Exhibit 10.2
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of August ___,
2003, is entered into by and between UNIVEC, INC. (the "Company"), and THE SHAAR
FUND, LTD. (the "Lender").
W I T N E S S E T H:
WHEREAS, the Company and the Lender are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration for offers and sales to accredited investors
afforded, inter alia, by Rule 506 under Regulation D ("Regulation D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act"), and/or Section
4(2) of the 1933 Act; and
WHEREAS, the Lender wishes to lend funds to the Company,
subject to and upon the terms and conditions of this Agreement and acceptance of
this Agreement by the Company, the repayment of which will be represented by an
8% Convertible Note of the Company (the "Convertible Note"), which Convertible
Note will be convertible into shares of Common Stock, $.001 par value per share,
of the Company (the "Common Stock"), upon the terms and subject to the
conditions of such Convertible Note;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
AGREEMENT TO PURCHASE; PURCHASE PRICE.
Purchase.
(i) The Lender hereby agrees to agrees to loan to the Company,
and the Company hereby agrees to borrow from the Lender, the sum of $85,000.00
(the "Purchase Price"). The obligation to repay the loan from the Lender shall
be evidenced by the Company's issuance of the Convertible Note to the Lender in
such principal amount (the Convertible Note issued to the Lender, the "Note").
The Note (i) shall provide for a conversion price (the "Conversion Price"),
which shall initially be the Fixed Conversion Price (as defined below), which
price may be adjusted from time to as provided in the Note and (ii) shall have
the terms and conditions of, and be substantially in the form attached hereto
as, Annex I. The loan to be made by the Lender and the issuance of the Note to
the Lender are sometimes referred to herein and in the other Transaction
Agreements as the purchase and sale of the Note.
(ii) The Purchase Price shall be payable in United States
Dollars.
b. Certain Definitions. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:
(i) "Affiliate" means, with respect to a specific Person
referred to in the relevant provision, another Person who or which controls or
is controlled by or is under common control with such specified Person.
(iv) "Closing Date" means the date of the closing of the
purchase and sale of the Note, as provided herein.
(v) "Company Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Rule 405 under the 1933 Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "1934 Act").
(vi) "Conversion Shares" or "Shares" means the shares of
Common Stock issuable upon conversion of the Note (including, if relevant,
accrued interest on the Note so converted).
(vii) "Holder" means the Person holding the relevant
Securities at the relevant time.
(viii) "Last Audited Date" means December 31, 2002.
(ii) "Lender Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Lender pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.
(ix) "Material Adverse Effect" means an event or combination
of events, which individually or in the aggregate, would reasonably be expected
to (w) adversely affect the legality, validity or enforceability of the
Securities or any of the Transaction Agreements, (x) have or result in a
material adverse effect on the results of operations, assets or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole,
(y) adversely impair the Company's authority or ability to perform fully on a
timely basis its obligations under any of the Transaction Agreements or the
transactions contemplated thereby, or (z) materially and adversely affect the
value of the rights granted to the Lender in the Transaction Agreements.
(x) "Person" means any living person or any entity, such as,
but not necessarily limited to, a corporation, partnership or trust.
(xi) "Principal Market" means the OTC Bulletin Board.
(xii) "Securities" means the Note and the Conversion Shares.
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(xiv) "State of Incorporation" means Delaware.
(xv) "Trading Day" shall mean any day during which the
Principal Market shall be open for business.
(xvi) "Transaction Agreements" means this Agreement and the
Note and includes all ancillary documents referred to in or contemplated by any
of those agreements.
Form of Payment; Delivery of Certificates.
(i) The Lender shall pay the Purchase Price for the Note by
delivering (or causing the delivery of) immediately available good funds in
United States Dollars to the Company on the Closing Date.
(ii) No later than the Closing Date, the Company shall deliver
the Note, duly executed on behalf of the Company and issued in the name of the
Lender, to the Lender or its designee.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Lender represents and warrants to, and covenants and
agrees with, the Company as follows:
Without limiting Lender's right to sell the Securities
pursuant to an effective registration statement or otherwise in compliance with
the 1933 Act, the Lender is purchasing the Securities for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof.
The Lender is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3), (ii) experienced in making investments of the kind
described in this Agreement and the related documents, (iii) able, by reason of
the business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its Affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and to evaluate the merits and risks of an investment in
the Securities, and (iv) able to afford the entire loss of its investment in the
Securities.
All subsequent offers and sales of the Securities by the
Lender shall be made pursuant to registration of the relevant Securities under
the 1933 Act or pursuant to an exemption from registration.
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The Lender understands that the Securities are being offered
and sold to it in reliance on specific exemptions from the registration
requirements of the 1933 Act and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Lender's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Lender set forth herein in order to determine the availability of such
exemptions and the eligibility of the Lender to acquire the Securities.
The Lender and its advisors, if any, have been furnished with
or have been given access to all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Note which have been requested by the Lender, including those set forth on
in any annex attached hereto. The Lender and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its management and
have received complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Lender has also had the
opportunity to obtain and to review the Company's filings on XXXXX listed on
Annex III hereto (the documents listed on such Annex III, to the extent
available on XXXXX or otherwise provided to the Lender as indicated on said
Annex III, collectively, the "Company's SEC Documents").
The Lender understands that its investment in the Securities
involves a high degree of risk.
g. The Lender hereby represents that, in connection with its
purchase of the Securities, it has not relied on any statement or representation
by the Company or any of their respective officers, directors and employees or
any of their respective attorneys or agents or the Finder, except as
specifically set forth herein.
The Lender understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
This Agreement and the other Transaction Agreements to which
the Lender is a party, and the transactions contemplated thereby, have been duly
and validly authorized, executed and delivered on behalf of the Lender and are
valid and binding agreements of the Lender enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC. Except as provided in Annex
II hereto or in the Company's SEC Documents or as otherwise provided herein, the
Company represents and warrants to the Lender, as of the date hereof and as of
the Closing Date, that,
a. Concerning the Securities. No stockholder of the Company is
entitled to any preemptive rights with respect to the sale of the Securities
contemplated by the Transaction Agreements. No party has a currently exercisable
right of first refusal to which the Company is a party or to which the Company
or any Company Control Person is aware that would be applicable to any or all of
the transactions contemplated by the Transaction Agreements.
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b. Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted as described in the Company's SEC Documents. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. The Company has registered its stock under, and is obligated to
file reports pursuant to, Section 12 of the 1934 Act. The Common Stock is listed
and quoted on the Principal Market.
c. Authorized Shares. As of the Closing Date, immediately
before giving effect to the transactions contemplated by the Transaction
Agreements, (i) the authorized capital stock of the Company consists of (x)
75,000,000 shares of Common Stock, par value $.001 per share, of which
33,616,095 are outstanding and (y) 4,995,500 shares of preferred stock, of which
104,813 are outstanding (including 124 shares of Series A 8% Convertible
Preferred Stock, for which the Company has received a notice of conversion into
4,009,000 shares of Common Stock, 104,167 shares of Series D 5% Convertible
Preferred Stock and 522 shares of Series E 5% Convertible Preferred Stock) and
(ii) all issued and outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable. The Company has
sufficient authorized and unissued shares of Common Stock as may be necessary to
effect the issuance of the Securities, including the Conversion Shares.
d. Transaction Agreements. This Agreement and each of the
other Transaction Agreements and the transactions contemplated thereby have been
duly and validly authorized by the Company. This Agreement has been duly
executed and delivered by the Company. This Agreement is, and the other
Transaction Agreements, when executed and delivered by the Company, will be,
valid and binding agreements of the Company enforceable in accordance with their
respective terms, except in all cases to the extent that (i) enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting the enforcement of creditors' rights and remedies
generally, (ii) the availability of the equitable remedy of specific performance
and injunctive relief is subject to the discretion of the court before which the
proceedings may be brought, and (iii) the enforceability of the provisions
hereof relating to indemnification and contribution may be limited by applicable
federal, state or other securities laws or the public policy underlying such
laws.
e. Non-contravention. The execution and delivery of this
Agreement and the other Transaction Agreements by the Company, the issuance of
the Securities, and the consummation by the Company of the other transactions
contemplated by the Transaction Agreements do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions of, or
constitute a default under (i) the certificate of incorporation or other charter
document and by-laws of the Company, each as currently in effect, (ii) any
material indenture, mortgage, deed of trust, or other material agreement or
instrument to which the Company is a party or by which it or any of its
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properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, or (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its respective properties or assets; except that the foregoing representation
shall not apply in each case to the extent such conflict, breach or default
would not have a Material Adverse Effect.
f. Approvals. Assuming the accuracy of the Lender's
representations in Section 2 hereof, no authorization, approval or consent of
any court, governmental body, regulatory agency, self-regulatory organization,
stock exchange or market or the stockholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the
Lender as contemplated by this Agreement, except such authorizations, approvals
and consents that have been obtained or for which the failure to obtain such
would not, individually or in the aggregate, have a Material Adverse Effect.
g. Filings. As of their respective filing dates, none of the
Company's SEC Documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements made therein in light of the circumstances under which they
were made, not misleading (except any statements or omissions therein which were
corrected or otherwise disclosed or updated in a filing of any of the subsequent
Company's SEC Documents).
h. Absence of Certain Changes. Since the Last Audited Date,
there has been no Material Adverse Effect. Since the Last Audited Date, except
as provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other
property to stockholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business
consistent with past practices; (v) suffered any substantial losses or waived
any rights of material value, whether or not in the ordinary course of business,
or suffered the loss of any material amount of existing business; (vi) made any
changes in employee compensation, except in the ordinary course of business
consistent with past practices; or (vii) experienced any material problems with
labor or management in connection with the terms and conditions of their
employment.
i. Full Disclosure. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been disclosed in writing to the Lender that (i) would reasonably be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement or any of the other
Transaction Agreements, or (ii) would reasonably be expected to materially and
adversely affect the value of the rights granted to the Lender in the
Transaction Agreements.
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j. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company before or by any governmental authority or
non-governmental department, commission, board, bureau, agency or
instrumentality or any other Person to which the Company is a party or of which
the Company is otherwise aware, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect. The Company is not aware of any
valid basis for any such claim that (either individually or in the aggregate
with all other such events and circumstances) could reasonably be expected to
have a Material Adverse Effect. There are no outstanding or unsatisfied
judgments, orders, decrees, writs, injunctions or stipulations to which the
Company is a party or by which it or any of its properties is bound, that
involve the transaction contemplated herein or that, alone or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
k. Absence of Events of Default. Except as set forth in
Section 3(e) hereof, no Event of Default (or its equivalent term), as defined in
the respective agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (or its equivalent term) (as so defined in such agreement), has
occurred and is continuing, which would have a Material Adverse Effect.
l. No Undisclosed Liabilities or Events. Since the Last
Audited Date, the Company has incurred no liabilities or obligations other than
(x) those disclosed in the Transaction Agreements or the Company's SEC
Documents, (y) those incurred in the ordinary course of the Company's business,
or (z) which individually or in the aggregate, do not or would not have a
Material Adverse Effect. No event or circumstances has occurred or exists with
respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (i) change the certificate of incorporation or
other charter document or by-laws of the Company, each as currently in effect,
with or without shareholder approval, which change would reduce or otherwise
adversely affect the rights and powers of the shareholders of the Common Stock
or (ii) materially or substantially change the business, assets or capital of
the Company, including its interests in subsidiaries.
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m. No Integrated Offering. Neither the Company nor any of its
Affiliates nor any Person acting on its or their behalf has, directly or
indirectly, at any time since May 1, 2002, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
n. Dilution. The number of Conversion Share issuable upon
conversion of the Note may have a dilutive effect on the ownership interests of
the other shareholders (and Persons having the right to become shareholders) of
the Company. The Company's executive officers and directors have studied and
fully understand the nature of the Securities being sold hereby and recognize
that they have such a potential dilutive effect. The Company specifically
acknowledges that its obligation to issue the Conversion Shares upon conversion
of the Note consistent with and in accordance with the terms of the Transaction
Agreements is binding upon the Company and enforceable regardless of the
dilution such issuance may have on the ownership interests of other shareholders
of the Company, and the Company will honor every duly given Notice of Conversion
(as contemplated by the Note) unless the Company is subject to an injunction
(which injunction was not sought by the Company) prohibiting the Company from
doing so. Nothing in the foregoing provisions of this Section 3(n) shall be
deemed to restrict the Company's rights under the Transaction Agreements.
o. Fees to Brokers, Finders and Others. The Company has taken
no action which would give rise to any claim by any person for brokerage
commission, finder's fees or similar payments by Lender or the Company relating
to this Agreement or the transactions contemplated hereby.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Lender acknowledges that (1) the
Securities have not been and are not being registered under the provisions of
the 1933 Act and, except as provided herein or in the other Transaction
Agreements or otherwise included in an effective registration statement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder or (B) the
Lender shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 (as defined below) may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Securities under circumstances in which the seller, or the Person through
whom the sale is made, may be deemed to be an underwriter, as that term is used
in the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than as contemplated herein or in any of the other Transaction
Agreements) under the 1933 Act or to comply with the terms and conditions of any
exemption thereunder.
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b. Restrictive Legend. The Lender acknowledges and agrees
that, until such time as the relevant Shares have been registered under the 1933
Act, and sold in accordance with an effective registration statement, the
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
Filings. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Securities to the Lender
under any United States laws and regulations applicable to the Company, or by
any domestic securities exchange or trading market, and to provide a copy
thereof to the Lender promptly after such filing.
Reporting Status. So long as the Lender beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable
action under its control to ensure that adequate current public information with
respect to the Company, as required in accordance with Rule 144(c)(2) of the
1933 Act, is publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company will take
all reasonable action under its control to maintain the continued listing and
quotation and trading of its Common Stock (including, without limitation, the
Shares) on the Principal Market or a listing on the NASDAQ/Small Cap or National
Markets and, to the extent applicable to it, will comply in all material
respects with the Company's reporting, filing and other obligations under the
by-laws or rules of the Principal Market and/or the National Association of
Securities Dealers, Inc., as the case may be, applicable to it at least through
the date which is sixty (60) days after the later of the date on which all of
the Warrants have been exercised or have expired.
Use of Proceeds. The Company will use the proceeds received hereunder
for general corporate purposes.
f. Rule 144. With a view to making available to the Holder the
benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may
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at any time permit the Holder to sell securities of the Company to the public
without registration (collectively, "Rule 144"), the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144;
(ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934 Act; and
(iii) furnish to the Holder so long as such party owns Shares,
promptly upon request, (x) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the 1934
Act, (y) if not available on the SEC's XXXXX system, a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company and (z) such other information as may be reasonably
requested to permit the Holder to sell such securities pursuant to Rule 144
without registration; and
(iv) at the request of any Holder then holding Shares, give
its transfer agent (the "Transfer Agent") instructions (supported by an opinion
of Company counsel, if required or requested by the Transfer Agent) to the
effect that, upon the Transfer Agent's receipt from such Holder of
(x) a certificate (a "Rule 144 Certificate") certifying (A) that the
Holder's holding period (as determined in accordance with the
provisions of Rule 144) for the Shares which the Holder proposes to
sell (the "Securities Being Sold") is not less than (1) year and (B) as
to such other matters as may be appropriate in accordance with Rule 144
under the 1933 Act, and
(y) an opinion of counsel acceptable to the Company (for which purposes
it is agreed that Xxxxxxx & Prager LLP shall be deemed acceptable if
not given by Company counsel) that, based on the Rule 144 Certificate,
Securities Being Sold may be sold pursuant to the provisions of Rule
144, even in the absence of an effective registration statement,
the Transfer Agent is to effect the transfer of the Securities Being Sold and
issue to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent's books and records (except to the extent any such
legend or restriction results from facts other than the identity of the relevant
Holder, as the seller or transferor thereof, or the status, including any
relevant legends or restrictions, of the shares of the Securities Being Sold
while held by the Lender). If the Transfer Agent reasonably requires any
additional documentation at the time of the transfer, the Company shall deliver
or cause to be delivered all such reasonable additional documentation as may be
necessary to effectuate the issuance of an unlegended certificate.
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g. Piggy-Back Rights.
(i) The Holder shall have piggy-back registration rights with
respect to the Shares, subject to the conditions set forth below. If the Company
participates (whether voluntarily or by reason of an obligation to a third
party) in the registration of any shares of the Company's stock (other than a
registration on Form S-8 or on Form S-4), the Company shall give written notice
thereof to the Holder and the Holder shall have the right, exercisable within
ten (10) business days after receipt of such notice, to demand inclusion of all
or a portion of the Holder's Shares in such registration statement. If the
Holder exercises such election, the Shares so designated shall be included in
the registration statement (without any holdbacks) at no cost or expense to the
Lender (other than any commissions, if any, relating to the sale of Holder's
shares). The Holder's rights under this Section 4(g)(i) shall expire at such
time as such Holder can sell all of such Holder's remaining Shares under Rule
144 (as defined below) without volume or other restrictions or limit.
(ii) Notwithstanding the foregoing, if at any time or from
time to time after the date of effectiveness of the registration statement, the
Company notifies the Holder in writing of the existence of a Potential Material
Event (as defined below), the Holder shall not offer or sell any Securities
covered by such registration statement ("Registrable Securities"), or engage in
any other transaction involving or relating to the Registrable Securities, from
the time of the giving of notice with respect to a Potential Material Event
until the Holder receives written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided, however, that the Company may not so
suspend such right other than during a Permitted Suspension Period. The term
"Potential Material Event" means any of the following: (i) the possession by the
Company of material information not ripe for disclosure in a registration
statement, which shall be evidenced by determinations in good faith by the Board
of Directors of the Company that disclosure of such information in the
registration statement would be detrimental to the business and affairs of the
Company; or (ii) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the Board of
Directors of the Company that the registration statement would be materially
misleading absent the inclusion of such information. The term "Permitted
Suspension Period" means one or more suspension periods during any consecutive
12-month period which suspension periods, in the aggregate, do not exceed fifty
(50) days, provided, however, that no one such suspension period shall either
(i) be for more than twenty (20) days or (ii) begin less than ten (10) business
days after the last day of the preceding suspension (whether or not such last
day was during or after a Permitted Suspension Period).
h. Available Shares. The Company shall have at all times
authorized and reserved for issuance, free from preemptive rights, a number of
shares (the "Minimum Available Shares") at least equal to two hundred percent
(200%) of the number of shares issuable upon conversion of the then unconverted
balance of the Note (including interest thereon through at least the Maturity
Date thereof). For the purposes of such calculations, the Company should assume
that the Note was then convertible without regard to any restrictions which
might limit any Holder's right to convert all or any part of the Note held by
the Holder.
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i. Late Delivery of Conversion Shares. The Company understands
that a delay in the issuance of the Conversion Shares beyond the Delivery Date
(as defined in the Note) could result in economic loss to the Lender. As
compensation to the Lender for such loss, the Company agrees to pay late
payments to the Lender for late issuance of Conversion Shares upon conversion of
the Note in accordance with the following schedule (where "No. Business Days
Late" refers to the number of business days which is beyond two (2) business
days after the Delivery Date):3
Late Payment For Each $10,000
of Principal and Interest
Business Days Late Being Converted No.
----------------------------------------------------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each Business
Day Late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Lender's exclusive remedy (other than the
following provisions of this Section 4(i) and the provisions of the immediately
following Section 4(j) of this Agreement) for such delay. Furthermore, in
addition to any other remedies which may be available to the Lender, in the
event that the Company fails for any reason to effect delivery of such shares of
Common Stock by close
-----------------------
3 Example: Notice of Conversion is delivered on Monday, December 1, 2003. The
Delivery Date would be Thursday, December 4 (the third business day after such
delivery). If the certificate is delivered by Monday December 8 (2 business days
after the Delivery Date), no payment under this provision is due. If the
certificates are delivered on December 9, that is 1 "Business Day Late" in the
table below; if delivered on December 16, that 6 "Business Days Late" in the
table.
12
of business on the Delivery Date, the Lender will be entitled to revoke the
relevant Notice of Conversion by delivering a notice to such effect to the
Company, whereupon the Company and the Lender shall each be restored to their
respective positions immediately prior to delivery of such Notice of Conversion;
provided, however, that an amount equal to any payments contemplated by this
Section 4(i) which have accrued through the date of such revocation notice shall
remain due and owing to the Lender notwithstanding such revocation.
13
Buy-In Adjustment. If, by the relevant Delivery Date, the Company fails
for any reason to deliver the Conversion Shares, the Holder of the Note being
converted (a "Converting Holder") purchases, in an arm's-length open market
transaction or otherwise, shares of Common Stock (the "Covering Shares") in
order to make delivery in satisfaction of a sale of Common Stock by the
Converting Holder (the "Sold Shares"), which delivery such Converting Holder
anticipated to make using the Shares to be issued upon such conversion (a
"Buy-In"), the Converting Holder shall have the right, to require the Company to
pay to the Converting Holder, in addition to and not in lieu of the amounts due
under Section 4(i) hereof, the Buy-In Adjustment Amount (as defined below). The
"Buy-In Adjustment Amount" is the amount equal to the excess, if any, of (x) the
Converting Holder's total purchase price (including brokerage commissions, if
any) for the Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Converting Holder from the sale of the Sold
Shares. The Company shall pay the Buy-In Adjustment Amount to the Converting
Holder in immediately available funds immediately upon demand by the Converting
Holder.4
DWAC Issuance. In lieu of delivering physical certificates representing
the Common Stock issuable upon conversion, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the Holder and its compliance with
the provisions contained in this paragraph, so long as the certificates therefor
do not bear a legend and the Holder thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of
Holder's Broker with DTC through its Deposit Withdrawal Agent Commission system.
---------------------
4 By way of illustration and not in limitation of the foregoing, if the
Converting Holder purchases shares of Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
shares of Common Stock it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount which Company will be required to pay to the Converting Holder
will be $1,000.
14
Conversion after Bankruptcy. The Holder shall be entitled to exercise
its conversion privilege with respect to the Note notwithstanding the
commencement of any case under 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C. ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C. ss.362 in respect of the conversion of the Note. The
Company agrees, without cost or expense to such holder, to take or to consent to
any and all action necessary to effectuate relief under 11 U.S.C. ss.362.
5. TRANSFER AGENT INSTRUCTIONS.
The Company warrants that, with respect to the
Securities, other than the stop transfer instructions to give effect to Section
4(a) hereof, it will give the Transfer Agent no instructions inconsistent with
instructions to issue the Conversion Shares (upon conversion of the Note),
bearing the restrictive legend specified in Section 4(b) of this Agreement prior
to registration of the Shares under the 1933 Act or other sale or transfer
pursuant to an applicable exemption from registration, registered in the name of
the Lender or its nominee and in such denominations to be specified by the
Lender in connection with each such issuance. Except as so provided, the Shares
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and applicable law. Nothing in
this Section shall affect in any way the Lender's obligations to comply with all
applicable securities laws upon resale of the Securities. If the Lender provides
the Company with an opinion of counsel reasonably satisfactory to the Company
that registration of a resale by the Lender of any of the Securities in
accordance with clause (1)(B) of Section 4(a) of this Agreement is not required
under the 1933 Act, the Company shall (except as provided in clause (2) of
Section 4(a) of this Agreement) permit the transfer of the Securities and, in
the case of the Conversion Shares, promptly instruct the Company's transfer
agent to issue one or more certificates for Common Stock without legend in such
name and in such denominations as specified by the Holder.
The Company will authorize its transfer agent to give
information relating to the Company directly to the Lender or the Lender's
representatives upon the request of the Lender or any such representative, to
the extent such information relates solely to (i) the status of shares of Common
Stock issued or claimed to be issued to the Lender in connection with an
exercise of a Warrant, or (ii) the number of outstanding shares of Common Stock
of all shareholders as of a current or other specified date.
6. CLOSING DATE.
a. The Closing Date shall occur on the date which is the first
Trading Day after each of the conditions contemplated by Sections 7 and 8 hereof
shall have either been satisfied or been waived by the party in whose favor such
conditions run.
The closing of the purchase and issuance of the Note shall
occur on the Closing Date at the offices of Xxxxxxx & Xxxxxx LLP, 00 Xxxxxxxx,
Xxxxx 0000, Xxx Xxxx, XX 00000 and shall take place no later than 3:00 P.M., New
York time, on such day or such other time and place as is mutually agreed upon
by the Company and the Lender.
15
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Lender understands that the Company's obligation to sell
the Note to the Lender pursuant to this Agreement on the Closing Date is
conditioned upon:
The execution and delivery of this Agreement by the Lender;
Delivery by the Lender to the Company of good funds as payment
in full of an amount equal to the Purchase Price for the Securities in
accordance with this Agreement;
The accuracy on such Closing Date of the representations and
warranties of the Lender contained in this Agreement, each as if made on such
date, and the performance by the Lender on or before such date of all covenants
and agreements of the Lender required to be performed on or before such date;
and
There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Lender's obligation to
purchase the Note on the Closing Date is conditioned upon:
The execution and delivery of this Agreement and the other
Transaction Agreements by the Company;
Delivery by the Company to Xxxxxxx & Prager LLP of the Note in
accordance with this Agreement;
The accuracy in all material respects on such Closing Date of
the representations and warranties of the Company contained in this Agreement,
each as if made on such date, and the performance by the Company on or before
such date of all covenants and agreements of the Company required to be
performed on or before such date;
On such Closing Date, the Lender shall have received an
opinion of counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to the Lender, substantially to the effect set
forth in Annex IV attached hereto;
There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained; and
From and after the date hereof to and including such Closing
Date, each of the following conditions will remain in effect: (i) the trading of
the Common Stock shall not have been suspended by the SEC or on the Principal
Market; (ii) trading in securities generally on the Principal Market shall not
16
have been suspended or limited; (iii), no minimum prices shall been established
for securities traded on the Principal Market; and (iv) there shall not have
been any material adverse change in any financial market that, in the reasonable
judgment of the Lender, makes it impracticable or inadvisable to purchase the
Purchased Shares.
9. INDEMNIFICATION.
a. The Company agrees to indemnify and hold harmless Lender
and its officers, directors, shareholders, employees, affiliates, advisors,
administrators, representatives, and agents, and each Lender Control Person
(collectively, "Covered Lenders") from and against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees) incurred
(collectively, "Damages"), jointly or severally, and any action in respect
thereof to which a Covered Lender becomes subject to, resulting from, arising
out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement, as such Damages are incurred, except to the
extent such Damages result primarily from Lender's failure to perform any
covenant or agreement contained in this Agreement or Lender's or its officer's,
director's, employee's, agent's or Lender Control Person's gross negligence,
recklessness or bad faith in performing its obligations under this Agreement.
If
(x) the Lender becomes involved in any capacity in any action,
proceeding or investigation brought by any stockholder of the Company,
in connection with or as a result of the consummation of the
transactions contemplated by this Agreement or the other Transaction
Agreements, or if the Lender is impleaded in any such action,
proceeding or investigation by any Person, or
(y) the Lender becomes involved in any capacity in any action,
proceeding or investigation brought by the SEC, any self-regulatory
organization or other body having jurisdiction, against or involving
the Company or in connection with or as a result of the consummation of
the transactions contemplated by this Agreement or the other
Transaction Agreements, or if the Lender is impleaded in any such
action, proceeding or investigation by any Person,
then in any such case, the Company hereby agrees to indemnify, defend and hold
harmless the Lender from and against and in respect of all losses, claims,
liabilities, damages or expenses resulting from, imposed upon or incurred by the
Lender, directly or indirectly, and reimburse such Lender for its reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are incurred.
The indemnification and reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Covered Lender who
are actually named in such action, proceeding or investigation, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Lender, any such Covered Lender.
The Company also agrees that no Covered Lender shall have any liability to the
Company or any Person asserting claims on behalf of or in right of the Company
in connection with or as a result of the consummation of this Agreement or the
other Transaction Agreements, except as provided in or contemplated by this
Agreement.
17
c. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to.
10. JURY TRIAL WAIVER. The Company and the Lender hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out or in
connection with the Transaction Agreements.
11. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the Company and the Lender hereby
submits to the exclusive jurisdiction of the United States Federal and the state
courts located in New York County, New York with respect to any dispute arising
under this Agreement or any of the other Transaction Agreements or the
transaction contemplated hereby or thereby and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions. To
the extent determined by such court, the Company shall reimburse the Lender for
any reasonable legal fees and disbursements incurred by the Lender in
enforcement of or protection of any of its rights under any of the Transaction
Agreements.
Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.
All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.
This Agreement may be signed in one or more counterparts, each
of which shall be deemed an original.
The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
18
This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement thereof.
This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
k. The language of this Agreement shall, in any and all cases,
for any and all purposes, and in any and all circumstances be construed as a
whole, according to its fair meaning, not strictly for or against the Company or
the Lender, and with no regard whatsoever to the identity or status of any
person or persons who drafted all or any part of this Agreement.
NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of
(a) the date delivered, if delivered by personal delivery as
against written receipt therefor or by confirmed facsimile
transmission,
(b) the seventh business day after deposit, postage prepaid,
in the United States Postal Service by registered or certified
mail, or
(c) the third business day after mailing by domestic or
international express courier, with delivery costs and fees
prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: UNIVEC, INC.
00 X. Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to: Xxxx Xxxxxx, Esq.
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx, 00xx Xx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
LENDER: The Shaar Fund, Ltd.
c/x Xxxxxxxx Capital Management
000 Xxxxx Xxxxxx
00
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Lender's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the Certificates
and the payment of the Purchase Price, and shall inure to the benefit of the
Lender and the Company and their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
20
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Lender and the Company as of the date first above written.
UNIVEC, INC.
By: ________________________________
Name:
Title:
THE SHAAR FUND, LTD.
BY: INTERCARIBBEAN SERVICES LTD.,
Director
By: ________________________________
Name:
Title:
ANNEX I FORM OF NOTE
ANNEX II COMPANY DISCLOSURE MATERIALS
ANNEX III COMPANY'S SEC DOCUMENTS AVAILABLE ON XXXXX
ANNEX IV FORM OF OPINION OF COUNSEL
80
ANNEX II
TO
SECURITIES PURCHASE AGREEMENT
COMPANY DISCLOSURE
------------------
NONE
ANNEX III
TO
SECURITIES PURCHASE AGREEMENT
COMPANY'S SEC DOCUMENTS
1. See schedule of documents available on XXXXX below.
2. Other: NONE
Documents Available on XXXXX
----------------------------
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002, filed
on May 15, 2003
Quarterly Report on Form 10-QSB filed on May 16, 2003
Definitive Proxy Statement on Schedule 14A filed on August 7, 2003
