Execution Copy
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SECURITIES PURCHASE AGREEMENT, dated as of December 21, 2001
(this "AGREEMENT"), by and between Ribozyme Pharmaceuticals,
Inc., a Delaware corporation (the "COMPANY"), and Elan
International Services, Ltd., a Bermuda exempted limited
liability company (the "PURCHASER").
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The Company and the Purchaser are parties to a Securities Purchase
Agreement, dated as of January 7, 2000 (the "PRIOR SPA"), pursuant to which the
Company issued and delivered to the Purchaser, and the Purchaser purchased and
received, INTER ALIA, (i) shares of the Company's Series A Preferred Stock, (ii)
shares of the Company's Series B Preferred Stock, and (iii) shares of the
Company's common stock. As a condition to the Prior SPA, the Purchaser was
issued certain preference shares of the capital stock of Medizyme, a Bermuda
exempted limited liability company (the "NON-VOTING CONVERTIBLE PREFERENCE
SHARES"). The Company has authorized the issuance and sale of certain additional
shares of its common stock and the granting of certain warrants to purchase
shares of common stock in accordance with, and subject to, the terms and
conditions of this Agreement.
Upon the terms and subject to the conditions of this Agreement, the
Purchaser desires to purchase from the Company and the Company desires to sell
to the Purchaser such shares of the Company's common stock and such warrants to
purchase shares of the Company's common stock.
The parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. (a) As used in this Agreement, the terms
"Agreement", "Company", "Purchaser", "Prior SPA" and "Non-Voting Convertible
Preference Shares" shall have the respective meanings assigned to such terms in
the preceding introductory paragraphs.
(b) As used in this Agreement, the following terms have the meanings
specified below:
"ACT" means the Securities Act of 1933, as amended.
"AFFILIATE" means with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified.
"BENEFIT PLANS" shall have the meaning assigned to such term in
Section 3.12.
"BLACKOUT PERIOD" shall have the meaning assigned to such term in
Section 6.01.
"BY-LAWS" has the meaning assigned to such term in Section 3.01.
"CERTIFICATE" has the meaning assigned to such term in Section 3.01.
"CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations of
the Series A Preferred Stock and the Series B Preferred Stock of the Company.
"CLOSING" has the meaning assigned to such term in Section 2.02.
"CLOSING DATE" has the meaning assigned to such term in Section 2.02.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
the Company.
"COMPANY INTELLECTUAL PROPERTY" has the meaning assigned to such term
in Section 3.08.
"CONTRACTS" has the meaning assigned to such term in Section 3.18.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise;
"controlling" and "controlled" have meanings correlative thereto.
"DELAY PERIOD" shall have the meaning assigned to such term in Section
6.01.
"DEMAND" has the meaning assigned to such term in Section 6.02.
"Demand Registration Statement" has the meaning assigned to such term
in Section 6.02.
"$" refers to lawful dollars of the United States of America.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company directly or indirectly resulting from
or based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment, or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Company or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Company or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Company or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Company or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer, or controller of the Company.
"FINANCIAL STATEMENTS" means the most recent financial statements of
the Company included within SEC Documents filed prior to the Closing Date.
"GAAP" means generally accepted accounting principles in the United
States of America.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity, whether foreign or domestic, exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"INTELLECTUAL PROPERTY" means any patent (including all reissues,
divisions, continuations and extensions thereof), patent application, patent
right, trademark, trademark registration, trademark application, servicemark,
trade name, business name, brand name, logo, domain name, copyright, copyright
registration, design, design registration, trade secrets, confidential
information, inventions, know-how, business methods, formulae, processes and
records of inventions, or any right to any of the foregoing.
"LEGAL REQUIREMENTS" means any applicable law, code, rule, statute,
regulation, judgment, decree, ruling, injunction, order or any other requirement
of any Governmental Authority relating to the Company, its properties or
business.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, or condition, financial or otherwise, of the
Company or (b) the ability of the Company to perform any of its obligations
under this Agreement or any of the other Transaction Documents.
"MEDIZYME" means Medizyme Pharmaceutical Ltd., a Bermuda exempted
limited liability company and a joint venture between the Company and the
Purchaser.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NASDAQ NATIONAL MARKET" shall mean the Nasdaq National Market, and if
the Common Stock no longer trades on such stock market, the term shall refer to
such other stock market upon which the Company's Common Stock then trades.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERMITS" means all franchises, licenses, permits, waivers,
registrations, certificates, consents, approvals or authorizations required by
any applicable Legal Requirement.
"PERSON" means any natural person, corporation, limited liability
company, firm, trust, joint venture, association, company, partnership,
Governmental Authority, or other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PROSPECTUS" shall have the meaning assigned to such term in Section
6.01.
"PURCHASE PRICE" has the meaning assigned to such term in Section
2.01.
"PURCHASER INDEMNITEE" has the meaning assigned to such term in
Section 7.03.
"REGISTRABLE SECURITIES" means (i) the Shares, (ii) the Warrant
Shares, (iii) the shares of Common Stock issued or issuable pursuant to the
Prior SPA or the transactions contemplated therein (including shares of Common
Stock issuable upon conversion or exercise of any of the Securities (as defined
in the Prior SPA) and purchased pursuant to Section 1(f) of the Prior SPA), and
(iv) shares of Common Stock issued on behalf of any shares of Common Stock held
by the Purchaser or any of its affiliates, whether by stock split, stock
dividend, or otherwise and any security into which such may be exchanged for in
the event of a merger, consolidation, stock swap, recapitalization,
reorganization, exchange offer or otherwise.
"REGISTRATION PERIOD" shall have the meaning assigned to such term in
Section 6.02.
"REGISTRATION STATEMENT" shall have the meaning assigned to such term
in Section 6.01.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates. "Required Amendment"
shall have the meaning assigned to such term in Section 6.01.
"SEC" means the United States Securities Exchange Commission.
"SEC DOCUMENTS" means all reports, schedules, registration statements,
and definitive proxy statements, including any exhibits filed therewith (but
excluding exhibits incorporated therein by reference and not attached thereto),
filed by the Company during the fiscal year ended December 31, 2000 and any
subsequent interim periods, with the SEC.
"SECURITIES" has the meaning assigned to such term in Section 2.01.
"SECURITY" or "securities" has the meaning set forth in Section 2(1)
of the Act.
"SERIES A PREFERRED STOCK" means the Series A Preferred Stock, par
value $0.01 per share, of the Company.
"SERIES B PREFERRED STOCK" means the Series B Preferred Stock, par
value $0.01 per share, of the Company.
"SHARES" has the meaning assigned to such term in Section 2.01.
"TAX" or "TAXES" shall mean all federal, state, county, local,
municipal, foreign and other taxes, assessments, duties or similar charges of
any kind whatsoever, including all corporate franchise, income, sales, use, ad
valorem, receipts, value added, profits, license, withholding, payroll,
employment, excise, premium, property, customs, net worth, capital gains,
transfer, stamp, documentary, social security, environmental, alternative
minimum, occupation, recapture and other taxes, and including all interest,
penalties and additions imposed with respect to such amounts, and all amounts
payable pursuant to any agreement or arrangement with respect to Taxes.
"TAX RETURN" means any federal, state, local and foreign Tax returns,
reports and filings.
"TRANSACTION DOCUMENTS" means this Agreement and the Warrant
Certificate.
"WARRANT CERTIFICATE" has the meaning assigned to such term in Section
2.01.
"WARRANT SHARES" means the shares of Common Stock issued to the
Purchaser upon exercise of any of the Warrants.
"WARRANTS" has the meaning assigned to such term in Section 2.01.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument, or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03. ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED,
HOWEVER, that if the Company notifies the Purchaser that the Company requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Purchaser notifies the Company that it
requests an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
ARTICLE II
PURCHASE AND SALE OF THE SECURITIES
SECTION 2.01. PURCHASE AND SALE OF THE SECURITIES. (a) Subject to the
terms and conditions set forth in this Agreement and in reliance upon the
Company's and the Purchaser's representations set forth herein, on the Closing
Date, the Company shall sell to the Purchaser, and the Purchaser shall purchase
from the Company, (i) 750,000 shares of Common Stock (the "Shares"), and (ii)
five year warrants to purchase 75,000 shares of Common Stock at an initial
exercise price of $5.00 per share, subject to adjustment as to the number of
shares of Common Stock issuable upon exercise of the Warrant and the exercise
price for the Warrant Shares (collectively, the "Warrants") evidenced by a
warrant certificate in the form attached hereto as Exhibit A (the "Warrant
Certificate"). The aggregate purchase price for the Shares and the Warrants is
$3,000,000 (the "Purchase Price"). The Shares and the Warrants are hereinafter
sometimes referred to collectively as the "Securities". The sale and purchase
shall be effected on the Closing Date by the Company causing the delivery to the
Purchaser of (i) duly executed certificate or certificates representing the
Shares and (ii) the duly executed Warrant Certificate, against delivery by the
Purchaser to the Company of cash by wire transfer of immediately available funds
in the amount of the Purchase Price to an account provided by the Company to the
Purchaser.
SECTION 2.02. THE CLOSING. The closing of the sale and purchase of the
Securities hereunder (the "Closing") shall take place at the offices of Reitler
Xxxxx LLC, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, on December
21, 2001 or at, on, or by such other location, date, or means as the Purchaser
and the Company shall agree (the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the date
hereof and as of the Closing Date that:
SECTION 3.01. ORGANIZATION; GOOD STANDING. The Company is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as it is presently being conducted as described in the Registration
Statement. The Company has provided the Purchaser with true and complete copies
of the Certificate of Incorporation of the Company, including any Certificates
of Designations thereto, as amended through the date hereof (the "Certificate"),
and the By-Laws of the Company, as amended through the date hereof (the
"By-Laws").
SECTION 3.02. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY;
AUTHORIZATION TO DO BUSINESS. Each of the Transaction Documents and the
transactions contemplated therein have been duly executed and delivered by the
Company and each of the Transaction Documents constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms subject to the effect of applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and equitable principles of general
applicability. The Board of Directors of the Company has duly authorized the
execution, delivery, and performance of each of the Transaction Documents, and
each of the transactions contemplated thereby including, authorization of the
issuance and delivery of the Securities and the Warrant Shares (subject to
payment of the exercise price and subject to and in compliance with the Warrant
Certificate). No other corporate action is necessary to authorize the execution
or delivery of any of the Transaction Documents or the performance by the
Company of its obligations hereunder or thereunder or under the terms of the
Securities or the Warrant Shares. The Company has filed all documents necessary
to qualify it to do business as a foreign corporation, and the Company is in
good standing under the laws of each jurisdiction in which the conduct of the
Company's business or the nature of the property owned by the Company requires
such qualification, except in jurisdictions where the failure to qualify shall
not have a Material Adverse Effect in the Company.
SECTION 3.03. CAPITAL STOCK. The authorized capital stock of the
Company consists of: (i) 60,000,000 shares of Common Stock, par value $0.01 per
share, of which 19,189,889 are issued and outstanding, 3,315,090 are reserved
for issuance upon the exercise of stock options granted or to be granted under
the Company's stock option and 294,329 are reserved for issuance upon the
exercise of warrants or options and the conversion of preferred stock or
convertible promissory notes issued by the Company and (ii) 5,000,000 shares of
preferred stock, par value $0.01 per share, of which 12,015 have been designated
as Series A Preferred Stock, of which 12,015 are issued and outstanding.
Additionally, warrants to purchase 1,743,413 shares of common stock have been
issued with exercise prices ranging from $5.00 per share to $40.50 per share.
The Company has convertible debt of approximately $3,200,000 outstanding with
Schering AG, which is convertible into approximately 800,000 shares of Common
Stock, and approximately $8,400,000 million outstanding with the Purchaser (or
it Affiliates), which is convertible into 773,654 shares of Common Stock. All
outstanding capital stock of the Company has been duly and validly issued and
are fully paid and nonassessable. Except as set forth above, (i) there are no
shares of capital stock or other equity securities of the Company outstanding
and (ii) there are no outstanding warrants, options, agreements, convertible or
exchangeable securities or other commitments (other than as contemplated by this
Agreement) pursuant to which the Company is or may become obligated to issue,
sell, purchase, return or redeem any shares of capital stock or other securities
of the Company, and there are not any equity securities of the Company reserved
for issuance for any purpose.
SECTION 3.04. COMMON STOCK. The Shares and the Warrant Shares have
been duly authorized and, upon issuance in accordance with this Agreement and
the terms of the Warrant Certificate, as the case may be, will be validly
issued, fully paid (assuming, in the case of the Warrant Shares, payment of the
exercise price under the Warrants), and nonassessable shares of Common Stock of
the Company issued free and clear of any Lien, and no Person has or will have
any preemptive rights to subscribe for such Common Stock. The Company has a
sufficient number of authorized but unissued shares of Common Stock reserved for
issuance upon exercise of the Warrants.
SECTION 3.05. NO CONSENTS. Neither the nature of the business which
the Company currently conducts nor any relationship between the Company and any
other Person, nor any circumstance in connection with the creation,
authorization, issuance, offer or sale of the Shares or the Warrant Shares, nor
the execution and performance of any of the Transaction Documents, is such so as
to require a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority on the part of the Company or the
vote, consent or approval in any manner of any lender to the Company or the
holders of any security of the Company as a condition to the execution, delivery
and performance of any of the Transaction Documents. In addition to the
foregoing, there are no consents or waivers, other than those which have been
obtained, which the Company must obtain so as to be able to fulfill its
obligations and to provide the Purchaser with all its rights under each of the
Transaction Documents.
SECTION 3.06. NO VIOLATIONS. The Company is not in violation or
default of any provisions of the Certificate or the By-Laws. The execution,
delivery and performance of each of the Transaction Documents will not result in
any violation of, be in conflict with, give rise to a right of termination,
cancellation, or acceleration of any obligation or to a loss of a material
benefit under, or constitute a default under, with or without the passage of
time or the giving of notice: (i) any Legal Requirement or Permit; (ii) any
Contract, obligation or commitment to which the Company is a party or by which
it is bound; or (iii) the terms and conditions of the Certificate or the
By-Laws. The execution, delivery and performance of each of the Transaction
Documents will not result in the creation or imposition of any Lien on any asset
of the Company.
SECTION 3.07. PROPERTY. Except as disclosed in the Registration
Statement, the Company (i) owns or leases all of the property (including all of
the Company's Intellectual Property) and assets necessary for its business as
currently conducted and no such leases may be terminated without the Company's
consent where termination of any of such leases, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
(ii) owns or leases its property (including all of the Company's Intellectual
Property) and assets free and clear of all Liens, except those that arise in the
ordinary course of business and do not materially impair the Company's ownership
or use of such property or assets, (iii) has good and insurable fee title with
respect to all of the real property it owns, if any, and (iv) with respect to
the property and assets which the Company leases, the Company is in compliance
with such leases and, holds a valid and marketable leasehold interest free of
any Liens or claims which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, and all such leases are
enforceable in accordance with their terms and the Company has not received any
notice of any default thereunder.
SECTION 3.08. INTELLECTUAL PROPERTY. (a) The Intellectual Property
owned, used, filed by or licensed to the Company is referred to in this
Agreement as the "Company Intellectual Property". Except as disclosed in the
Registration Statement, all the Company Intellectual Property has been duly
registered in, filed in or issued by the appropriate Governmental Authority
where such registration, filing or issuance is necessary or appropriate for the
conduct of the business of the Company as presently conducted. Except as
disclosed in the Registration Statement, the Company is the sole and exclusive
owner of, and the Company has the right to use, execute, reproduce, display,
perform, modify, enhance, distribute, prepare derivative works of and
sublicense, without payment to any other Person, all the Company Intellectual
Property and the consummation of the transactions contemplated by the
Transaction Documents does not and will not conflict with, alter or impair any
such rights. The Company has not received any written or oral communication from
any Person asserting any ownership interest in any Company Intellectual
Property.
(b) Except as disclosed in the Registration Statement or in
connection with any transaction involving any Affiliate of the Purchaser, the
Company has not granted any license of any kind relating to any Company
Intellectual Property or the marketing or distribution thereof, except
nonexclusive licenses to end-users in the ordinary course of business. The
Company is not bound by or a party to any option, license or similar contract
relating to the Intellectual Property of any other Person for the use of such
Intellectual Property in the conduct of the business of the Company, except for
so-called "shrink-wrap" license agreements relating to computer software
licensed to the Company in the ordinary course of business. The conduct of the
business of the Company as presently conducted does not violate, conflict with
or infringe in any material respect the Intellectual Property of any other
Person, except for such violations, conflicts or infringements that,
individually or in the aggregate, have not had and are not reasonably likely to
have a Material Adverse Effect. No claims are pending or, to the knowledge of
the Company, threatened, against the Company by any Person with respect to the
ownership, validity, enforceability, effectiveness or use in the business of the
Company of any Intellectual Property. The Company has not received any written
or oral communication alleging that the Company violated any rights relating to
Intellectual Property of any Person.
SECTION 3.09. LITIGATION. Except as disclosed in the Registration
Statement, there are no actions, suits, proceedings or investigations pending
or, to the best of the Company's knowledge, any basis therefor or threat
thereof, against or affecting the Company which question the validity of any
Transaction Document or the right of the Company to enter into or execute any of
such agreements or documents, or to consummate the transactions contemplated
thereby, or, which could reasonably be expected to result, either individually
or in the aggregate, in a Material Adverse Effect. Except as disclosed in the
Registration Statement, the Company is not a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or Governmental
Authority. Except as disclosed in the Registration Statement, there is no
action, suit, proceeding or investigation by the Company currently pending or
which the Company intends to initiate.
SECTION 3.10. REGULATORY; NO VIOLATION; NO CONFLICTS. The Company has
in all material respects duly complied with, and is presently in due compliance
with, and is not in default in any material respect under any Legal
Requirements, and there is no pending claim by or any Governmental Authority,
whether national, state or local, in the United States or elsewhere, that the
Company is not in such compliance or is in such breach. The Company holds, and
is in compliance with all Permits and has not received any notice asserting any
noncompliance with, or breach or violation of, any Legal Requirement or Permit.
The Company possesses all Permits required for the conduct of its business as
now being operated.
SECTION 3.11. FINANCIAL INFORMATION. The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with GAAP applied on a consistent basis with each other and with the
financial statements of all previous fiscal periods (subject only, in the case
of unaudited statements, to normal, recurring year end, audit adjustments).
Since the date of those Financial Statements, the Company has not:
(a) incurred any debts, obligations or liabilities, absolute,
accrued, contingent or otherwise, whether due or to become due, except
current liabilities incurred in the ordinary course of business, none
of which (individually or in the aggregate) could reasonably be
expected to result in a Material Adverse Effect;
(b) discharged or satisfied any Liens other than those securing,
or paid any obligation or liability other than, current liabilities
shown on the Financial Statements and current liabilities incurred
since the most recent date thereof, in each case in the usual and
ordinary course of business;
(c) mortgaged, pledged or subjected to Lien any of its assets,
tangible or intangible, other than purchase money security interests
in assets purchased in the ordinary course of business;
(d) sold, transferred or leased any of its assets except in the
usual and ordinary course of business none of which (individually or
in the aggregate) could reasonably be expected to result in a Material
Adverse Effect; or
(e) suffered or experienced any other change that, individually
or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.12. BENEFIT PLANS. The Company has not failed to make any
required contributions to or otherwise have any liability with respect to any
pension, profit sharing, thrift or other retirement plan, employee stock
ownership plan, deferred compensation, stock ownership, stock purchase,
performance share, bonus or other incentive plan, severance plan, health or
group insurance plan, welfare plan, or other similar plan, agreement, policy or
understanding (whether written or oral), whether or not such plan is intended to
be qualified under Section 401(a) of the Code, or within the meaning of Section
3(3) of the ERISA which plan covers any employee or former employee of the
Company (the "Benefit Plans"). The Benefit Plans, if any, have been and are
administered in substantial compliance with their terms and the requirements of
applicable law.
SECTION 3.13. NO VOTING AGREEMENT. Except for agreements entered into
in connection with the Prior SPA, or as provided in the Transaction Documents,
there are no outstanding stockholder agreements, voting trusts, proxies or other
arrangements or understandings among the stockholders of the Company or with the
Company relating to the voting of their respective shares.
SECTION 3.14. NO REGISTRATION RIGHTS. Except for agreements entered
into in connection with the Prior SPA, or as provided in the Transaction
Documents, the Company is under no contractual obligation to register (now or in
the future, whether contingent or not) under any applicable securities laws any
of its presently outstanding securities or any of its securities that may
subsequently be issued.
SECTION 3.15. TAXES. The Company has filed in a timely manner all Tax
Returns, including relating to income, franchise, property and other Taxes, and
has paid or accrued the appropriate amounts reflected on such Tax Returns
heretofore required to be filed. None of the Tax Returns have been audited or
challenged, nor has the Company received any notice of challenge nor have any of
the amounts or other data included in the Tax Returns been challenged or
reviewed by any governmental authority. The Company has no knowledge of any
liability of any Tax to be imposed upon its properties or assets that could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.16. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.17. ENVIRONMENTAL MATTERS. (a) Except for matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, the Company (i) has not failed to comply in all
material respects with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) has not become subject to any Environmental Liability, (iii) has not
received notice of any claim with respect to any Environmental Liability or (iv)
does not know of any basis for any Environmental Liability.
SECTION 3.18. MATERIAL CONTRACTS. Except as set forth in Schedule
3.18, the Company has filed all material agreements as exhibits to its SEC
Documents that are required to be filed as exhibits under the Act, the Exchange
Act, or the rules and regulations of the SEC. All such agreements filed as
exhibits are referred to as "Contracts". Each of the Contracts is, to the
Company's knowledge, valid, binding, and in full force and effect and is
enforceable by the Company in accordance with its terms. The Company has
performed all material obligations required to be performed by it to date under
each of the Contracts and is not (with or without the lapse of time or the
giving of notice or both) in breach or default in any material respect
thereunder and, to the knowledge of the Company, no other party to any of the
Contracts is (with or without the lapse of time or the giving of notice or both)
in breach or default in any material respect thereunder.
SECTION 3.19. DISCLOSURE. As of their respective dates and, except to
the extent information contained therein has been revised or superseded by a
later filed SEC Document, as of the date hereof, none of the SEC Documents
contained or contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations with respect thereto, have
been prepared in accordance with GAAP during the periods presented and fairly
present (subject only, in the case of the unaudited statements, to normal,
recurring audit adjustments) the financial position of the Company as of the
date thereof and the results of its operations and its cash flows for the
periods then ended.
SECTION 3.20. NO BROKER OR FINDERS. No Person has or will have, as a
result of any act or omission by the Company, any right, interest or valid claim
against the Purchaser for any commission, fee or other compensation as a finder
or broker, or in any similar capacity, in connection with the transactions
contemplated by the Transaction Documents. The Company will indemnify and hold
the Purchaser harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or determined to be
payable as a result of the actions of the Company in connection with the
transactions contemplated by the Transaction Documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as of the date
hereof and as of the Closing Date that:
SECTION 4.01. ORGANIZATION; GOOD STANDING. The Purchaser is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the Bermuda and has all requisite corporate power and authority to own
and operate its properties and assets and to carry on its business as it is
presently being conducted and as it is proposed to be conducted.
SECTION 4.02. AUTHORITY; EXECUTION AND DELIVERY; Authorization To Do
Business; Enforceability. Each of the Transaction Documents and the transactions
contemplated therein has been duly executed and delivered by the Purchaser and
constitutes the valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms. Where applicable, the
Purchaser has filed all documents necessary to qualify it to do business as a
foreign corporation, and the Purchaser is in good standing under the laws of
each jurisdiction in which the conduct of the Purchaser's business or the nature
of the property owned by the Purchaser requires such qualification, except where
failure to make such filings or be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 4.03. NO CONSENT. Except for consents which may be required
under Applicable Anti-Trust Laws, no Permits from any Governmental Authority are
required in connection with the execution, delivery, or performance of the
Transaction Documents by the Purchaser.
SECTION 4.04. INVESTMENT INTENT. The Purchaser is purchasing the
Securities for its own account, for investment, and not with a view to resale or
distribution, except in compliance with the Act. The Purchaser has not offered
or sold any portion of the Securities being acquired nor does the Purchaser have
any present intention of dividing such Securities with others or of selling,
distributing, or otherwise disposing of any portion of such Securities either
currently or after the passage of a fixed or determinable period of time or upon
the occurrence or non-occurrence of any predetermined event or circumstance in
violation of the Act.
SECTION 4.05. DUE DILIGENCE. All documents, records and books
pertaining to the transactions contemplated hereby which the Purchaser has
requested have been made available for inspection by it. The Purchaser has had a
reasonable opportunity to ask questions of, and receive answers from, a person
or persons acting on behalf of the Company concerning the transactions
contemplated hereby and all such questions have been answered to the reasonable
satisfaction of the Purchaser.
SECTION 4.06. ACCREDITED INVESTOR. The Purchaser is an accredited
investor within the meaning of Regulation D under the Act.
ARTICLE V
CONDITIONS
SECTION 5.01. CONDITIONS OF THE PURCHASER'S OBLIGATIONS. The
obligations hereunder of the Purchaser shall not become effective until the date
on which each of the following conditions is satisfied (or waived in accordance
with Section 7.02):
(a) the Purchaser shall have received from the Company a
counterpart of this Agreement signed on behalf of the Company;
(b) the Company shall have delivered (x) the certificate or
certificates representing the Shares and (y) the Warrant Certificate;
(c) the Company shall have filed the Registration Statement with
the SEC;
(d) the Company shall have paid to the Purchaser $7,500 to cover
legal expenses in connection with due diligence and the preparation,
negotiation and review of the Transaction Documents;
(e) the Purchaser shall have received a satisfactory legal
opinion (addressed to the Purchaser and dated the Closing Date) of
Stroock & Stroock & Xxxxx LLP, counsel for the Company, reasonably
satisfactory to the Purchaser, in substantially the form attached
hereto as Exhibit B;
(f) the Purchaser shall have received such documents and
certificates as it or its counsel may reasonably request relating to
the organization, existence and good standing of the Company, the
authorization of the transactions contemplated in this Agreement and
the other Transaction Documents and any other legal matters relating
to the Company, this Agreement, the other Transaction Documents or the
transactions contemplated hereby or thereby, all in form and substance
satisfactory to the Purchaser and its counsel;
(g) all other permits, consents, approvals, licenses, orders or
authorizations of, and registrations, declarations and filings with,
any Governmental Authority, if any that are required to be obtained or
made in connection with (i) the execution, delivery or performance of
this Agreement and the other Transaction Documents by the Company or
the consummation by the Company of any of the transactions
contemplated hereby and thereby, and (ii) the conduct by the Company
or the Purchaser of their respective businesses following the Closing
as conducted on the date hereof shall have been duly obtained or made;
(h) the Company shall have performed and complied with all
agreements and conditions herein required to be performed or complied
with by the Company on or before the Closing (including the agreements
set forth in Section 6.03 hereof) and shall, if so requested by the
Purchaser, provide reasonable evidence of such compliance;
(i) the representations and warranties of the Company under this
Agreement shall be true in all material respects; the Purchaser shall
have received from the Financial Officer a certificate, dated as of
the Closing Date, with the same effect as though made on and as of the
Closing Date, stating that the representations and warranties of the
Company under this Agreement are true in all material respects; and
(j) all corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transaction shall be
satisfactory in form and substance to the Purchaser and its counsel.
SECTION 5.02. CONDITIONS OF THE COMPANY'S OBLIGATIONS. The Company's
obligation to sell the Securities to the Purchaser on the Closing Date is
subject to the fulfillment prior to or on the Closing Date of the conditions set
forth below:
(a) the representations and warranties of the Purchaser under
this Agreement shall be true in all material respects as of the
Closing with the same effect as though made on and as of the Closing
Date; and
(b) the Purchaser shall have performed and complied with all
agreements or conditions required by this Agreement to be performed
and complied with by it prior to or as of the Closing Date (including
the payment to the Company of the Purchase Price, in cash).
In the event that any such condition is not satisfied (or waived in accordance
with Section 7.02), the Company shall not be obligated to proceed with the sale
of such Securities.
SECTION 5.03. TERMINATION DATE. Notwithstanding anything herein to the
contrary, the Purchaser's obligation to purchase the Securities shall terminate
if the Closing Date has not occurred on or prior to December 31, 2001.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Purchaser as follows:
SECTION 6.01. INITIAL REGISTRATION STATEMENT. (a) On or before the
Closing Date, the Company shall have filed a registration statement under the
Act for the resale by the Purchaser of the Registrable Securities (the
"REGISTRATION STATEMENT"). The Registration Statement shall be declared
effective under the Act by the SEC within sixty (60) days of the Closing Date
and no stop order shall have been issued and no proceeding shall have been
initiated or threatened with respect to a stop order relating thereto. If
required, a prospectus constituting a part of the Registration Statement (the
"PROSPECTUS") shall have been filed with the SEC in the manner and within the
time period required by Rule 424(b) under the Act. The Registration Statement
and the Prospectus and any amendments or supplements thereto shall contain all
statements which are required to be stated therein in accordance with the Act
and the rules and regulations thereunder, and in all material respects conform
to the requirements thereof, and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto shall contain any untrue
statement of a material fact or shall omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made in the case of the Prospectus, not
misleading.
(b) The Company shall keep the Registration Statement effective
under the Act until the earlier of (i) the sale of all Registrable Securities
pursuant to the Registration Statement and (ii) the first date upon which the
Purchaser may sell all of the Registrable Securities into the public market,
without restrictions, pursuant to Rule 144(k) promulgated under the Act;
provided, however, that in the event that at any time following the
effectiveness of the Registration Statement under the Act, the Registration
Statement or the Prospectus shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made in the case of the Prospectus, not misleading as a result
of a pending material corporate transaction, the Company (i) shall provide
written notice to the Purchaser advising the Purchaser that the Purchaser may
not resell the Registrable Securities pursuant to the Registration Statement
until the date specified therein (the period commencing on the date of the
receipt of such notice and such date, a "BLACKOUT PERIOD"), and (ii) shall be
entitled to delay (the "Delay Period") the filing with the SEC of any amendment
or supplement to the Registration Statement required to correct such untrue
statement of material fact or omission to state any material fact (a "REQUIRED
AMENDMENT"), if the purpose for such delay is solely to maintain the
confidentiality of such transaction or to permit the Company to consummate such
transaction. Notwithstanding the foregoing, (x) the aggregate number of days
included in any Blackout Period shall not exceed 90 days during any consecutive
12 month period and (y) the Delay Period shall terminate, and such Required
Amendment shall be declared by the SEC to be effective under the Act, on or
prior to the final day of the applicable Blackout Period.
(c) If the Registration Statement is not declared effective by
the SEC within sixty (60) days of the Closing Date or a Required Amendment is
not declared effective by the SEC prior to the final day of the applicable
Blackout Period, the Company shall pay to the Purchaser in cash, on the first
day of each calendar month thereafter, an amount equal to 6% per annum of the
Purchase Price for each day in the immediately preceding calendar month that the
Registration Statement or the Required Supplement has not yet declared
effective. The payments required in this Section 6.01(b) shall not reduce or
excuse (but shall be cumulative to) the obligations of the Company under the
Warrant Certificate to increase the number of shares of Common Stock issuable
upon exercise of the Warrants as a result of the delay in the SEC declaring the
Registration Statement effective.
SECTION 6.02. REGISTRATION OF THE REGISTRABLE SECURITIES. (a) DEMAND
(i) If at any time after the Closing Date, the resale of any Registrable
Security shall not be covered by an effective registration statement (other than
during any Delay Period), the Purchaser shall have the right, in its discretion
(and in addition to any other right or entitlement of the Purchaser), to request
in writing (a "DEMAND") that the Company effect a registration of Registrable
Securities. If a Demand is sent to the Company, the Company shall within 20 days
of receipt of such Demand, file with the SEC a registration statement (a "DEMAND
REGISTRATION STATEMENT") on Form S-1 (or Form S-3 if available) for the
registration and sale, in accordance with the intended method or methods of
distribution, of the total number of Registrable Securities specified by such
holders in such Demand. The Company shall, within 60 days of filing the Demand
Registration Statement, cause a Demand Registration Statement to be declared
effective by the SEC, and shall keep such Demand Registration Statement
continuously effective for a period commencing on the effective date of such
Demand Registration Statement and ending on the earlier of (x) the first day on
which all Registrable Securities included in such Demand Registration Statement
have been sold as described therein and (y) the 180th day after the effective
date of such Demand Registration Statement, subject to extension for any
Blackout Period occurring during such 180-day period (the "REGISTRATION
PERIOD").
(ii) The Company shall not cause or permit any other
registration statement with respect to Common Stock (other than on Forms S-4 or
S-8, or any successor forms), whether for its own account or for the account of
others, to become effective less than 90 days after the effective date of any
registration required pursuant to this Section 6.02.
(iii) If the Company shall not have registered the
Registrable Securities covered by a Demand pursuant to an effective Demand
Registration Statement within 180 days of the receipt of such Demand, the
Company shall immediately pay $200,000 to the holders of the Registrable
Securities to be included in the registration to be effected thereby
collectively. The Parties hereto hereby acknowledge and agree that such damages
are reasonable and accurately reflect the actual damages such holders are likely
to suffer in the event of the Company's failure to register the Registrable
Securities within 180 days of the Company's receipt of any such Demand.
(iv) The Company will have the right to select the
investment banker(s) and manager(s) to administer an offering pursuant to a
Demand Registration Statement, subject to the approval of the holders of a
majority of the Registrable Securities, which approval will not be unreasonably
withheld, delayed or conditioned.
(b) Piggy-back (i) If at any time after the Closing Date, the
resale of any Registrable Security shall not be covered by an effective
registration statement (other than during any Delay Period) and the Company
proposes to register any shares of capital stock under the Act, on a form and in
a manner that would permit registration of Registrable Securities for the sale
to the public under the Act, the Company shall give written notice to the
holders of Registrable Securities at least 30 days' notice of its intention to
do so. Upon the written request of any holder of Registrable Securities given
within 10 days after the giving of such notice by the Company, the Company shall
use its best efforts to cause to be included in such registration statement all
of the Registrable Securities so requested for inclusion by such holder. If the
registration statement is to cover, in whole or in part, any underwritten
distribution, the Company shall use its best efforts to cause the Registrable
Securities requested for inclusion pursuant to this Section to be included in
the underwriting on the same terms and conditions (including any lock-up) as the
shares otherwise being sold through the underwriters.
(ii) If, in the good faith judgment of the lead-managing
underwriter of any underwritten offering, the inclusion of all of the
Registrable Securities requested for inclusion pursuant to this Section 6.03
would materially and adversely affect the success of the proposed offering, then
the number of shares of capital stock and Registrable Securities, if any, to be
included in such registration shall be reduced, such reduction to be applied by
excluding (on a pro rata basis) capital stock to be sold by Persons other than
the Company. Notwithstanding the foregoing provisions, the Company may withdraw
any registration statement referred to in this Section 6.02(b) without incurring
any liability to any holder of Registrable Securities.
(c) The Company shall bear the cost of all registration expenses
incurred in compliance with this Section 6.02, including all registration and
filing fees, printing, messenger and delivery expenses, fees and disbursements
of counsel for the Company, blue sky fees and expenses (including, without
limitation, fees and expenses of counsel for the underwriters in connection with
blue sky qualifications of the Registrable Securities), all fees and expenses
incurred in connection with the listing of the Registrable Securities on a
national securities exchange or automated quotation system, and the expense of
any special audits and/or "cold comfort" letters incident to or required by any
such registration, the reasonable fees and disbursements, up to $7,500 of one
counsel, selected by Persons holding a majority of the Registrable Securities
being registered, to represent all holders of the Registrable Securities being
registered in connection with each such registration, any fees and disbursements
of underwriters customarily paid by the issuers or sellers of securities,
including, without limitation, fees and disbursements of counsel for the
underwriter, but excluding underwriting discounts and commissions, liability
insurance if the Company so desires or if the underwriters so require and the
reasonable fees and expenses of any special experts retained by the Company in
connection with the registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
(d) REGISTRATION PROCEDURES. Whenever the Purchaser requests that
any Registrable Securities be registered pursuant to this Section 6.02, the
Company will use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will as expeditiously as
possible:
(i) prepare and file with the SEC a registration statement
on any appropriate form for which the Company qualifies with
respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective
(provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company
will (i) furnish to the counsel selected by the Purchaser copies
of all such documents proposed to be filed, which documents will
be subject to the review of such counsel, and (ii) notify the
Purchaser of any stop order issued or threatened by the SEC);
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be reasonably necessary to
keep such registration statement effective for the requisite
180-day period and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with
the intended methods of disposition by the Purchaser thereof set
forth in such registration statement;
(iii) furnish to the Purchaser such number of copies of such
registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as the
Purchaser may reasonably request in order to facilitate the
disposition of the Registrable Securities sought to be sold by
the Purchaser;
(iv) use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of
such jurisdictions as the Purchaser reasonably requests and do
any and all other acts and things which may be reasonably
necessary or advisable to enable the Purchaser to consummate the
disposition in such jurisdictions of the Registrable Securities
owned by the Purchaser (PROVIDED that the Company will not be
required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this Section 6.02(iv), (ii) subject itself to taxation in
any jurisdiction or (iii) take any action that would subject it
to general service of process in any such jurisdiction);
(v) notify the Purchaser, at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary
to make the statements therein not misleading, and, at the
request of the Purchaser, the Company will prepare a supplement
or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus
will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not
misleading. Upon receipt of any notice pursuant to this Section
6.02(v), the Purchaser shall suspend all offers and sales of
securities of the Company and all use of any prospectus until
advised by the Company that offers and sales may resume;
(vi) cause all such Registrable Securities to be listed on
each securities exchange, if any, on which similar securities
issued by the Company are then listed;
(vii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(viii) enter into such customary agreements (including
underwriting agreements in customary form) and take all such
other actions as the Purchaser or the underwriters, if any,
reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(ix) make available for inspection by a representative of
the Purchaser, any underwriter participating in any disposition
pursuant to such registration statement and any attorney,
accountant or other agent retained by the Purchaser or
underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by the
Purchaser, underwriter, attorney, accountant or agent in
connection with such registration statement;
(x) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months
beginning with the first day of the Company's first full calendar
quarter after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;
(xi) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of
any order suspending or preventing the use of any related
prospectus or suspending the qualification of any shares of
Common Stock included in
such registration statement for sale in any jurisdiction, use all reasonable
efforts promptly to obtain the withdrawal of such order; and
(xii) if the registration is an underwritten offering, use
all reasonable efforts to obtain a so-called "cold comfort"
letter from the Company's independent public accountants in
customary form and covering such matters of the type customarily
covered by cold comfort letters.
(e) TRANSFERABILITY OF REGISTRATION RIGHTS. The rights granted to
the Purchaser under this Section 6.02 may be assigned to any permitted
transferee of Registrable Securities, in connection with any transfer or
assignment of Registrable Securities by the Purchaser or the Purchaser's
transferee; PROVIDED, HOWEVER, that: (a) such transfer is otherwise effected in
accordance with applicable securities laws, (b) such transfer is permitted by
this Agreement, (c) if not already a party hereto, the assignee or transferee
agrees in writing prior to such transfer to be bound by the provisions of this
Agreement applicable to the transferor, (d) the Purchaser shall act as agent and
representative for such transferee for the giving and receiving of notices
hereunder and (e) the assignee or transferee shall, after giving effect to such
transfer, hold at least 100,000 shares of Common Stock or securities convertible
into or exchangeable for at least 100,000 shares of Common Stock.
(f) INDEMNIFICATION.
(i) In the event of a registration of any Registrable
Securities pursuant to Section 6.01 or 6.02, the Company will
indemnify and hold harmless each holder of such Registrable
Securities and any underwriter (as defined in the Act) of such
Registrable Securities, and their respective Affiliates, and each
of their successors and assigns from and against, and will
reimburse such holder, underwriter, Affiliate, successor or
assign with respect to, any and all claims, actions, demands,
losses, damages, liabilities, costs and expenses, as incurred, to
which such holder, underwriter, Affiliate, successor or assign
may become subject under the Act, the Exchange Act, as amended,
or otherwise, including the reasonable fees and expenses of legal
counsel (including those incurred in connection with any claim
for indemnity hereunder) insofar as such claims, actions,
demands, losses, damages, liabilities, costs or expenses (or
actions, or proceedings, whether commenced or threatened in
respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, 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, in light of the
circumstances in which they are made, not misleading, or arise
out of any violation by the Company of any rule or regulation
under the Act, the Exchange Act or any state securities laws
applicable to the Company and relating to action or inaction
required of the Company in connection with such registration;
PROVIDED, HOWEVER, that the Company will not be liable in any
case to the extent, but only to the extent, that any such claim,
action, demand, loss, damage, liability, cost or expense arises
out of, or is based upon, an untrue statement or omission made in
reliance upon, and in strict conformity with, information
furnished by such holder or such underwriter in writing
specifically for use in the preparation thereof. This indemnity
shall remain in full force and effect regardless of any
investigation made by, or on behalf of, such holder, underwriter
or Affiliate and shall survive the transfer of such securities by
such holder or such underwriter and the termination of this
Agreement.
(ii) Promptly after receipt by a party to be indemnified
pursuant to the provisions of Section 6.02(f)(i) (an "indemnified
party") of notice of the commencement of any action involving the
subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim thereof is to be made against
the indemnifying party as contemplated by the provisions of
Section 6.02(f)(i), notify the indemnifying party of the
commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from
any liability which he or it may have to an indemnified party
otherwise than under this Section 6.02(f), and shall not relieve
the indemnifying party from liability under this Section 6.02(f)
unless, and to the extent, such indemnifying party is prejudiced
by such omission. In case such action is brought against any
indemnified party and the indemnified party notifies the
indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and after the
notice from the indemnifying party to such indemnified party of
its election to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party pursuant to
the provisions of Section 6.02(f)(i) for any legal expense
subsequently incurred by such indemnified party in connection
with the defense thereof, other than reasonable costs of
investigation; provided, however, that, if the defendants in any
such action include both the indemnified party and the
indemnifying party and the indemnified party shall have
reasonably concluded that there may be material defenses
available to it that are different from or additional to those
available to the indemnifying party, or if the interests of the
indemnified party may reasonably be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall
have the right to select a separate counsel and to assume such
legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel
and other expenses related to such participation to be reimbursed
by the indemnifying party as incurred. No indemnifying party
shall be liable to an indemnified party for any settlement of any
action or claim without the consent of the indemnifying party and
no indemnifying party may unreasonably withhold his or its
consent to any such settlement. No indemnifying party will,
except with the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from
all liability and equitable claims in respect to such claim or
litigation.
SECTION 6.03. ACTIONS WITH RESPECT TO PRIOR SPA. (a) Prior to the
Closing, the Company shall effect an amendment to the Certificate of
Designations which shall amend (i) the first date upon which the Series A
Preferred Stock of the Company may be converted into shares of Common Stock from
the date that is 24 months after the issuance of the Series A Preferred Stock
(January 7, 2002) to the date certain of October 7, 2002, and (ii) the first
date upon which the Series A Preferred Stock of the Company may be exchanged for
shares of Medizyme from the date that is 24 months after the issuance of the
Series A Preferred Stock (January 7, 2002) to the date certain of October 7,
2002.
(b) The Company hereby irrevocably votes its shares of Medizyme
in favor of an amendment to the by-laws of Medizyme to amending the first date
upon which the Non-Voting Convertible Preference Shares of Medizyme may be
converted into Voting Common Shares of Medizyme (as each is defined in the
Articles of Association of Medizyme) from the second anniversary of the issuance
of the Non-Voting Convertible Preference Shares to the date certain of July 7,
2003 and agrees to take all steps necessary, in the view of the Purchaser, to
effect such amendment, including the execution of a consent of the shareholders
of Medizyme substantially in the form of Exhibit C hereto.
SECTION 6.04. MAINTENANCE OF COMMON STOCK. The Company shall maintain
a sufficient number of authorized but unissued shares of Common Stock reserved
for issuance upon exercise of the Warrants.
SECTION 6.05. SEC DISCLOSURES. Each report, schedule, registration
statement and definitive proxy statement filed by the Company with the SEC from
and after the date of this Agreement will comply in all material respects with
the requirements of the Exchange Act applicable to such documents The Company
shall comply with all SEC filing requirements to which it is subject and has
filed all reports required to be filed thereunder.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Company, to:
Ribozyme Pharmaceuticals, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
(b) if to EIS, to:
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx Xxxxxx
Xxxxxxx, XX 04
Attention: Director
Facsimile: (000) 000-0000
with a copy to:
Reitler Xxxxx LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 7.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Purchaser in exercising any right or power hereunder or under any other
Transaction Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Purchaser hereunder and under the other Transaction
Documents are cumulative and are not exclusive of any rights or remedies that it
would otherwise have. No waiver of any provision of this Agreement or any of the
Transaction Documents or consent to any departure by the Company therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
(b) Neither this Agreement nor any of the other Transaction
Documents nor any provision hereof or thereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Company and the Purchaser.
SECTION 7.03. EXPENSES; INDEMNITY; DAMAGE WAIVER BY COMPANY. (a) The
Company shall pay all out-of-pocket expenses incurred by the Purchaser,
including the fees, charges and disbursements of any counsel for the Purchaser,
in connection with the enforcement or protection of its rights in connection
with the Transaction Documents, including its rights under this Section 7.03.
The Company will pay, and save the Purchaser harmless from any and all
liabilities (including interest and penalties) with respect to any stamp,
transfer and other Taxes (other than income taxes), if any, which may be payable
or determined to be payable on the execution and delivery of this Agreement, the
exercise of the Warrants or the acquisition of the Shares pursuant to this
Agreement.
(b) The Company shall indemnify the Purchaser, and each Related
Party of the Purchaser (each such Person being called an "Purchaser Indemnitee")
against, and hold each Purchaser Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including the fees, charges
and disbursements of any counsel for any Purchaser Indemnitee, incurred by or
asserted against any Purchaser Indemnitee arising out of, in connection with, or
as a result of any actual or prospective claim, litigation, investigation or
proceeding relating to or arising out of any of the Transaction Documents or any
agreement or instrument or transaction contemplated thereby, whether based on
contract, tort or any other theory and regardless of whether any Purchaser
Indemnitee is a party thereto; provided, however, that such indemnity shall not,
as to any Purchaser Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Purchaser Indemnitee.
SECTION 7.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby. All or any part of this
Agreement may be assigned by the Purchaser and their permitted assigns to their
respective Affiliates and subsidiaries, as well as any special purpose financing
or similar vehicle established by the Purchaser or its Affiliates. Other than as
set forth above, no party shall assign all or any part of this Agreement without
the prior written consent of the other party (and any attempted assignment or
transfer without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of the Purchaser) any legal or equitable right, remedy or claim under or
by reason of this Agreement.
SECTION 7.05. SURVIVAL. All covenants, agreements, representations and
warranties made by the Company in the Transaction Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Transaction Document shall be considered to have
been relied upon by the other parties hereto and shall survive the execution and
delivery of the Transaction Documents, regardless of any investigation made by
any such other party or on its behalf; provided that the representation and
warranties made by the Company herein and therein shall survive only for a
period of two (2) years from the Closing Date. The provisions of Sections 7.03
and 7.08 shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby or the termination of this
Agreement the other Transaction Documents or any provision hereof or thereof.
SECTION 7.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement
may be executed in counterparts (and by the parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Transaction Documents constitute the entire agreement among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 5.01, this Agreement shall become effective when the
parties hereto exchange signed counterparts and thereafter shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 7.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 7.08. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the parties irrevocably and unconditionally submits
to the exclusive jurisdiction of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court of the
Southern District of New York in any action or proceeding arising out of or
relating to any Transaction Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such federal court. Nothing in this Agreement or any other Transaction Document
shall affect any right that the Purchaser may otherwise have to bring any action
or proceeding relating to this Agreement or any other Transaction Document
against the Company or its properties in the courts of any jurisdiction.
(c) Each of the parties irrevocably and unconditionally waives
any objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
other Transaction Document in any court referred to in paragraph (b) of this
Section 7.08.
(d) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 7.01. Nothing in this
Agreement or any other Transaction Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH OF THE PARTIES WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH OF THE PARTIES (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 7.10. HEADINGS. Article and Section headings used herein are
for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
SECTION 7.11. DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken by, or prohibited to be taken by, any
Person, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
RIBOZYME PHARMACEUTICALS, INC.
By: _________________________________
Name:
Title:
ELAN INTERNATIONAL SERVICES, LTD.
By: __________________________________
Name:
Title:
===============================================================================
SECURITIES PURCHASE AGREEMENT
DATED AS OF
DECEMBER 21, 2001
BETWEEN
RIBOZYME PHARMACEUTICALS, INC.
AND
ELAN INTERNATIONAL SERVICES, LTD.
===============================================================================
EXHIBIT A
FORM OF WARRANT
EXHIBIT B
FORM OF OPINION
EXHIBIT C
FORM OF CONSENT
