
issuance of an Issuer Free Writing Prospectus in connection with the Offering
there occurred or occurs an event or development as a result of which such
Issuer Free Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement, the Statutory Prospectus or the
Prospectus or included or would include an untrue statement of a material fact
or omitted or would 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 Company promptly will notify the Underwriters (and the
Underwriters agree to cease any such use promptly upon such notification) and
the Company will amend or supplement, at its own expense, such Issuer Free
Writing Prospectus to eliminate or correct such conflict, untrue statement or
omission.
(e) Blue Sky
Laws. The Company shall take or cause to be taken all
necessary action to qualify the Securities for sale under the securities laws of
such jurisdictions as the Underwriters may reasonably designate and to continue
such qualifications in effect so long as required for the distribution of the
Securities, except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to execute a general consent to
service of process in any state or jurisdiction.
(f) Delivery of
Copies. The Company will furnish (which may be satisfied by
filing with the Commission’s EDGAR System) to the Underwriters and counsel for
the Underwriters copies of the Registration Statement, each Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus, any Issuer Free
Writing Prospectus, and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the Underwriters may
from time to time reasonably request.
(g) Earnings
Statement. The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 16
months after the end of the Company’s current fiscal quarter, an earnings
statement (which need not be audited) covering a 12 month period that shall
satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Rules and Regulations.
(h) Costs and
Expenses. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay or reimburse
if paid by the Underwriters all costs and expenses incident to the performance
of the obligations of the Company under this Agreement and in connection with
the transactions contemplated hereby, including but not limited to costs and
expenses of or relating to (i) the preparation, printing, filing, delivery
and shipping of the Registration Statement, any Issuer Free Writing Prospectus,
each Statutory Prospectus, the Time of Sale Disclosure Package and the
Prospectus, and any amendment or supplement to any of the foregoing (including
costs of mailing and shipment), (ii) the registration, issue, sale and
delivery of the Securities including any stock or transfer taxes and stamp or
similar duties payable upon the sale, issuance or delivery of the Securities and
the printing, delivery, and shipping of the certificates representing the
Securities, (iii) the registration or qualification of the Securities for
offer and sale under the securities or blue sky laws of such jurisdictions
designated pursuant to Section 4(e),
(including the reasonable legal fees and filing fees, and other disbursements of
counsel to the Underwriters in connection therewith), and, if reasonably
requested by the Underwriters, the preparation and printing and furnishing of
copies of any blue sky surveys to the Underwriters, (iv) the fees and
expenses of any transfer agent or registrar for the Shares or Warrant Shares,
(v) any filings required to be made by the Underwriters or the Company with
FINRA, and the reasonable fees, disbursements and other charges of counsel for
the Underwriters in connection with the FINRA’s review and approval of the
Underwriters’ participation in the offering (including all COBRADesk fees),
(vi) fees, disbursements and other charges of counsel to the Company,
(vii) listing fees, if any, for the listing or quotation of the Shares and
Warrant Shares on the NASDAQ Capital Market, (viii) fees and disbursements
of the Company’s auditors incurred in delivering the letter(s) described in
Sections 5(l)
and (m) of this
Agreement, (ix) fees, disbursements and other charges of counsel to the
Underwriters (in addition to the fees described in clauses (iii) and (v))
and (x) the costs and expenses of the Company and the Underwriters in
connection with the marketing of the offering and the sale of the Units to
prospective investors including, but not limited to, those related to any
presentations or meetings undertaken in connection therewith including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged with the written consent
of the Company in connection with the road show presentations, travel, lodging
and other expenses incurred by the officers of the Company and any such
consultants, and the cost of any aircraft or other transportation chartered in
connection with the road show. Notwithstanding the foregoing, in no
event shall the Company be obligated to reimburse the Underwriters pursuant to
this Section 4(h) in
an amount in excess of $125,000 in the aggregate without the Company’s prior
written consent. Notwithstanding anything to the contrary contained
in this Agreement, in the event this Agreement is terminated, the Company shall
only be obligated to reimburse the Underwriters for their out-of-pocket expenses
actually incurred by them in connection with the Offering.
(i) Use of
Proceeds. The Company will apply the net proceeds from the
sale of the Units to be sold by it hereunder for the purposes set forth in the
Time of Sale Disclosure Package and in the Prospectus.
(j) Lock-Up
Period. The Company will not, without the prior written
consent of the Representative, from the date of execution of this Agreement and
continuing to and including the date 90 days after the date of the Prospectus
(the “Lock-Up
Period”), other than the Company’s sale of the Units hereunder and the
issuance of shares pursuant to the exercise of the Warrants, (1) offer for sale;
sell, contract to sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any shares of Common
Stock or any securities convertible into or exchangeable for Common Stock, or
sell or grant any options, rights or warrants with respect to any shares of
Common Stock or securities convertible into or exchangeable for Common Stock
other than (i) the grant of options or other equity based compensation pursuant
to plans existing as of the date of this Agreement, and (ii) the issuance of
Common Stock upon exercise of options expiring on or before the end of the
Lock-Up Period, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
or ownership of Common Stock, regardless of whether such transaction described
in clause (1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise; provided, however, the foregoing restriction
shall not apply to (i) securities required to be issued pursuant to contractual
obligations of the Company in effect as of the date of this Agreement or (ii)
equity securities issued pursuant to employee benefit or purchase plans in
effect as of the date of this Agreement or pursuant to bona fide employee
benefit or purchase plans established during the Lock-Up Period. If
(A) the Company issues an earnings release or material news or a material
event relating to the Company occurs during the last seventeen (17) days of the
Lock-Up Period, or (B) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the sixteen
(16)-day period beginning on the last day of the Lock-Up Period, then the
restrictions in this Section 4(j),
unless otherwise waived by the Representative in writing, shall continue to
apply until the expiration of the eighteen (18)-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event. The Company will provide the Representative with
prior notice of any such announcement that gives rise to the extension of the
Lock-Up Period. The Company agrees not to accelerate the vesting of
any option or warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period.
(k) Lock-Up
Agreements. The Company has caused to be delivered to the
Underwriters prior to the execution of this Agreement the Lock-Up Agreements
substantially in the form attached as Exhibit A hereto
executed by the officers and directors of the Company identified on Exhibit B
hereto.
(l) Stabilization. The
Company will not take, directly or indirectly, any action designed to or which
might reasonably be expected to cause or result in, or which has constituted,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Units in violation of the Rules and
Regulations.
(m) Public
Communications. Before the opening of trading on the NASDAQ
Capital Market on the next trading day after the date of this Agreement, the
Company shall issue a press release (the “Press
Release”) reasonably acceptable to the Underwriters disclosing the
execution of this Agreement and the transactions contemplated
hereby. Prior to the Closing Date, the Company will not issue any
press release or other communication directly or indirectly or hold any press
conference with respect to the Company, the Subsidiaries, their condition,
financial or otherwise, or the earnings, business, operations or prospects of
any of them, or the offering of the Units (except for routine oral marketing
communications in the ordinary course of business and consistent with the past
practices of the Company and of which the Underwriters are notified), without
the prior consent of the Representative, unless in the reasonable judgment of
the Company and its counsel, and after notification to the Underwriters, such
press release or communication is required by law or applicable stock
exchange.
(n) Broker’s
Fee. The Company will not incur any liability for any finder’s
or broker’s fee or agent’s commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
(o) Sarbanes-Oxley. The
Company and its Subsidiaries will comply with all effective applicable
provisions of the Sarbanes-Oxley Act.
(p) Issuer Free
Writing Prospectuses. The Company represents and agrees that,
unless it obtains the prior written consent of the Representative, and the
Underwriters represent and agree that, unless they obtain the prior written
consent of the Company, it has not made and will not make any offer relating to
the Units that would constitute an “issuer free writing prospectus,” as defined
in Rule 433 under the Securities Act, or that would otherwise constitute a
“free writing prospectus,” as defined in Rule 405 under the Securities Act,
required to be filed with the Commission; provided that the prior
written consent of the parties hereto shall be deemed to have been given in
respect of the free writing prospectuses included in Schedule III. Any
such free writing prospectus consented to by the Company and the Representative
is hereinafter referred to as a “Permitted Free
Writing Prospectus.” The Company represents that it has
treated or agrees that it will treat each Permitted Free Writing Prospectus as
an “issuer free writing prospectus,” as defined in Rule 433, and has
complied and will comply with the requirements of Rule 433 applicable to
any Permitted Free Writing Prospectus, including timely Commission filing where
required, legending and record keeping.
(q) Transfer
Agent. The Company shall engage and maintain, at its expense,
a transfer agent and, if necessary under the jurisdiction of incorporation of
the Company, a registrar for the Shares and Warrant Shares.
5. Conditions
of Underwriters’ Obligations
. The
obligations of the Underwriters hereunder are subject to the following
conditions (unless waived by the Underwriters):
(a) Filings with
Commission. If filing of the Prospectus, or any amendment or
supplement thereto, or any Issuer Free Writing Prospectus, is required under the
Securities Act or the Rules and Regulations, the Company shall have filed the
Prospectus (or such amendment or supplement) or such Issuer Free Writing
Prospectus with the Commission in the manner and within the time period so
required (without reliance on Rule 424(b)(8) or
Rule 164(b)).
(b) Abbreviated
Registration Statement. If the Company has elected to rely
upon Rule 462(b), the registration statement filed under Rule 462(b)
shall have become effective under the Securities Act by 10:00 P.M.,
New York time, on the date of this Agreement.
(c) No Stop
Orders. The Registration Statement shall remain effective; no
stop order suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462(b) Registration Statement, or any amendment
thereof, nor suspending or preventing the use of the Time of Sale Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall have been
issued; no proceedings for the issuance of such an order shall have been
initiated or threatened; any request of the Commission for additional
information (to be included in the Registration Statement, the Time of Sale
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or
otherwise) shall have been complied with to the Underwriters’
satisfaction.
(d) No FINRA
Objection. FINRA shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(e) Contents of
Registration Statement. The Underwriters shall not have
advised the Company in good faith that the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus, or any amendment thereof or
supplement thereto, or any Issuer Free Writing Prospectus, contains an untrue
statement of fact which, in the Underwriters’ good faith opinion, is material,
or omits to state a fact which, in the Underwriters’ good faith opinion, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(f) Action Preventing
Issuance. No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any
governmental agency or body of competent jurisdiction which would, as of the
Closing Date, prevent the issuance or sale of the Units; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Units.
(g) Objection of
Underwriters. No Prospectus or amendment or supplement to the
Registration Statement shall have been filed to which the Underwriters shall
have objected in writing, which objection shall not be
unreasonable.
(h) Representations
and Warranties. Each of the representations and warranties of
the Company contained herein shall be true and correct when made and on and as
of the Closing Date, as if made on such date (except that those representations
and warranties that address matters only as of a particular date shall remain
true and correct as of such date), and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied
with.
(i) Absence of
Material Change. Except as contemplated in the Time of Sale
Disclosure Package, subsequent to the respective dates as of which information
is given in the Time of Sale Disclosure Package, neither the Company nor any of
its Subsidiaries shall have, other than in the ordinary course of business,
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock; and there
shall not have been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of shares upon
the exercise of outstanding options or warrants), or any material change in the
short term or long term debt of the Company, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its Subsidiaries (other than grants of stock options or
other equity awards pursuant to the Company’s equity incentive plan existing on
the date hereof), or any Material Adverse Change or any development involving a
prospective Material Adverse Change (whether or not arising in the ordinary
course of business), or any material loss by strike, fire, flood, earthquake,
accident or other calamity, whether or not covered by insurance, incurred by the
Company or any Subsidiary, the effect of which, in any such case described
above, in the Representative’s reasonable judgment, makes it impractical or
inadvisable to offer or deliver the Units on the terms and in the manner
contemplated in the Time of Sale Disclosure Package and in the
Prospectus.
(j) Opinion of
Counsel to the Company. On the Closing Date, there shall have
been furnished to the Underwriters, the opinion of Maslon Edelman Borman &
Brand, LLP, counsel for the Company, dated such Closing Date and addressed to
the Underwriters, in form and substance as is set forth on Exhibit C
attached hereto. Such counsel shall also have furnished to the
Underwriters a written statement (“Negative
Assurances”), addressed to the Underwriters and dated the Closing Date,
in form and substance as set forth in Exhibit D
attached hereto.
(k) Opinion of
Counsel to the Underwriters. On the Closing Date, there shall
have been furnished to the Underwriters, such opinion or opinions from Goodwin
Procter LLP, counsel for the Underwriters, dated such Closing Date and addressed
to the Underwriters, with respect to the validity of the Securities, the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus and
other related matters as the Underwriters reasonably may request, and such
counsel shall have received such papers and information as they request to
enable them to pass upon such matters. Such counsel shall also have
furnished to the Underwriters a written Negative Assurances statement, addressed
to the Underwriters and dated the Closing Date.
(l) Accountant’s
Comfort Letter. On the date hereof, the Underwriters shall
have received a letter dated the date hereof (a “Comfort
Letter”), addressed to the Underwriters and in form and substance
reasonably satisfactory to the Underwriters and their counsel, from Caturano and
Company, P.C., (i) confirming that they are independent public accountants
with respect to the Company within the meaning of the Securities Act and the
Rules and Regulations and (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Time of Sale
Disclosure Package, as of a date not more than three days prior to the date
hereof), the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants’ “comfort
letters” to underwriters, delivered according to Statement of Auditing Standards
No. 72 and Statement of Auditing Standard No. 100 (or successor
bulletins), in connection with registered public offerings.
(m) Bring-Down
Letter. At the Closing Date, the Underwriters shall have
received from Caturano and Company, P.C. a letter (a “Bring-Down
Letter”), dated the Closing Date, addressed to the Underwriters and in
form and substance reasonably satisfactory to the Underwriters,
(i) confirming that they are independent public accountants with respect to
the Company within the meaning of the Securities Act and the Rules and
Regulations, (ii) stating, as of the date of the Bring-Down Letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Time of Sale
Disclosure Package and the Prospectus, as of a date not more than three days
prior to the date of the Bring-Down Letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered by
the Comfort Letter and (iii) confirming in all material respects the
conclusions and findings set forth in the Comfort Letter.
(n) Officer’s
Certificate. On the Closing Date, there shall have been
furnished to the Underwriters, a certificate, dated such Closing Date and
addressed to the Underwriters, signed by the chief executive officer and by the
chief financial officer of the Company, to the effect that to their actual
knowledge:
(i) The
representations and warranties of the Company in this Agreement are true and
correct as if made at and as of such Closing Date, and the Company has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date; and
(ii) No
stop order or other order suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof or the qualification of
the Units for offering or sale nor suspending or preventing the use of the Time
of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, has been issued, and no proceeding for that purpose has been
instituted or, to the best of their knowledge, is contemplated by the Commission
or any state or regulatory body.
(o) Secretary’s
Certificate. On the Closing Date, the Company shall have
furnished to the Underwriters a Secretary’s Certificate of the
Company.
(p) Lock-Up
Agreements. Each executive officer and director of the Company
identified on Exhibit B hereto
shall have entered into Lock-Up Agreements substantially in the form attached as
Exhibit A
hereto on or prior to the date hereof, and each such Lock-Up Agreement, or a
copy thereof, shall have been delivered to the Underwriters and shall be in full
force and effect at the Time of Sale.
(q) Trading
Market. The Shares and Warrant Shares shall have been listed
and authorized for trading on the NASDAQ Capital Market, and satisfactory
evidence of such actions shall have been provided to the Underwriters, which
shall include verbal confirmations from a member of the staff of the NASDAQ
Capital Market.
(r) Other Filings
with the Commission. The Company shall have prepared and filed
with the Commission a Current Report on Form 8-K with respect to the
transactions contemplated hereby, including as an exhibit thereto this Agreement
and any other documents relating thereto required to be filed with the
Commission.
(s) Additional
Documents. Prior to the Closing Date, the Company shall have
furnished to the Underwriters such further information, certificates or
documents as the Underwriters shall have reasonably requested.
All such
opinions, certificates, letters and other documents will be in compliance with
the provisions hereof only if they are satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
6. Indemnification
and Contribution.
(a) Indemnification
of the Underwriters. The Company agrees to indemnify and hold
harmless the Underwriters against any losses, claims, damages or liabilities,
joint or several, to which such Underwriters may become subject, under the
Securities Act or otherwise (including in settlement of any litigation if such
settlement is effected with the written consent of the Company, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) an untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, including the
information deemed to be a part of the Registration Statement at the time of
effectiveness and at any subsequent time pursuant to Rules 430A and 430B of
the Rules and Regulations, if applicable, any Preliminary Prospectus, the Time
of Sale Disclosure Package, the Prospectus, or any amendment or supplement
thereto (including any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus), any Issuer Free Writing
Prospectus or in any materials or information provided to investors by, or with
the approval of, the Company in connection with the marketing of the offering of
the Common Stock (“Marketing
Materials”), including any roadshow or investor presentations made to
investors by the Company (whether in person or electronically) or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; (ii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iii) in
whole or in part upon any failure of the Company to perform their respective
obligations hereunder or under law, and shall reimburse the Underwriters
promptly upon demand for any documented legal fees or other expenses reasonably
incurred by the Underwriters in connection with investigating, or preparing to
defend, or defending against, or appearing as a third party witness in respect
of, or otherwise reasonably incurred in connection with, any such loss, claim,
damage, expense, liability, action, investigation or proceeding, as such fees
and expenses are incurred); provided, however, that with
respect to clause (i) above, the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, including the
information deemed to be a part of the Registration Statement at the time of
effectiveness and at any subsequent time pursuant to Rules 430A and 430B of
the Rules and Regulations, if applicable, any Preliminary Prospectus, the Time
of Sale Disclosure Package, the Prospectus, or any amendment or supplement
thereto (including any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus), any Issuer Free Writing
Prospectus or in any Marketing Materials, in reliance upon and in conformity
with written information furnished to the Company by the Underwriters,
specifically for use in the preparation thereof, which information the parties
hereto agree is limited to the Underwriters’ Information.
(b) Indemnification
of the Company. Each of the Underwriters, severally but not
jointly, will indemnify and hold harmless the Company against any losses,
claims, damages or liabilities to which the Company may become subject, under
the Securities Act or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of such Underwriters),
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, including
the information deemed to be a part of the Registration Statement at the time of
effectiveness and at any subsequent time pursuant to Rules 430A and 430B of
the Rules and Regulations, if applicable, any Preliminary Prospectus, the Time
of Sale Disclosure Package, the Prospectus, or any amendment or supplement
thereto (including any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus), any Issuer Free Writing
Prospectus or in any Marketing Materials, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and 430B of the Rules and Regulations, if
applicable, any Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto (including any documents
filed under the Exchange Act and deemed to be incorporated by reference into the
Prospectus), or any Issuer Free Writing Prospectus or in any Marketing Materials
in reliance upon and in conformity with written information furnished to the
Company by the Underwriters, specifically for use in the preparation thereof,
which information the parties hereto agree is limited to the Underwriters’
Information, and shall reimburse the Company promptly upon demand for any
documented legal fees or other expenses reasonably incurred by the Company in
connection with investigating, or preparing to defend, or defending
against, or appearing as a third party witness in respect of, or otherwise
reasonably incurred in connection with, any such loss, claim, damage, expense,
liability, action, investigation or proceeding, as such fees and expenses are
incurred.
(c) Notice and
Procedures. Promptly after receipt by an indemnified party
under Section 6(a) or
6(b) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
Section 6(a) or
6(b), notify
the indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve the indemnifying party
from any liability that it may have to any indemnified party except to the
extent such indemnifying party has been materially prejudiced by such
failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party’s election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such Section 6(a) or
6(b) for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided,
however, the indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense of such action but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be at the expense of such indemnified party unless
(i) the employment thereof has been specifically authorized in writing by
the Company in the case of a claim for indemnification under Section 6(a) or
the Underwriters in the case of a claim for indemnification under Section 6(b) or
(ii) representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interests between them
(which such judgment the indemnified party shall have reasonably concluded in
good faith); provided,
however, that the indemnifying party shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such indemnified parties, and the reasonable and
documented expenses of such separate counsel shall be borne by the indemnifying
party or parties and reimbursed to the indemnified parties as incurred (in
accordance with the provisions of Section 6(a) or
6(b) above, as
applicable).
The
indemnifying party under this Section 6 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by this Section 6, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 45 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent (A) includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and (B) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Contribution;
Limitation on Liability. If the indemnification provided for
in this Section
6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or
6(b) above,
then each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in Section 6(a) or
6(b) above,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the Offering or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other from the Offering shall be deemed to
be in the same proportion as the total net proceeds from the Offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters and the parties’ relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 6(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of this Section
6(d). The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this Section 6(d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending against any
action or claim which is the subject of this Section 6(d). Notwithstanding
the provisions of this Section 6(d),
the Underwriters shall not be required to contribute any amount in excess of the
amount by which the total price at which the Units placed by them and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriters have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations to contribute as
provided in this Section 6(d) are
several in proportion to the total underwriting discounts and commissions
received by the Underwriters and not joint.
(e) Non-Exclusive
Remedies. The obligations of the Company under this Section 6 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriters within the meaning of the Securities Act; and the obligations
of the Underwriters under this Section 6 shall
be in addition to any liability that the respective Underwriters may otherwise
have and shall extend, upon the same terms and conditions, to each director of
the Company (including any person who, with his consent, is named in the
Registration Statement as about to become a director of the Company), to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
7. Representations
and Agreements to Survive Delivery
. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Underwriters, the Company, or any person controlling any of them and
shall survive delivery of and payment for the Units. Notwithstanding
any termination of this Agreement, including without limitation any termination
pursuant to Section 9, the
indemnity and contribution agreements contained in Section 6 and
the covenants, representations, warranties set forth in this Agreement shall not
terminate and shall remain in full force and effect at all times.
8. Information
Furnished by Underwriters
. The
parties hereto acknowledge and agree that, for all purposes of this Agreement,
the “Underwriters’
Information” consists solely of the statements contained in the third,
sixth and ninth through fourteenth paragraphs under the heading “Underwriting”
in the Prospectus.
9. Termination
of this Agreement.
(a) The
Underwriters shall have the right to terminate this Agreement by giving notice
as hereinafter specified at any time at or prior to the Closing Date, without
liability on the part of the Underwriters to the Company, if (i) prior to
delivery and payment for the Units (A) trading in securities generally
shall have been suspended on or by the New York Stock Exchange, the NYSE
Amex, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ
Capital Market or in the over the counter market (each, a “Trading
Market”), (B) trading in the Common Stock of the Company shall have
been suspended on any exchange, in the over-the-counter market or by the
Commission, (C) a general moratorium on commercial banking activities shall
have been declared by federal or New York state authorities or a material
disruption shall have occurred in commercial banking or securities settlement or
clearance services in the United States, (D) there shall have occurred any
outbreak or material escalation of hostilities or acts of terrorism involving
the United States or there shall have been a declaration by the United States of
a national emergency or war, (E) there shall have occurred any other
calamity or crisis or any material change in general economic, political or
financial conditions in the United States or elsewhere, if the effect of any
such event specified in clause (D) or (E), in the judgment of the
Representative, is material and adverse and makes it impractical or inadvisable
to proceed with the completion of the sale of and payment for the Units on the
Closing Date on the terms and in the manner contemplated by this Agreement, the
Time of Sale Disclosure Package and the Prospectus, (ii) since the time of
execution of this Agreement or the earlier respective dates as of which
information is given in the Time of Sale Disclosure Package or incorporated by
reference therein, there has been any Material Adverse Change or the Company or
any Subsidiary shall have sustained a loss or interference with its business by
strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, in each case which is not described in the Time of Sale
Disclosure Package or the Prospectus and is of such character that in the
judgment of the Representative would, individually or in the aggregate, result
in a Material Adverse Change and which would, in the judgment of the
Representative, make it impracticable or inadvisable to proceed with the
offering or the delivery of the Units on the terms and in the manner
contemplated in this Agreement, the Time of Sale Disclosure Package and the
Prospectus, (iii) the Company shall have failed, refused or been unable to
comply with the terms or perform any agreement or obligation of this Agreement,
other than by reason of a default by the Underwriters, or (iv) any
condition of the Underwriters’ obligations hereunder is not
fulfilled. Any such termination shall be without liability of any
party to any other party except that the Company will reimburse the Underwriters
for all of their out-of-pocket expenses actually incurred by them in connection
with the Offering, and that the provisions of Section 6, and
Section 14
hereof shall at all times be effective notwithstanding such
termination.
(b) If
the Underwriters elect to terminate this Agreement as provided in this Section 9, the
Company shall be notified promptly by the Underwriters by telephone, confirmed
by letter.
10. Substitution
of Underwriters. If
any Underwriter shall default in its obligation to purchase on the Closing Date
the Units agreed to be purchased hereunder on such Closing Date, the
Representative shall have the right, within 36 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase such Units on the terms contained
herein. If, however, the Representative shall not have completed such
arrangements within such 36-hour period, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to the Underwriters to purchase such Units on such
terms. If, after giving effect to any arrangements for the purchase
of the Units of a defaulting Underwriter or Underwriters by the Representative
and the Company as provided above, the aggregate number of Units which remains
unpurchased on such Closing Date does not exceed one-eleventh of the aggregate
number of all the Units that all the Underwriters are obligated to purchase on
such date, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Units which such Underwriter agreed to
purchase hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Units which
such Underwriter agreed to purchase hereunder) of the Units of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default. In any such case, either the Representative or the Company
shall have the right to postpone the Closing Date for a period of not more than
seven days in order to effect any necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus or any other documents), and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the opinion
of the Company and the Underwriters and their counsel may thereby be made
necessary.
If, after
giving effect to any arrangements for the purchase of the Units of a defaulting
Underwriter or Underwriters by the Representative and the Company as provided
above, the aggregate number of such Units which remains unpurchased exceeds 10%
of the aggregate number of all the Units to be purchased at such date, then this
Agreement shall terminate, without liability on the part of any non-defaulting
Underwriter to the Company, and without liability on the part of the, except as
provided in Sections
4(h), 6
and 9. The
provisions of this Section 10 shall not
in any way affect the liability of any defaulting Underwriter to the Company or
the nondefaulting Underwriters arising out of such default. The term
"Underwriter"
as used in this Agreement shall include any person substituted under this Section 10 with like
effect as if such person had originally been a party to this Agreement with
respect to such Units.
11. Notices. All
statements, requests, notices and agreements hereunder shall be in writing or by
facsimile, and:
(a) if
to the Underwriters, shall be delivered or sent by mail, telex or facsimile
transmission to the Representative:
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JMP
Securities LLC
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600
Montgomery Street, Suite 1100
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San
Francisco, CA 94111
|
|
Attention: Bob
Carey
|
|
Facsimile
No.: 415-835-8982
|
|
with
a copy (which shall not constitute notice) to:
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|
Goodwin
Procter LLP
|
|
The
New York Times Building
|
|
620
Eighth Avenue
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|
New
York, NY 10018
|
|
Attention: Michael
D. Maline, Esq.
|
|
Facsimile
No.: 212-355-3333
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(b) if
to the Company shall be delivered or sent by mail, telex or facsimile
transmission to ZIOPHARM Oncology, Inc., 1180 Avenue of the Americas, 19th
Floor, New York, NY 10036, Attention: Chief Financial Officer (Facsimile
No.: 646-214-0711), with a copy (which shall not constitute notice) to:
Maslon Edelman Borman & Brand, LLP, counsel for the Company, located at 3300
Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-4140,
Attention: Alan M. Gilbert, Esq. (Facsimile
No.: 612-642-8381).
12. Persons
Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and shall be binding upon the
Underwriters, the Company, and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any person other than the persons mentioned in the
preceding sentence any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, except
that the representations, warranties, covenants, agreements and indemnities
of the Company contained in this Agreement shall also be for the benefit of the
controlling persons, officers and directors referred to in Section 6(a) and
the indemnities of the Underwriters shall also be for the benefit of the
controlling persons, officers and directors referred to in Section 6(b). The
term “successors and assigns” as herein used shall not include any purchaser of
the Units by reason merely of such purchase.
13. Absence
of Fiduciary Relationship. The
Company acknowledges and agrees that: (a) the Underwriters have been
retained solely to act as the Underwriters in connection with the sale of the
Units and that no fiduciary, advisory or agency relationship between the Company
and the Underwriters has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether the Underwriters have
advised or are advising the Company on other matters; (b) the price and
other terms of the Units set forth in this Agreement were established by the
Company following discussions and arms-length negotiations with the Underwriters
and the Company is capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions contemplated by this
Agreement; (c) it has been advised that the Underwriters and their
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Underwriters have
no obligation to disclose such interest and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship; (d) it has been
advised that the Underwriters are acting, in respect of the transactions
contemplated by this Agreement, solely for the benefit of the Underwriters, and
not on behalf of the Company; and (e) it waives to the fullest extent
permitted by law, any claims it may have against the Underwriters for breach of
fiduciary duty or alleged breach of fiduciary duty in respect of any of the
transactions contemplated by this Agreement and agrees that the Underwriters
shall have no liability (whether direct or indirect) to the Company in respect
of such a fiduciary duty claim on behalf of or in right of the Company,
including stockholders, employees or creditors of the Company.
14. Governing
Law This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. No legal proceeding may be commenced,
prosecuted or continued in any court other than the courts of the State of
New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and the Company
and the Underwriters each hereby consent to the jurisdiction of such courts and
personal service with respect thereto. The Company and the
Underwriters each hereby consent to personal jurisdiction, service and venue in
any court in which any legal proceeding arising out of or in any way relating to
this Agreement is brought by any third party against the Company or the
Underwriters. The Company and the Underwriters each hereby waive all
right to trial by jury in any legal proceeding (whether based upon contract,
tort or otherwise) in any way arising out of or relating to this
Agreement. The Company and the Underwriters agree that a final
judgment in any such legal proceeding brought in any such court shall be
conclusive and binding upon the Company and the Underwriters and may be enforced
in any other courts in the jurisdiction of which the Company or the
Underwriters, as applicable, are or may be subject, by suit upon such
judgment.
15. Partial
Unenforceability. The
invalidity or unenforceability of any section, paragraph, clause or provision of
this Agreement shall not affect the validity or enforceability of any other
section, paragraph, clause or provision hereof. If any section,
paragraph, clause or provision of this Agreement is for any reason determined to
be invalid or unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and
enforceable.
16. Counterparts. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same
instrument. Signatures to this Agreement may be delivered by
facsimile or electronically in .pdf format.
17. Entire
Agreement, Amendments and Waivers. This
Agreement constitutes the entire agreement between the parties hereto pertaining
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements among
the parties in connection with the subject matter hereof except as set forth
specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such
right or remedy in the future. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
Please
sign and return to the Company the enclosed duplicates of this letter whereupon
this letter will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
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Very
truly yours,
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|
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ZIOPHARM
ONCOLOGY, INC.
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|
|
|
|
|
|
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By:
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/s/ Jonathan Lewis
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Name: Jonathan
Lewis, MD, Ph.D.
|
|
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Title:
Chief Executive Officer
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|
|
|
|
|
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Confirmed
as of the date first above mentioned:
JMP
SECURITIES LLC
|
|
Acting
on behalf of itself and as Representative
|
|
of
the several Underwriters set forth on
|
|
Schedule I
attached hereto
|
|
|
By:
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/s/ Robert
F.
Carey
|
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Name:
Robert F. Carey
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|
Managing
Director
|
Schedules
and Exhibits
Schedule
I:
|
Underwriters
|
Schedule
II:
|
Pricing
Information
|
Schedule
III:
|
Issuer
Free Writing Prospectuses
|
Schedule
IV:
|
Subsidiaries
|
Exhibit
A:
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Form
of Lock-Up Agreement
|
Exhibit
B:
|
List
of Directors and Executive Officers Executing Lock-Up
Agreements
|
Exhibit
C:
|
Matters
to be Covered in the Opinion of Corporate Counsel to the
Company
|
Exhibit
D:
|
Form
of Written Statement of Corporate Counsel to the
Company
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Exhibit
E:
|
Form
of Warrant
|
SCHEDULE
I
Underwriters
Name
of Underwriter
|
Number
of Units to be
Purchased
from the Company
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JMP
Securities LLC
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8,602,222
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Rodman
& Renshaw, LLC
|
6,881,778
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Total
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15,484,000
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SCHEDULE
II
Pricing
Information
Number of
Units to be Sold: 15,484,000
Shares: 15,484,000
shares
Warrants:
7,742,000 shares
Unit: 1
Share and a Warrant to purchase 0.50 of a share of Common Stock
Warrants: $4.02
exercise price
Public
Offering Price: $3.10 per Unit
Underwriting
Discount: 5.4%
Estimated
Net Proceeds to the Company: $45,408,378.40 (excluding estimated
expenses)
SCHEDULE
III
Issuer
Free Writing Prospectuses
None.
SCHEDULE
IV
Subsidiaries
None.
EXHIBIT
A
Form
of Lock-Up Agreement
JMP
Securities LLC
As
representative of the several underwriters
600
Montgomery Street, Suite 1100
San
Francisco, CA 94111
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Re:
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Public Offering of
Securities
|
Ladies
and Gentlemen:
The
undersigned understands that you, as representative (the “Representative”)
of the several underwriters (the “Underwriters”),
propose to enter into the Underwriting Agreement (the “Underwriting
Agreement”) with ZIOPHARM Oncology, Inc., a Delaware corporation (the
“Company”),
providing for the offering (the “Offering”)
of shares of common stock, $0.001 par value per share (the “Common
Stock”), warrants and other securities, if applicable, of the
Company. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Underwriting Agreement.
In order
to induce the Underwriters to enter in to the Underwriting Agreement, the
undersigned hereby agrees that for a period (the “Lock-Up
Period”) of ninety (90) days following the date of the final prospectus
filed by the Company with the Securities and Exchange Commission in connection
with such offering, the undersigned will not, without the prior written consent
of the Representative, directly or indirectly, (1) offer for sale; sell,
contract to sell, pledge or otherwise dispose of (or enter into any transaction
or device which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of Common
Stock or any securities convertible into or exchangeable for Common Stock, or
sell or grant any options, rights or warrants with respect to any shares of
Common Stock or securities convertible into or exchangeable for Common Stock
other than (i) the grant of options or other equity based compensation pursuant
to plans existing as of the date of this Lock-Up Agreement, (ii) the disposition
of securities to the Company pursuant to a cashless exercise or tax withholding
feature contained in an option or other equity award outstanding as of the date
of this Lock-Up Agreement, and (iii) the exercise of options and the disposition
of Common Stock acquired upon exercise of options expiring on or before the end
of the Lock-Up Period, or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks or ownership of the Common Stock, regardless of whether such
transaction described herein is to be settled by delivery of the Common Stock or
other securities, in cash or otherwise; provided, however, the foregoing
restriction shall not apply to (i) securities required to be issued pursuant to
contractual obligations of the Company in effect as of the date of this Lock-Up
Agreement or (ii) equity securities issued pursuant to employee benefit or
purchase plans in effect as of the date of this Lock-Up Agreement or pursuant to
bona fide employee benefit or purchase plans established during the Lock-Up
Period. Notwithstanding the foregoing restrictions, the undersigned
shall be permitted to sell up to an aggregate of 6,000 shares of Common Stock
solely for the purpose of facilitating payment of the undersigned’s tax
liabilities; provided, however, that no such sale shall occur prior to January
1, 2010.
None of
the restrictions set forth in this Lock-Up Agreement shall apply to Common Stock
acquired in open market transactions.
For the
purpose of allowing you to comply with FINRA Rule 2711(f)(4), if
(a) the Company issues an earnings release or material news or a material
event relating to the Company occurs during the last seventeen (17) days of the
lock-up period, or (b) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the sixteen
(16)-day period beginning on the last day of the Lock-Up Period, the
restrictions imposed by this Agreement shall continue to apply until the
expiration of the eighteen (18)-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event (the
term “Lock-Up
Period” shall be deemed to include any extension pursuant to this
paragraph).
The
undersigned hereby acknowledges and agrees that written notice of any extension
of the Lock-Up Period pursuant to the previous paragraph will be delivered by
the Representative to the Company (in accordance with the notice provision in
the Underwriting Agreement) and that any such notice properly delivered will be
deemed to have been given to, and received by, the undersigned. The
undersigned further agrees that, prior to engaging in any transaction or taking
any other action that is subject to the terms of this Lock-Up Agreement during
the period from the date of this Lock-Up Agreement to and including the 34th day
following the expiration of the Lock-Up Period, it will give notice thereof to
the Company and will not consummate such transaction or take any such action
unless it has received written confirmation from the Company that the Lock-Up
Period (as may have been extended pursuant to the previous paragraph) has
expired.
The
foregoing restrictions are expressly agreed to preclude the undersigned from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a sale or disposition of the Common Stock even
if such Common Stock would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
The
undersigned hereby agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent against the transfer of
securities of the Company held by the undersigned during the Lock-Up Period (as
may have been extended pursuant hereto), except in compliance with this Lock-Up
Agreement.
The
undersigned understands that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the securities to be sold thereunder, the undersigned shall be
released from all obligations under this Lock-Up Agreement.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. This Lock-Up
Agreement is irrevocable and all authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and any
obligations of the undersigned shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
This
Lock-Up Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to the conflict of laws principles
thereof.
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Very
truly yours,
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Print
Name:
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Print
Title:
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Signature:
:
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EXHIBIT
B
List
of Directors and Executive Officers
Executing
Lock-Up Agreements
Jonathan
Lewis
Richard
E. Bagley
Murray
Brennan
James A.
Cannon
Wyche
Fowler, Jr.
Gary
Fragin
Timothy
McInerney
Michael
Weiser
EXHIBIT
C
Matters
to be Covered in the Opinion
of
Corporate Counsel to the Company
1. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware.
2. The
Company is in good standing as a foreign corporation and is duly qualified to do
business in the jurisdictions listed opposite its name on a schedule
thereto.
3. The
Company has the requisite corporate power and authority necessary to own or
lease, as the case may be and operate its properties, to conduct its business as
currently being carried on and as it is described in the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus, to execute and deliver
the Agreement, and to issue, sell and deliver the Units as contemplated by the
Agreement.
4. The
Company has the authorized and issued capital stock as set forth in the Time of
Sale Disclosure Package and the Prospectus and such capital stock conforms in
all material respects as to legal matters to the description thereof contained
or incorporated by reference therein.
5. The
Shares have been duly and validly authorized and reserved for issuance by all
necessary corporate action on the part of the Company and, when issued, sold and
delivered by the Company to, and paid for by, the Underwriters in accordance
with the terms of the Agreement, will be validly issued, fully paid and
nonassessable, and will conform in all material respects to the description
thereof contained in the Time of Sale Disclosure Package and the
Prospectus. The Warrants have been duly authorized and, when issued,
delivered and paid for in accordance with the terms of the Agreement and the
Warrants, will be valid and binding. Assuming a sufficient number of authorized
but unissued shares of Common Stock are available for issuance when the Warrants
are exercised, the Warrant Shares, when and if issued upon exercise of the
Warrants and paid for in accordance with the terms of the Warrants, will be
validly issued, fully paid and non-assessable.
6. There
are no statutory preemptive rights or similar rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any of the Shares
or Warrant Shares pursuant to the Company’s certificate of incorporation,
bylaws, the Delaware General Corporation Law or any agreement or other
instrument known to such counsel to which the Company is a party or by which the
Company is bound.
7. Except
as set forth in the Registration Statement, in the Time of Sale Disclosure
Package or the Prospectus, to such counsel’s knowledge, neither the filing of
the Registration Statement nor the offering or sale of the Units as contemplated
by the Agreement gives rise to any rights for or relating to the registration of
any shares of Common Stock or other securities of the Company, except for rights
which have been waived or satisfied.
8. The
Registration Statement has become effective under the Securities Act, and to
such counsel’s knowledge, no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof has been issued
by the Commission and no proceeding for that purpose is pending before or, to
such counsel’s knowledge, is threatened by the Commission; and all filings
required by Rule 424(b) and Rule 430A, 430B or 430C promulgated under
the Securities Act have been made in the manner and within the time period
required by Rule 424(b).
9. The
Agreement has been duly authorized by all necessary corporate action on the part
of the Company and have been duly executed and delivered by the Company and each
constitutes a valid and binding agreement of the Company, and is enforceable
against the Company in accordance with the terms thereof, except as the
enforceability thereof may be subject to or limited by (a) bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other similar laws
relating to or affecting the rights of creditors, and (b) general equitable
principles, regardless of whether the issue of enforceability is considered in a
proceeding in equity or law.
10. The
execution and delivery of the Agreement by the Company and the issuance and sale
by the Company of the Units and the consummation by the Company of the
transactions contemplated by the Agreement to be consummated by the Company do
not and will not result in any breach or a default under (nor constitute any
event that with notice, lapse of time or both would result in any breach or
default under), or conflict with (a) any provisions of the certificate of
incorporation or by-laws of the Company, (b) any provision of any material
license, permit, indenture, mortgage, deed of trust, note, bank loan or credit
agreement or other evidence of indebtedness, license, lease, contract or other
agreement or instrument, in each case filed as an exhibit to the Company’s most
recently filed Annual Report on Form 10-K or subsequently filed as an exhibit to
any other report or registration statement, (c) any U.S. federal or state
law, regulation or rule that, in such counsel’s experience, is generally
applicable to transactions of the nature of those contemplated by the Agreement
and is applicable to the Company, or the Delaware General Corporation Law (other
than the state securities or blue sky laws and the rules of FINRA governing
underwriters compensation, as to which such counsel expresses no opinion), or
(d) any decree, judgment or order known to such counsel to be applicable to
the Company.
11. The
Company is not required to register as an “investment company” as defined in the
Investment Company Act of 1940, as amended.
12. No
approval, authorization, consent or order or filing with any U.S. federal, state
court or governmental or regulatory agency or body in the United States having
jurisdiction over the Company, or approval of the shareholders of the Company,
is required to be obtained or made by the Company for the consummation by the
Company of the transactions contemplated by the Agreement, except for such as
have been duly obtained or made, including without limitation, registration of
the Shares and Warrant Shares under the Securities Act and of the Common Stock
under the Exchange Act, or such as may be required under (x) the state
securities or blue sky laws of the various states or (y) the bylaws or
rules and regulations of FINRA, as to which such counsel expresses no
opinion.
13. To
such counsel’s knowledge, there is not pending or threatened in writing any
action, suit or proceeding, inquiry or investigation to which the Company is a
party, or to which the property of the Company is subject, before or brought by
any court or governmental agency or body that explicitly places in question the
validity or enforceability of, or seeks to enjoin the performance of, the
Agreement or which is of a character that is required to be disclosed in the
Registration Statement or the Prospectus and is not so disclosed.
EXHIBIT
D
Form
of Written Statement
of
Corporate Counsel to the Company
Such
counsel has acted as counsel to the Company in connection with the preparation
of the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, and each amendment or supplement thereto made by the Company prior
to the Closing Date. Based on (x) such counsel’s examination of
the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, and each amendment or supplement thereto made by the Company prior
to the Closing Date and the documents incorporated by reference in the Time of
Sale Disclosure Package or the Prospectus and any further amendment or
supplement to any such incorporated document made by the Company prior to the
Closing Date and (y) such counsel’s investigation made in connection with
the preparation of the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, and each amendment or supplement thereto made by the
Company prior to the Closing Date and discussions with representatives of the
Underwriters, counsel to the Underwriters, the Company’s independent public
accountants and certain officers and other representatives of the Company, in
which the business and affairs of the Company were discussed, and, although we
do not assume any responsibility for the accuracy, completeness or fairness of
the Registration Statement, the Time of Sale Disclosure Package or the
Prospectus, and we have made no independent check or verification thereof, on
the basis of the foregoing we can advise you as a matter of fact and not as an
opinion that nothing has come to such counsel’s attention to cause such counsel
to believe that:
1. the
Registration Statement or any amendment thereof (including any information
omitted from the Registration Statement at the time it became effective but that
is deemed to be a part of and included in the Registration Statement pursuant to
430B or 430C), at the Effective Time, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading (it being understood
that such counsel expresses no opinion with respect to the financial statements
and schedules, and other financial data, included in any of the documents
mentioned in this paragraph);
2. the
Time of Sale Disclosure Package, as of the Time of Sale, and the Statutory
Prospectus, as of its date, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such counsel expresses no opinion with respect to the financial
statements and schedules, and other financial data, included in any of the
documents mentioned in this paragraph); or
3. the
Prospectus, or any amendment or supplement thereto, as of its issue date and as
of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits 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 (it being understood that such counsel expresses no opinion
with respect to the financial statements and schedules, and other financial
data, included in any of the documents mentioned in this
paragraph).
In
addition, we confirm to you that the Registration Statement, as of the Effective
Time, the Statutory Prospectus as of the Time of Sale and the Prospectus, as of
its date and the date hereof, (except as to the financial statements and
schedules, and other financial or statistical data derived therefrom, contained
in the Registration Statement, the Statutory Prospectus and the Prospectus, as
to which such counsel expresses no opinion), complied as to form and appear on
their face to be appropriately responsive in all material respects to the
applicable requirements of Form S-3 under the Securities Act and the
applicable Rules and Regulations, and the documents incorporated by reference
therein (except as to the financial statements and schedules, and other
financial or statistical data derived therefrom, contained therein, as to which
such counsel expresses no opinion), including any Current Report on
Form 8-K filed with the Commission prior to the Closing Date, when they
became effective or were filed with the Commission, as the case may be, complied
as to form and appear on their face to be appropriately responsive in all
material respects with the requirements of the Securities Act or the Exchange
Act and the rules and regulations promulgated thereunder.
EXHIBIT
E
Form
of Warrant
ZIOPHARM
ONCOLOGY, INC.
WARRANT
TO PURCHASE COMMON STOCK
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Warrant
No. 2009PS1-[ ]
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Original
Issue Date:
[ ],
2009
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ZIOPHARM
Oncology, Inc., a Delaware corporation (the “Company”), hereby certifies
that, for value received,
[ ] or
its permitted registered assigns (the “Holder”), is entitled to
purchase from the Company up to a total of
[ ]
shares of common stock, $0.001 par value (the “Common Stock”), of the
Company (each such share, a “Warrant Share” and all such
shares, the “Warrant
Shares”) at an exercise price per share equal to
$[ ]
(as adjusted from time to time as provided in Section 8 herein, the “Exercise Price”), at any time
and from time to time from on or after the date hereof (the “Trigger Date”) and through
and including 5:30 P.M., New York City time, on
[ ],
2014 (the “Expiration
Date”), and subject to the following terms and conditions:
This Warrant (this “Warrant”) is being issued
pursuant to that certain Underwriting Agreement, dated as of
[ ],
2009, by and between the Company and the Representative of the several
underwriters identified therein (the “Purchase Agreement”) and
pursuant to the Company’s Registration Statement on Form S-3 (SEC File No.
333-161453) (the “Registration
Statement”).
1.
Registration of
Warrants. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder (which shall include the initial Holder or, as the
case may be, any registered assignee to which this Warrant is permissibly
assigned hereunder) from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
2. Registration of
Transfers. Subject to compliance with applicable securities laws, the
Company shall register the transfer of all or any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached as Schedule 2 hereto duly completed and signed, to the Company’s
transfer agent or to the Company at its address specified in the Purchase
Agreement. Upon any such registration or transfer, a new warrant to purchase
Common Stock in substantially the form of this Warrant (any such new warrant, a
“New Warrant”)
evidencing the portion of this Warrant so transferred shall be issued to the
transferee, and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a Holder
of a Warrant.
3. Exercise and Duration of
Warrants.
(a) Subject
to compliance with applicable securities laws, all or any part of this Warrant
shall be exercisable by the registered Holder at any time and from time to time
on or after the Trigger Date and through and including 5:30 P.M. New York City
time on the Expiration Date. At 5:30 P.M., New York City time, on the Expiration
Date, the portion of this Warrant not exercised prior thereto shall be and
become void and of no value and this Warrant shall be terminated and no longer
outstanding.
(b) The
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached as Schedule 1 hereto (the “Exercise Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
in immediately available funds for the number of Warrant Shares as to which this
Warrant is being exercised (or by cashless exercise, if permitted), and the date
such items are delivered to the Company (as determined in accordance with the
notice provisions hereof) is an “Exercise Date.” The Holder
shall not be required to deliver the original Warrant in order to effect an
exercise hereunder. Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.
4. Delivery of Warrant
Shares.
(a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later than
three Trading Days after the Exercise Date) issue or cause to be issued the
Warrant Shares issuable upon such exercise, and the Company cause such Warrant
Shares to be delivered by the Company’s transfer agent to the Holder by
crediting the account of the Holder’s prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company
is then a participant in such system, or otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise. This
Warrant shall be deemed to have been exercised on the first date on which all of
the foregoing have been delivered to the Company. The Holder, or any “Person” (which for purposes
of this Warrant shall include any individual, limited liability company,
partnership, joint venture, corporation, trust, unincorporated organization or
any other entity, government, including any agency or department thereof)
permissibly so designated by the Holder to receive Warrant Shares, shall be
deemed to have become the holder of record of such Warrant Shares as of the
Exercise Date. If this Warrant shall have been exercised in part, the
Company shall, at the request of a Holder and upon surrender of this Warrant, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant. To the
extent permitted by applicable law, the Company’s obligations to issue and
deliver Warrant Shares upon exercise of this Warrant and in accordance with the
terms hereof are unconditional, and the Holder shall, subject to the following
proviso, have the right to pursue any remedies available to it hereunder, at law
or in equity with respect to the Company’s failure to do so; provided, however, that
notwithstanding anything to the contrary in this Warrant or in the Purchase
Agreement, and except as provided pursuant to Section 4(b), if the Company is
for any reason unable to deliver Warrant Shares upon exercise of this Warrant as
required pursuant to the terms hereof, the Company shall have no obligation to
pay to the Holder cash or other consideration or otherwise “net cash settle”
this Warrant.
(b)
If (1) a certificate representing the Warrant Shares is not delivered to the
Holder within three (3) Trading Days of the due exercise of this Warrant by the
Holder and (2) prior to the time such certificate is received by the Holder, the
Holder, or any third party on behalf of the Holder or for the Holder’s account,
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of shares represented by such
certificate (a “Buy-In”), then the Company
shall pay in cash to the Holder (for costs incurred either directly by such
Holder or on behalf of a third party) the amount by which the total purchase
price paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceeds the proceeds received by such Holder as a result of
the sale to which such Buy-In relates. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such
loss.
5. Charges, Taxes and
Expenses. Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder
for any issue or transfer tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes and
expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or Warrants in a name other than that of the Holder or an affiliate thereof. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.
6. Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction (in such case)
and, in each case, a customary and reasonable indemnity (which shall not include
a surety bond), if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company as
a condition precedent to the Company’s obligation to issue the New
Warrant.
7. Reservation of Warrant
Shares. The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other contingent purchase rights of
persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares so
issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable. The Company will take all
such action as may be necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any securities exchange or automated
quotation system upon which the Common Shares may be listed.
8. Certain Adjustments.
The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section
8.
(a)
Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding,
(i) pays a stock dividend on its Common Stock or otherwise makes a distribution
on any class of capital stock that is payable in shares of Common Stock, (ii)
subdivides its outstanding shares of Common Stock into a larger number of
shares, or (iii) combines its outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Exercise Price shall be multiplied
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately before such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.
(b) Fundamental
Transactions. If, at any time while this Warrant is
outstanding (i) the Company effects any merger or consolidation of
the Company with or into another Person, in which the shareholders of the
Company as of immediately prior to the transaction own less than a majority of
the outstanding stock of the surviving entity, (ii) the Company effects any sale
of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which all or substantially all of
the holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property and would result in the shareholders of the
Company immediately prior to such tender offer or exchange offer owning less
than a majority of the outstanding stock after such tender offer or exchange
offer, (iv) the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (other than
as a result of a subdivision or combination of shares of Common Stock covered by
Section 8(a) above), (v) any transaction where the Company consummates a stock
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding Common Stock or (vi) any transaction where any "person" or "group"
(as these terms are used for purposes of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or shall become the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of 50% aggregate ordinary voting power
represented by issued and outstanding Common Stock (in any such case, a “Fundamental Transaction”),
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant without regard to any limitations on exercise contained herein
(the “Alternate
Consideration”). Notwithstanding the foregoing, in the event
of a Fundamental Transaction, at the request of the Holder delivered before the
90th day after such Fundamental Transaction, the Company (or the surviving
entity) shall purchase this Warrant from the Holder by paying to the Holder,
within five Business Days after such request (or, if later, on the effective
date of the Fundamental Transaction), cash in an amount equal to the Black
Scholes Value of the remaining unexercised portion of this Warrant on the date
of such Fundamental Transaction. The Company shall not
effect any such Fundamental Transaction unless prior to or simultaneously with
the consummation thereof, any successor to the Company, surviving entity or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the Holder, such
Alternate Consideration as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase and/or receive (as the case may be), and the
other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to subsequent transactions analogous to a
Fundamental Transaction. As used herein, “Black Scholes Value” means
the value of this Warrant based on the Black and Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg Financial Markets determined as of
the day of the closing of the applicable Fundamental Transaction for pricing
purposes and reflecting (i) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the remaining term of this Warrant as of
such date of request, (ii) an expected volatility equal to the greater of 100%
and the 100 day volatility obtained from the HVT function on Bloomberg Financial
Markets as of the day immediately following the public announcement of the
applicable Fundamental Transaction, (iii) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non cash consideration, if any, being offered in
the Fundamental Transaction and (iv) a 365 day annualization
factor.
(c) Certain Issuances of Common
Securities. If, any time prior to the four year anniversary of the
Original Issue Date of this Warrant, the Company shall (x) sell or issue shares
of its Common Stock (other than a dividend or distribution of Common Stock
referred to in Section (a) above), (y) issue rights, options or warrants to
subscribe for or purchase shares of Common Stock or (z) issue or sell other
rights for shares of Common Stock or securities convertible or exchangeable into
shares of Common Stock (collectively, any such stock, rights, options or
warrants being referred to as “Common Securities”), at a
price per share less than the then applicable Exercise Price, then in each such
case the Exercise Price in effect immediately prior to the issuance of such
Common Securities shall be reduced to the price determined by multiplying the
Exercise Price in effect immediately prior to the date of issuance of the Common
Securities by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of the Common
Securities plus the number of shares of Common Stock which the aggregate
consideration received for the issuance of the Common Securities would purchase
at such Exercise Price, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after the issuance of the Common
Securities (after giving effect to the full exercise, conversion or exchange, as
applicable, of such Common Securities). The adjustment provided for
in this Section (ii) shall be made successively whenever any such Common
Securities are issued (provided, however, that,
except as provided below, no further adjustments in the Exercise Price shall be
made upon the subsequent exercise, conversion or exchange, as applicable of such
Common Securities pursuant to the terms of such Common Securities) and shall
become effective immediately after such issuance; provided, however, that the
Exercise Price shall in no event be adjusted pursuant to this paragraph (c) to
amount less than $0.50 per share (which $0.50 amount shall be adjusted
appropriately based on any adjustments pursuant to paragraph (a) of this
Section). In determining whether any Common Securities entitle the
holders of the Common Stock to subscribe for or purchase shares of Common Stock
at less than the Exercise Price, and in determining the aggregate offering price
of the shares of Common Stock so offered, there shall be taken into account any
consideration received by the Company for such Common Securities, any
consideration required to be paid upon the exercise, conversion, or exchange, as
applicable, of such Common Securities and the fair market value (as determined
in good faith by the Company’s board of directors) of all such consideration (if
other than cash). Upon the expiration or termination of the right to
exercise, convert or exchange any Common Securities, any adjustment to the
Exercise Price which was made upon the issuance of such Common Securities, and
any subsequent adjustments based thereon, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock actually issued upon the
exercise, conversion or exchange of such Common Securities and the actual
consideration received therefor (as determined herein). For purposes
of this Section 8(c), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company or by
any subsidiary of the Company. Notwithstanding the foregoing, no adjustment will
be made under this Section 8(c) in respect of: (i) the issuance of securities
upon the exercise or conversion of any Common Stock, or stock or securities
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock (“Convertible
Securities”), issued by the Company prior to the date hereof; provided, however, that
neither the conversion price, exercise price nor number of shares issuable under
such Convertible Securities (excluding any Convertible Securities covered by
clause (ii) below) is amended, modified or changed after the Original Issuance
Date of this Warrant other than pursuant to the provisions of such Convertible
Securities as they exist as of such date, (ii) the grant of options, warrants,
Common Stock or other Convertible Securities (but not including any amendments
to such instruments) to employees, officers, directors of the Company under any
duly authorized Company stock option, restricted stock plan or stock purchase
plan whether now existing or hereafter approved by the Company and its
stockholders in the future, and the issuance of Common Stock in respect thereof,
or (iii) the issuance of securities in a transaction described in paragraphs (a)
and (b) of this Section (collectively, “Excluded
Issuances”).
(d) Rights Upon
Distribution of Assets. If
the Company, at any time while this Warrant is outstanding, shall declare or make
any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of shares of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or other securities, evidence
of indebtedness, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (excluding those referred to in Section 8(a)) (a
“Distribution”), then in each such case the Company
shall simultaneously distribute such Distribution pro rata to the Holders of
Warrants on the record date or date of effectiveness, as the case may be, fixed
for determining the holders of Common Stock entitled to participate in such Distribution,
in an amount equal to the amount that each Holder would have been entitled to
receive had its Warrants been exercised in full (without regard to any
limitations on the exercise of the Warrants) for Warrant Shares immediately prior to the time for
determination of the holders of Common Stock entitled to participate in such
distribution.
(e) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant
to paragraph (a) or (c) of this Section, the number of Warrant Shares that may
be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the increased or decreased number of Warrant Shares shall
be the same as the aggregate Exercise Price in effect immediately prior to such
adjustment.
(f) Calculations. All
calculations under this Section 8 shall be made to the nearest cent or the
nearest 1/100th of a
share, as applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the sale or issuance of any such shares shall be considered an
issue or sale of Common Stock.
(g) Notice of
Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 8, the Company at its expense will, at the written request of the
Holder, compute such adjustment, in good faith, in accordance with the terms of
this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of
Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will deliver a copy of each such certificate to the Holder
and to the Company’s transfer agent.
9. Payment of Exercise
Price. The Holder shall pay the Exercise Price in immediately available
funds; provided,
however, that if, on any Exercise Date a registration statement
registering the issuance of the Warrant Shares under the Securities Act of 1933,
as amended (the “Securities
Act”) is not effective, the Holder may, in its sole discretion, satisfy
its obligation to pay the Exercise Price through a “cashless exercise”, in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
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X =
Y [(A-B)/A]
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where:
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X =
the number of Warrant Shares to be issued to the
Holder.
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Y =
the total number of Warrant Shares with respect to which this Warrant is
being exercised.
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A =
the average of the Closing Sale Prices of the shares of Common Stock (as
reported by Bloomberg Financial Markets) for the five Trading Days ending
on the date immediately preceding the Exercise Date.
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B =
the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.
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For
purposes of this Warrant, “Closing Sale Price” means,
for any security as of any date, the last trade price for such security on the
principal securities exchange or trading market for such security, as reported
by Bloomberg Financial Markets, or, if such exchange or trading market begins to
operate on an extended hours basis and does not designate the last trade price,
then the last trade price of such security prior to 4:00:00 p.m., New York Time,
as reported by Bloomberg Financial Markets, or if the foregoing do not apply,
the last trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg Financial
Markets, or, if no last trade price is reported for such security by Bloomberg
Financial Markets, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC. If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such
security, then the Company shall, within two business days submit via facsimile
(a) the disputed determination of the Warrant Exercise Price to an independent,
reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of the Warrant Shares to the Company's
independent, outside accountant. The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than ten business days from the time it receives the disputed
determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error. All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued pursuant to the Purchase Agreement
(provided that the Commission continues to take the position that such treatment
is proper at the time of such exercise).
10. Limitations on
Exercise. Notwithstanding anything to the contrary contained herein, the
Holder shall not have the right to exercise this Warrant to the extent that,
following such exercise, the total number of shares of Common Stock then
beneficially owned by the Holder and its affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, would exceed 9.99% (the “Maximum Percentage”) of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. The Company’s obligation to issue shares of Common Stock
in excess of the limitation referred to in this Section shall be suspended (and,
except as provided below, shall not terminate or expire notwithstanding any
contrary provisions hereof) until such time, if any, as such shares of Common
Stock may be issued in compliance with such limitation; provided, that, if, as
of 5:30 p.m., New York City time, on the Expiration Date, the Company has not
received written notice that the shares of Common Stock may be issued in
compliance with such limitation, the Company’s obligation to issue such shares
shall terminate. By written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 19.99% specified in such notice; provided that (i)
any such increase will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company and (ii) any such increase will
only apply to the Holder and not to any other holder of Warrants.
11. Purchase
Rights. In addition to any adjustments pursuant to Section 8
above, if at any time the Company grants, issues or sells any options,
convertible securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
12. No Fractional Shares.
No fractional Warrant Shares will be issued in connection with any exercise of
this Warrant. In lieu of any fractional shares which would otherwise
be issuable, subject to Section 10, the number of Warrant Shares to be issued
shall be rounded up to the next whole number.
13. Notices. Any and all
notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
the Purchase Agreement prior to 5:30 p.m. (New York City time) on a Trading Day,
(ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
the Purchase Agreement on a day that is not a Trading Day or later than 5:30
p.m. (New York City time) on any Trading Day, (iii) the Trading Day following
the date of mailing, if sent by nationally recognized overnight courier service
specifying next business day delivery, or (iv) upon actual receipt by the party
to whom such notice is required to be given, if by hand delivery. The address
and facsimile number of a party for such notices or communications shall be as
set forth in the Purchase Agreement unless changed by such party by two Trading
Days’ prior notice to the other party in accordance with this Section
13.
14. Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
15. Miscellaneous.
(a) The
Holder, solely in such Person's capacity as a holder of this Warrant, shall not
be entitled to vote or receive dividends or be deemed the holder of share
capital of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Holder, solely in such Person's capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company
or any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of stock, consolidation,
merger, amalgamation, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance to
the Holder of the Warrant Shares which such Person is then entitled to receive
upon the due exercise of this Warrant. In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on the Holder to purchase
any securities (upon exercise of this Warrant or otherwise) or as a stockholder
of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 15(a), the Company shall
provide the Holder with copies of the same notices and other information given
to the shareholders of the Company, contemporaneously with the giving thereof to
the shareholders.
(b) Subject
to compliance with applicable securities laws, this Warrant may be assigned by
the Holder. This Warrant may not be assigned by the Company except to a
successor in the event of a Fundamental Transaction. This Warrant shall be
binding on and inure to the benefit of the parties hereto and their respective
successors and assigns. Subject to the preceding sentence, nothing in this
Warrant shall be construed to give to any Person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder, or their successors and assigns.
(c) GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL
RIGHTS TO A TRIAL BY JURY.
(d) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(e) In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby, and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(f) Except
as otherwise set forth herein, prior to exercise of this Warrant, the Holder
hereof shall not, by reason of by being a Holder, be entitled to any rights of a
stockholder with respect to the Warrant Shares.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.
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ZIOPHARM
ONCOLOGY, INC
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By:
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__________________
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Name:
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Title:
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SCHEDULE
1
FORM OF
EXERCISE NOTICE
(To be
executed by the Holder to exercise the right to purchase shares
of Common
Stock under the foregoing Warrant)
To: ZIOPHARM
Oncology, Inc.
(1) The
undersigned is the Holder of Warrant No. __________ (the “Warrant”) issued by
ZIOPHARM Oncology, Inc. a Delaware corporation (the
“Company”). Capitalized terms used herein and not otherwise defined
herein have the respective meanings set forth in the Warrant.
(2) The
undersigned hereby exercises its right to purchase __________ Warrant Shares
pursuant to the Warrant.
(3) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
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o |
Cash
Exercise
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o |
“Cashless
Exercise” under Section 9
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(4) If
the Holder has elected a Cash Exercise, the Holder shall pay the sum of $_______
in immediately available funds to the Company in accordance with the terms of
the Warrant.
(5) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder _____________
Warrant Shares in accordance with the terms of the Warrant.
(6) By
its delivery of this Exercise Notice, the undersigned represents and warrants to
the Company that in giving effect to the exercise evidenced hereby, the Holder
will not beneficially own in excess of the Maximum Percentage of shares of
Common Stock (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934) permitted to be owned under Section 10 of this Warrant to
which this notice relates.
Dated:_______________,
_____
By:
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Name:
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Title:
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(Signature
must conform in all respects to name of Holder as specified on the face of
the Warrant)
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SCHEDULE
2
ZIOPHARM
ONCOLOGY, INC.
FORM OF
ASSIGNMENT
[To be
completed and signed only upon transfer of Warrant]
FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto the
transferee identified below (the “Transferee”) the right represented by the
within Warrant to purchase
shares of Common Stock of ZIOPHARM Oncology, Inc. (the “Company”) to which the
within Warrant relates and appoints
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.
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Dated:
,
___
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(Signature
must conform in all respects to name of holder as specified on the face of
the Warrant)
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Exact
Name of Transferee
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Address
of Transferee
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In
the presence of:
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_______________________________________ |
Unassociated Document
Exhibit
4.2
Form
of Underwriters’ Warrant
ZIOPHARM
ONCOLOGY, INC.
WARRANT
TO PURCHASE COMMON STOCK
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Warrant
No. 2009PS1-[ ]
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Original
Issue Date:
[ ],
2009
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ZIOPHARM
Oncology, Inc., a Delaware corporation (the “Company”), hereby certifies
that, for value received,
[ ] or
its permitted registered assigns (the “Holder”), is entitled to
purchase from the Company up to a total of
[ ]
shares of common stock, $0.001 par value (the “Common Stock”), of the
Company (each such share, a “Warrant Share” and all such
shares, the “Warrant
Shares”) at an exercise price per share equal to
$[ ]
(as adjusted from time to time as provided in Section 8 herein, the “Exercise Price”), at any time
and from time to time from on or after the date six (6) months after the date
hereof (the “Trigger
Date”) and through and including 5:30 P.M., New York City time, on
[ ],
2014 (the “Expiration
Date”), and subject to the following terms and conditions:
This Warrant (this “Warrant”) is being issued
pursuant to that certain Underwriting Agreement, dated as of
[ ],
2009, by and between the Company and the Representative of the several
underwriters identified therein (the “Purchase Agreement”) and
pursuant to the Company’s Registration Statement on Form S-3 (SEC File No.
333-161453) (the “Registration
Statement”).
1.
Registration of
Warrants. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder (which shall include the initial Holder or, as the
case may be, any registered assignee to which this Warrant is permissibly
assigned hereunder) from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
2. Registration of
Transfers. Subject to compliance with applicable securities laws, the
Company shall register the transfer of all or any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached as Schedule 2 hereto duly completed and signed, to the Company’s
transfer agent or to the Company at its address specified in the Purchase
Agreement. Upon any such registration or transfer, a new warrant to purchase
Common Stock in substantially the form of this Warrant (any such new warrant, a
“New Warrant”)
evidencing the portion of this Warrant so transferred shall be issued to the
transferee, and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a Holder
of a Warrant.
3. Exercise and Duration of
Warrants.
(a) Subject
to compliance with applicable securities laws, all or any part of this Warrant
shall be exercisable by the registered Holder at any time and from time to time
on or after the Trigger Date and through and including 5:30 P.M. New York City
time on the Expiration Date. At 5:30 P.M., New York City time, on the Expiration
Date, the portion of this Warrant not exercised prior thereto shall be and
become void and of no value and this Warrant shall be terminated and no longer
outstanding.
(b) The
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached as Schedule 1 hereto (the “Exercise Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
in immediately available funds for the number of Warrant Shares as to which this
Warrant is being exercised (or by cashless exercise, if permitted), and the date
such items are delivered to the Company (as determined in accordance with the
notice provisions hereof) is an “Exercise Date.” The Holder
shall not be required to deliver the original Warrant in order to effect an
exercise hereunder. Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.
4. Delivery of Warrant
Shares.
(a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later than
three Trading Days after the Exercise Date) issue or cause to be issued the
Warrant Shares issuable upon such exercise, and the Company cause such Warrant
Shares to be delivered by the Company’s transfer agent to the Holder by
crediting the account of the Holder’s prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company
is then a participant in such system, or otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise. This
Warrant shall be deemed to have been exercised on the first date on which all of
the foregoing have been delivered to the Company. The Holder, or any “Person” (which for purposes
of this Warrant shall include any individual, limited liability company,
partnership, joint venture, corporation, trust, unincorporated organization or
any other entity, government, including any agency or department thereof)
permissibly so designated by the Holder to receive Warrant Shares, shall be
deemed to have become the holder of record of such Warrant Shares as of the
Exercise Date. If this Warrant shall have been exercised in part, the
Company shall, at the request of a Holder and upon surrender of this Warrant, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant. To the
extent permitted by applicable law, the Company’s obligations to issue and
deliver Warrant Shares upon exercise of this Warrant and in accordance with the
terms hereof are unconditional, and the Holder shall, subject to the following
proviso, have the right to pursue any remedies available to it hereunder, at law
or in equity with respect to the Company’s failure to do so; provided, however, that
notwithstanding anything to the contrary in this Warrant or in the Purchase
Agreement, and except as provided pursuant to Section 4(b), if the Company is
for any reason unable to deliver Warrant Shares upon exercise of this Warrant as
required pursuant to the terms hereof, the Company shall have no obligation to
pay to the Holder cash or other consideration or otherwise “net cash settle”
this Warrant.
(b)
If (1) a certificate representing the Warrant Shares is not delivered to the
Holder within three (3) Trading Days of the due exercise of this Warrant by the
Holder and (2) prior to the time such certificate is received by the Holder, the
Holder, or any third party on behalf of the Holder or for the Holder’s account,
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of shares represented by such
certificate (a “Buy-In”), then the Company
shall pay in cash to the Holder (for costs incurred either directly by such
Holder or on behalf of a third party) the amount by which the total purchase
price paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceeds the proceeds received by such Holder as a result of
the sale to which such Buy-In relates. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such
loss.
5. Charges, Taxes and
Expenses. Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder
for any issue or transfer tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes and
expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or Warrants in a name other than that of the Holder or an affiliate thereof. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.
6. Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction (in such case)
and, in each case, a customary and reasonable indemnity (which shall not include
a surety bond), if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company as
a condition precedent to the Company’s obligation to issue the New
Warrant.
7. Reservation of Warrant
Shares. The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other contingent purchase rights of
persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares so
issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable. The Company will take all
such action as may be necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any securities exchange or automated
quotation system upon which the Common Shares may be listed.
8. Certain Adjustments.
The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section
8.
(a)
Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding,
(i) pays a stock dividend on its Common Stock or otherwise makes a distribution
on any class of capital stock that is payable in shares of Common Stock, (ii)
subdivides its outstanding shares of Common Stock into a larger number of
shares, or (iii) combines its outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Exercise Price shall be multiplied
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately before such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.
(b) Fundamental
Transactions. If, at any time while this Warrant is
outstanding (i) the Company effects any merger or consolidation of
the Company with or into another Person, in which the shareholders of the
Company as of immediately prior to the transaction own less than a majority of
the outstanding stock of the surviving entity, (ii) the Company effects any sale
of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which all or substantially all of
the holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property and would result in the shareholders of the
Company immediately prior to such tender offer or exchange offer owning less
than a majority of the outstanding stock after such tender offer or exchange
offer, (iv) the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (other than
as a result of a subdivision or combination of shares of Common Stock covered by
Section 8(a) above), (v) any transaction where the Company consummates a stock
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding Common Stock or (vi) any transaction where any "person" or "group"
(as these terms are used for purposes of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or shall become the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of 50% aggregate ordinary voting power
represented by issued and outstanding Common Stock (in any such case, a “Fundamental Transaction”),
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant without regard to any limitations on exercise contained herein
(the “Alternate
Consideration”). Notwithstanding
the foregoing, in the event of a Fundamental Transaction, at the request of the
Holder delivered before the 90th day after such Fundamental Transaction, the
Company (or the surviving entity) shall
purchase this Warrant from the Holder by paying to the Holder, within five
Business Days after such request (or, if later, on the effective date of the
Fundamental Transaction), cash in an amount equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of such Fundamental Transaction. The Company shall not
effect any such Fundamental Transaction unless prior to or simultaneously with
the consummation thereof, any successor to the Company, surviving entity or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the Holder, such
Alternate Consideration as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase and/or receive (as the case may be), and the
other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to subsequent transactions analogous to a
Fundamental Transaction. As used
herein, “Black Scholes Value” means the value
of this Warrant based on the Black and Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg Financial Markets determined as
of the day of the closing of the applicable
Fundamental Transaction for pricing purposes and reflecting (i) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
remaining term of this Warrant as of such date of request, (ii) an expected
volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg Financial Markets as of the day
immediately following the public announcement of the applicable Fundamental
Transaction, (iii) the underlying price per share used in such
calculation shall be the sum of the price per share being offered in cash, if
any, plus the value of any non cash consideration, if any, being offered in the
Fundamental Transaction and (iv) a 365 day annualization
factor.
(c) Certain Issuances of Common
Securities. If, any time prior to the four year anniversary of the
Original Issue Date of this Warrant, the Company shall (x) sell or issue shares
of its Common Stock (other than a dividend or distribution of Common Stock
referred to in Section (a) above), (y) issue rights, options or warrants to
subscribe for or purchase shares of Common Stock or (z) issue or sell other
rights for shares of Common Stock or securities convertible or exchangeable into
shares of Common Stock (collectively, any such stock, rights, options or
warrants being referred to as “Common Securities”), at a
price per share less than the then applicable Exercise Price, then in each such
case the Exercise Price in effect immediately prior to the issuance of such
Common Securities shall be reduced to the price determined by multiplying the
Exercise Price in effect immediately prior to the date of issuance of the Common
Securities by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of the Common
Securities plus the number of shares of Common Stock which the aggregate
consideration received for the issuance of the Common Securities would purchase
at such Exercise Price, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after the issuance of the Common
Securities (after giving effect to the full exercise, conversion or exchange, as
applicable, of such Common Securities). The adjustment provided for
in this Section (ii) shall be made successively whenever any such Common
Securities are issued (provided, however, that,
except as provided below, no further adjustments in the Exercise Price shall be
made upon the subsequent exercise, conversion or exchange, as applicable of such
Common Securities pursuant to the terms of such Common Securities) and shall
become effective immediately after such issuance; provided, however, that the
Exercise Price shall in no event be adjusted pursuant to this paragraph (c) to
amount less than $0.50 per share (which $0.50 amount shall be adjusted
appropriately based on any adjustments pursuant to paragraph (a) of this
Section). In determining whether any Common Securities entitle the
holders of the Common Stock to subscribe for or purchase shares of Common Stock
at less than the Exercise Price, and in determining the aggregate offering price
of the shares of Common Stock so offered, there shall be taken into account any
consideration received by the Company for such Common Securities, any
consideration required to be paid upon the exercise, conversion, or exchange, as
applicable, of such Common Securities and the fair market value (as determined
in good faith by the Company’s board of directors) of all such consideration (if
other than cash). Upon the expiration or termination of the right to
exercise, convert or exchange any Common Securities, any adjustment to the
Exercise Price which was made upon the issuance of such Common Securities, and
any subsequent adjustments based thereon, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock actually issued upon the
exercise, conversion or exchange of such Common Securities and the actual
consideration received therefor (as determined herein). For purposes
of this Section 8(c), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company or by
any subsidiary of the Company. Notwithstanding the foregoing, no adjustment will
be made under this Section 8(c) in respect of: (i) the issuance of securities
upon the exercise or conversion of any Common Stock, or stock or securities
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock (“Convertible
Securities”), issued by the Company prior to the date hereof; provided, however, that
neither the conversion price, exercise price nor number of shares issuable under
such Convertible Securities (excluding any Convertible Securities covered by
clause (ii) below) is amended, modified or changed after the Original Issuance
Date of this Warrant other than pursuant to the provisions of such Convertible
Securities as they exist as of such date, (ii) the grant of options, warrants,
Common Stock or other Convertible Securities (but not including any amendments
to such instruments) to employees, officers, directors of the Company under any
duly authorized Company stock option, restricted stock plan or stock purchase
plan whether now existing or hereafter approved by the Company and its
stockholders in the future, and the issuance of Common Stock in respect thereof,
or (iii) the issuance of securities in a transaction described in paragraphs (a)
and (b) of this Section (collectively, “Excluded
Issuances”).
(d) Rights Upon
Distribution of Assets. If the Company, at any time while this
Warrant is outstanding, shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, evidence of indebtedness,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (excluding those referred to in
Section 8(a)) (a “Distribution”), then in each such case the Company
shall simultaneously distribute such Distribution pro rata to the Holders of
Warrants on the record date or date of effectiveness, as the case may be,
fixed for determining the
holders of Common Stock entitled to participate in such Distribution, in an
amount equal to the amount that each Holder would have been entitled to receive
had its Warrants been exercised in full (without regard to any limitations
on the exercise of the
Warrants) for Warrant
Shares immediately prior to the time for determination of the holders of Common
Stock entitled to participate in such distribution.
(e) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant
to paragraph (a) or (c) of this Section, the number of Warrant Shares that may
be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the increased or decreased number of Warrant Shares shall
be the same as the aggregate Exercise Price in effect immediately prior to such
adjustment.
(f) Calculations. All
calculations under this Section 8 shall be made to the nearest cent or the
nearest 1/100th of a
share, as applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the sale or issuance of any such shares shall be considered an
issue or sale of Common Stock.
(g) Notice of
Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 8, the Company at its expense will, at the written request of the
Holder, compute such adjustment, in good faith, in accordance with the terms of
this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of
Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will deliver a copy of each such certificate to the Holder
and to the Company’s transfer agent.
9. Payment of Exercise
Price. The Holder shall pay the Exercise Price in immediately available
funds, or the Holder may, in its sole discretion, satisfy its obligation to pay
the Exercise Price through a “cashless exercise”, in which event the Company
shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y
[(A-B)/A]
where:
X = the
number of Warrant Shares to be issued to the Holder.
Y = the
total number of Warrant Shares with respect to which this Warrant is being
exercised.
A = the
average of the Closing Sale Prices of the shares of Common Stock (as reported by
Bloomberg Financial Markets) for the five Trading Days ending on the date
immediately preceding the Exercise Date.
B = the
Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.
For
purposes of this Warrant, “Closing Sale Price” means,
for any security as of any date, the last trade price for such security on the
principal securities exchange or trading market for such security, as reported
by Bloomberg Financial Markets, or, if such exchange or trading market begins to
operate on an extended hours basis and does not designate the last trade price,
then the last trade price of such security prior to 4:00:00 p.m., New York Time,
as reported by Bloomberg Financial Markets, or if the foregoing do not apply,
the last trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg Financial
Markets, or, if no last trade price is reported for such security by Bloomberg
Financial Markets, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC. If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such
security, then the Company shall, within two business days submit via facsimile
(a) the disputed determination of the Warrant Exercise Price to an independent,
reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of the Warrant Shares to the Company's
independent, outside accountant. The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than ten business days from the time it receives the disputed
determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error. All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued pursuant to the Purchase Agreement
(provided that the Commission continues to take the position that such treatment
is proper at the time of such exercise).
10. Limitations on
Exercise. Notwithstanding anything to the contrary contained herein, the
Holder shall not have the right to exercise this Warrant to the extent that,
following such exercise, the total number of shares of Common Stock then
beneficially owned by the Holder and its affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, would exceed 9.99% (the “Maximum Percentage”) of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. The Company’s obligation to issue shares of Common Stock
in excess of the limitation referred to in this Section shall be suspended (and,
except as provided below, shall not terminate or expire notwithstanding any
contrary provisions hereof) until such time, if any, as such shares of Common
Stock may be issued in compliance with such limitation; provided, that, if, as
of 5:30 p.m., New York City time, on the Expiration Date, the Company has not
received written notice that the shares of Common Stock may be issued in
compliance with such limitation, the Company’s obligation to issue such shares
shall terminate. By written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 19.99% specified in such notice; provided that (i)
any such increase will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company and (ii) any such increase will
only apply to the Holder and not to any other holder of Warrants.
11. Purchase
Rights. In addition to any adjustments pursuant to Section 8
above, if at any time the Company grants, issues or sells any options,
convertible securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
12. No Fractional Shares.
No fractional Warrant Shares will be issued in connection with any exercise of
this Warrant. In lieu of any fractional shares which would otherwise
be issuable, subject to Section 10, the number of Warrant Shares to be issued
shall be rounded up to the next whole number.
13. Notices. Any and all
notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
the Purchase Agreement prior to 5:30 p.m. (New York City time) on a Trading Day,
(ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
the Purchase Agreement on a day that is not a Trading Day or later than 5:30
p.m. (New York City time) on any Trading Day, (iii) the Trading Day following
the date of mailing, if sent by nationally recognized overnight courier service
specifying next business day delivery, or (iv) upon actual receipt by the party
to whom such notice is required to be given, if by hand delivery. The address
and facsimile number of a party for such notices or communications shall be as
set forth in the Purchase Agreement unless changed by such party by two Trading
Days’ prior notice to the other party in accordance with this Section
13.
14. Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
15. Miscellaneous.
(a) The
Holder, solely in such Person's capacity as a holder of this Warrant, shall not
be entitled to vote or receive dividends or be deemed the holder of share
capital of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Holder, solely in such Person's capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company
or any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of stock, consolidation,
merger, amalgamation, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance to
the Holder of the Warrant Shares which such Person is then entitled to receive
upon the due exercise of this Warrant. In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on the Holder to purchase
any securities (upon exercise of this Warrant or otherwise) or as a stockholder
of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 15(a), the Company shall
provide the Holder with copies of the same notices and other information given
to the shareholders of the Company, contemporaneously with the giving thereof to
the shareholders.
(b) Subject
to compliance with applicable securities laws, this Warrant may be assigned by
the Holder. This Warrant may not be assigned by the Company except to a
successor in the event of a Fundamental Transaction. This Warrant shall be
binding on and inure to the benefit of the parties hereto and their respective
successors and assigns. Subject to the preceding sentence, nothing in this
Warrant shall be construed to give to any Person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder, or their successors and assigns.
(c) GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL
RIGHTS TO A TRIAL BY JURY.
(d) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(e) In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby, and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(f) Except
as otherwise set forth herein, prior to exercise of this Warrant, the Holder
hereof shall not, by reason of by being a Holder, be entitled to any rights of a
stockholder with respect to the Warrant Shares.
16. Registration Rights; Lock-Up
Restriction.
(a) The
Holder is not entitled to any registration rights, except for the right of the
Underwriters to require the Company to include this Warrant, the exercise of
this Warrant and the Warrant Shares in the Prospectus (as defined in the
Underwriting Agreement).
(b) In
accordance with Rule 5110(g) of the FINRA Rules, this Warrant and the Warrant
Shares shall not be sold during the Offering (as defined in the Underwriting
Agreement), or sold, transferred, assigned, pledged, or hypothecated, or be the
subject of any hedging, short sale, derivative, put, or call transaction that
would result in the effective economic disposition of the securities by any
person for a period of 180 days immediately following the Original Issue Date of
this Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.
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ZIOPHARM
ONCOLOGY, INC
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By:
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Name:
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Title:
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SCHEDULE
1
FORM OF
EXERCISE NOTICE
(To be
executed by the Holder to exercise the right to purchase shares
of Common
Stock under the foregoing Warrant)
To: ZIOPHARM
Oncology, Inc.
(1) The
undersigned is the Holder of Warrant No. __________ (the “Warrant”) issued by
ZIOPHARM Oncology, Inc. a Delaware corporation (the
“Company”). Capitalized terms used herein and not otherwise defined
herein have the respective meanings set forth in the Warrant.
(2) The
undersigned hereby exercises its right to purchase __________ Warrant Shares
pursuant to the Warrant.
(3) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
Cash
Exercise
“Cashless
Exercise” under Section 9
(4) If
the Holder has elected a Cash Exercise, the Holder shall pay the sum of $_______
in immediately available funds to the Company in accordance with the terms of
the Warrant.
(5) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder _____________
Warrant Shares in accordance with the terms of the Warrant.
(6) By
its delivery of this Exercise Notice, the undersigned represents and warrants to
the Company that in giving effect to the exercise evidenced hereby, the Holder
will not beneficially own in excess of the Maximum Percentage of shares of
Common Stock (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934) permitted to be owned under Section 10 of this Warrant to
which this notice relates.
Dated:_______________,
_____
By:
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Name:
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Title:
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(Signature
must conform in all respects to name of
Holder
as specified on the face of the Warrant)
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SCHEDULE
2
ZIOPHARM
ONCOLOGY, INC.
FORM OF
ASSIGNMENT
[To be
completed and signed only upon transfer of Warrant]
FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto the
transferee identified below (the “Transferee”) the right represented by the
within Warrant to purchase
shares of Common Stock of ZIOPHARM Oncology, Inc. (the “Company”) to which the
within Warrant relates and appoints
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.
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Dated:_______________,
_____
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(Signature
must conform in all respects to name of holder as specified on the face of
the Warrant)
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Exact
Name of Transferee
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Address
of Transferee
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In
the presence of:
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_____________________________________ |
Unassociated Document
Exhibit
5.1
December
8, 2009
ZIOPHARM
Oncology, Inc.
1180
Avenue of the Americas, 19th Floor
New York,
NY 10036
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RE:
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ZIOPHARM
Oncology, Inc. Prospectus Supplement to
Registration
Statements on Form S-3 (File Nos. 333-161453 and
333-163517)
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Ladies
and Gentlemen:
We have
acted as counsel to ZIOPHARM Oncology, Inc., a Delaware corporation (the
“Company”), in connection with the proposed public offering (the “Offering”) by
the Company of (i) 15,484,000 shares (the “Shares”) of the Company’s common
stock, $0.001 par value per share (the “Common Stock”); (ii) warrants to
purchase 7,742,000 shares of Common Stock (the “Investor Warrants”) to investors
in the Offering; (iii) warrants to purchase up to 464,520 shares of Common Stock
(the “Underwriter Warrants”) to be issued to the underwriters of the Offering
(the “Underwriters”); and (iv) up to 8,206,520 shares of Common Stock that may
be issued upon exercise of the Investor Warrants and the Underwriter Warrants
(the “Warrant Shares”). All such offers and sales are being made pursuant to (a)
the registration statement on Form S-3 (File No. 333-161453) filed by the
Company with the Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “Act”) and the abbreviated registration
statement (File No. 333-163517) filed with Commission pursuant to Rule 462(b)
under the Act (collectively, the “Registration Statement”); (b) the prospectus
of the Company dated September 21, 2009 (the “Base Prospectus”) as filed with
the Commission; and (c) the prospectus supplements of the Company, dated
December 4, 2009 and December 7, 2009, as filed with the Commission
(collectively, the “Prospectus Supplement”).
In
rendering the opinions set forth below, we have assumed that (i) all information
contained in all documents reviewed by us is true and correct; (ii) all
signatures on all documents examined by us are genuine; (iii) all documents
submitted to us as originals are authentic and all documents submitted to us as
copies conform to the originals of those documents; and (iv) each natural person
signing any document reviewed by us had the legal capacity to do
so. As to any facts material to the opinions expressed herein which
we have not independently established or verified, we have relied upon
statements and representations of officers and other representatives of the
Company and others.
We have
examined and relied upon the Registration Statement, including the exhibits
thereto, the Base Prospectus, the Prospectus Supplement, the Underwriting
Agreement between the Company and the Underwriters, the form of Investor
Warrant, the form of Underwriter Warrant, the Articles of Incorporation and
Bylaws of the Company, each as amended to date, and such other documents,
corporate records and instruments, and have examined such laws and regulations,
as we have deemed necessary for purposes of rendering the opinions set forth
herein. We have also relied as to certain matters on information obtained from
public officials and officers of the Company.
Based
upon such examination and subject to the further provisions hereof, we are of
the opinion that:
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1.
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The
Shares, when issued in the manner and for the consideration contemplated
by the Prospectus Supplement and the Underwriting Agreement, will be
validly issued, fully paid and
non-assessable.
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2.
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The
Investor Warrants, when paid for and issued in the manner and for the
consideration contemplated by the Prospectus Supplement and the
Underwriting Agreement, will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms subject to bankruptcy, insolvency, fraudulent transfer, fraudulent
conveyance, reorganization, arrangement, moratorium and other similar laws
related to or affecting creditors’ rights and to general equity
principles.
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3.
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The
Underwriter Warrants, when paid for and issued in the manner and for the
consideration contemplated by the Prospectus Supplement and Underwriting
Agreement will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms subject to
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, arrangement, moratorium and other similar laws related to
or affecting creditors’ rights and to general equity
principles.
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4.
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The
Warrant Shares, when issued upon payment of the exercise price therefor in
accordance with the Underwriting Agreement, the Investor Warrants, the
Underwriter Warrants and the Prospectus Supplement, will be validly
issued, fully paid and
nonassessable.
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It is
understood that this opinion is to be used only in connection with the
Offering.
Please
note that we are opining only as to the matters expressly set forth herein, and
no opinion should be inferred as to any other matters. This opinion is based
upon currently existing statutes, rules, regulations and judicial decisions, and
we disclaim any obligation to update this opinion or otherwise advise you of any
change in any of these sources of law or subsequent legal or factual
developments which might affect any matters or opinions set forth
herein.
The
opinions expressed herein are limited to the laws of the State of Minnesota, the
State of Delaware and the federal securities laws of the United
States.
We hereby
consent to the filing of this opinion in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act with the Commission as an
exhibit to the Current Report on Form 8-K to be filed by the Company in
connection with the Offering and to the use of our name as the Company’s counsel
under “Legal Matters” in the Base Prospectus and Prospectus Supplement, and in
any amendment or supplement thereto. In giving such consent, we do not believe
that we are “experts” within the meaning of such term as used in the Act or the
rules and regulations of the Commission issued thereunder with respect to any
part of the Base Prospectus or Prospectus Supplement, including this opinion as
an exhibit or otherwise.
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Very
truly yours,
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/s/
Maslon Edelman Borman & Brand, LLP
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Unassociated Document
Exhibit
99.1
ZIOPHARM
ANNOUNCES COMMENCEMENT OF PUBLIC OFFERING
NEW YORK, NY – December 3,
2009 - ZIOPHARM Oncology, Inc. (NASDAQ: ZIOP) announced today that it
intends to offer shares of its common stock and warrants to purchase shares of
its common stock in a public offering. JMP Securities LLC and Rodman &
Renshaw, LLC are acting as co-lead managers for the offering.
The
Company plans to use net proceeds from this offering for general corporate
purposes, which may include ongoing clinical development of its three product
candidates, palifosfamide (ZymafosTM or
ZIO-201), darinaparsin (ZinaparTM or
ZIO-101), and indibulin (ZybulinTM or
ZIO-301).
The
offering is being made pursuant to an effective shelf registration statement
previously filed with the Securities and Exchange Commission (File No.
333-161453). A prospectus supplement relating to the offering will be
filed with the Securities and Exchange Commission. When available, copies of the
prospectus supplement relating to this offering may be obtained by contacting
JMP Securities LLC at Equity Syndicate, 600 Montgomery Street, Suite 1100, San
Francisco, CA 94111; (415) 835-8900.
This
press release does not constitute an offer to sell, or the solicitation of an
offer to buy, shares of common stock and warrants. Furthermore, ZIOPHARM
Oncology, Inc. will not sell any of the common stock or warrants and has been
advised by JMP Securities LLC that the underwriters and their affiliates will
not sell any of the common stock or warrants in any state or jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification of the securities under the securities laws of any such state
or jurisdiction.
About
ZIOPHARM Oncology, Inc.:
ZIOPHARM
Oncology is a
biopharmaceutical company engaged in the development and commercialization of a
diverse portfolio of cancer drugs. The Company is currently focused on three
clinical programs.
Palifosfamide
(ZymafosTM or
ZIO-201) references a novel composition (tris formulation) that is the
functional active metabolite of ifosfamide, a standard of care for treating
sarcoma, lymphoma, testicular, and other cancers. Palifosfamide delivers
only the cancer fighting component of ifosfamide. It is expected to overcome the
resistance seen with ifosfamide and cyclophosphamide, two of the most commonly
used alkylating drugs used to treat certain cancers. Palifosfamide does not have
the toxic metabolites of ifosfamide that cause the debilitating side effects of
“fuzzy brain” (encephalopathy) and severe bladder inflammation.
Darinaparsin
(ZinaparTM or
ZIO-101) is a novel
organic arsenic being developed for the treatment of various hematologic and
solid cancers. Preclinical and clinical studies to date have demonstrated that
darinaparsin is considerably less toxic than inorganic arsenic, particularly
with regard to cardiac toxicity.
Indibulin
(ZybulinTM or
ZIO-301) is a
novel, oral tubulin binding agent that targets both mitosis and cancer cell
migration. Indibulin is expected to have several potential benefits,
including oral dosing, application in multi-drug resistant tumors, no neuropathy
and minimal overall toxicity.
In multiple Phase I trials in cancer patients, oral indibulin has been
administered both as a single agent and in combination with favorable activity
and a promising safety profile that does not include the neurotoxicity seen with
all of the other classes of tubulin binding agents.
ZIOPHARM’s
operations are located in Boston, MA with an executive office in New York.
Further information about ZIOPHARM may be found at www.ziopharm.com.
Forward-Looking
Safe Harbor Statement:
This
press release contains forward-looking statements for ZIOPHARM Oncology, Inc.
that involve risks and uncertainties that could cause the Company's actual
results to differ materially from the anticipated results and expectations
expressed in these forward-looking statements. These statements are based on
current expectations, forecasts and assumptions that are subject to risks and
uncertainties, which could cause actual outcomes and results to differ
materially from these statements. Among other things, there can be no assurance
that any of the Company's development efforts relating to its product candidates
will be successful, or such product candidates will be successfully
commercialized. Other risks that affect forward-looking information contained in
this press release include the possibility of being unable to obtain regulatory
approval of the Company's product candidates, the risk that the results of
clinical trials may not support the Company's claims, risks related to the
Company's ability to protect its intellectual property and its reliance on third
parties to develop its product candidates, risks related to the sufficiency of
existing capital reserves to fund continued operations for a particular amount
of time and uncertainties regarding the Company’s ability to obtain additional
financing to support its operations thereafter. The Company assumes no
obligation to update these forward-looking statements, except as required by
law.
# # #
Susan
Noonan
S.A.
Noonan Communications, LLC
(212)
966-3650
susan@sanoonan.com
Eric
Goldman - Media
Rx
Communications Group
917-322-2563
egoldman@rxir.com
Tyler
Cook
ZIOPHARM
Oncology, Inc.
617-259-1982
tcook@ziopharm.com
Unassociated Document
Exhibit
99.2
ZIOPHARM
PRICES PUBLIC OFFERING
NEW YORK, NY – December 4,
2009 - ZIOPHARM Oncology, Inc. (NASDAQ: ZIOP) announced the pricing of
its previously announced underwritten public offering of 15,484,000 shares of
its common stock and warrants to purchase 7,742,000 shares of its common stock
at a public offering price of $3.10 per unit. The warrants, which represent the
right to acquire 0.50 of a share of the Company’s common stock for each share of
common stock purchased in the offering, will have a five-year term from the date
of issuance and will be exercisable at a price of $4.02 per
share. JMP Securities LLC and Rodman & Renshaw, LLC, a subsidiary
of Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM), are acting as
co-lead managers for the offering.
The
offering will result in gross proceeds of approximately $48.0 million and net
proceeds, after deducting underwriting discounts and commissions and other
estimated offering expenses are expected to be approximately $45.2 million. The
offering is subject to customary closing conditions and is expected to close on
Wednesday, December 9, 2009.
The
Company plans to use net proceeds from this offering for general corporate
purposes, which may include ongoing clinical development of its three product
candidates, palifosfamide (ZymafosTM or
ZIO-201), darinaparsin (ZinaparTM or
ZIO-101), and indibulin (ZybulinTM or
ZIO-301).
The
offering is being made pursuant to an effective shelf registration statement
previously filed with the Securities and Exchange Commission (File No.
333-161453). A prospectus supplement relating to the offering will be filed with
the Securities and Exchange Commission. When available, copies of the prospectus
supplement relating to this offering may be obtained by contacting JMP
Securities LLC at Equity Syndicate, 600 Montgomery Street, Suite 1100, San
Francisco, CA 94111, (415) 835-8900, or Rodman & Renshaw, LLC at 1251 Avenue
of the Americas, 20th Floor,
New York, NY 10020, (212) 356-0530.
This
press release does not constitute an offer to sell, or the solicitation of an
offer to buy, shares of common stock and warrants. Furthermore, ZIOPHARM
Oncology, Inc. will not sell any of the common stock or warrants and has been
advised by JMP Securities LLC and Rodman & Renshaw, LLC that the
underwriters and their affiliates will not sell any of the common stock or
warrants in any state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification of the securities under
the securities laws of any such state or jurisdiction.
About
ZIOPHARM Oncology, Inc.:
ZIOPHARM
Oncology is a
biopharmaceutical company engaged in the development and commercialization of a
diverse portfolio of cancer drugs. The Company is currently focused on three
clinical programs.
Palifosfamide
(ZymafosTM or
ZIO-201) references a novel composition (tris formulation) that is the
functional active metabolite of ifosfamide, a standard of care for treating
sarcoma, lymphoma, testicular, and other cancers. Palifosfamide delivers
only the cancer fighting component of ifosfamide. It is expected to overcome the
resistance seen with ifosfamide and cyclophosphamide, two of the most commonly
used alkylating drugs used to treat certain cancers. Palifosfamide does not have
the toxic metabolites of ifosfamide that cause the debilitating side effects of
“fuzzy brain” (encephalopathy) and severe bladder inflammation.
Darinaparsin
(ZinaparTM or
ZIO-101) is a novel
organic arsenic being developed for the treatment of various hematologic and
solid cancers. Preclinical and clinical studies to date have demonstrated that
darinaparsin is considerably less toxic than inorganic arsenic, particularly
with regard to cardiac toxicity.
Indibulin
(ZybulinTM or
ZIO-301) is a
novel, oral tubulin binding agent that targets both mitosis and cancer cell
migration. Indibulin is expected to have several potential benefits,
including oral dosing, application in multi-drug resistant tumors, no neuropathy
and minimal overall toxicity.
In multiple Phase I trials in cancer patients, oral indibulin has been
administered both as a single agent and in combination with favorable activity
and a promising safety profile that does not include the neurotoxicity seen with
all of the other classes of tubulin binding agents.
ZIOPHARM’s
operations are located in Boston, MA with an executive office in New York.
Further information about ZIOPHARM may be found at www.ziopharm.com.
ZIOP-G
Forward-Looking
Safe Harbor Statement:
This
press release contains forward-looking statements for ZIOPHARM Oncology, Inc.
that involve risks and uncertainties that could cause the Company's actual
results to differ materially from the anticipated results and expectations
expressed in these forward-looking statements. These statements are based on
current expectations, forecasts and assumptions that are subject to risks and
uncertainties, which could cause actual outcomes and results to differ
materially from these statements. Among other things, there can be no assurance
that any of the Company's development efforts relating to its product candidates
will be successful, or such product candidates will be successfully
commercialized. Other risks that affect forward-looking information contained in
this press release include the possibility of being unable to obtain regulatory
approval of the Company's product candidates, the risk that the results of
clinical trials may not support the Company's claims, risks related to the
Company's ability to protect its intellectual property and its reliance on third
parties to develop its product candidates, risks related to the sufficiency of
existing capital reserves to fund continued operations for a particular amount
of time and uncertainties regarding the Company’s ability to obtain additional
financing to support its operations thereafter. The Company assumes no
obligation to update these forward-looking statements, except as required by
law.
# # #
Susan
Noonan
S.A.
Noonan Communications, LLC
(212)
966-3650
susan@sanoonan.com
Eric
Goldman - Media
Rx
Communications Group
917-322-2563
egoldman@rxir.com
Tyler
Cook
ZIOPHARM
Oncology, Inc.
617-259-1982
tcook@ziopharm.com