Exhibit 10.1
EXECUTION COPY
AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT
BY AND BETWEEN
KINGSBRIDGE CAPITAL LIMITED
AND
AKSYS, LTD.
DATED AS OF JANUARY 22, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.....................................................................2
Section 1.01. "Blackout Shares"............................................................2
Section 1.02. "Closing Date"...............................................................2
Section 1.03. "Commission".................................................................2
Section 1.04. "Commission Documents".......................................................2
Section 1.05. "Commitment Period"..........................................................2
Section 1.06. "Common Stock"...............................................................2
Section 1.07. "Condition Satisfaction Date"................................................2
Section 1.08. "Damages"....................................................................2
Section 1.09. "Draw Down"..................................................................2
Section 1.10. "Draw Down Amount"...........................................................2
Section 1.11. "Draw Down Discount Price"...................................................2
Section 1.12. "Draw Down Notice"...........................................................3
Section 1.13. "Draw Down Pricing Period"...................................................3
Section 1.14. "Effective Date".............................................................3
Section 1.15. "Exchange Act"...............................................................3
Section 1.16. "Knowledge"..................................................................3
Section 1.17. "Legend".....................................................................3
Section 1.18. "Make Whole Amount"..........................................................3
Section 1.19. "Material Adverse Effect"....................................................3
Section 1.20. "Maximum Commitment Amount"..................................................3
Section 1.21. "Maximum Draw Down Amount"...................................................3
Section 1.22. "Minimum Draw Down Amount"...................................................3
Section 1.23. "NASD".......................................................................3
Section 1.24. "Other Financing"............................................................3
Section 1.25. "Permitted Transaction"......................................................3
Section 1.26. "Person".....................................................................4
Section 1.27. "Principal Market"...........................................................4
Section 1.28. "Prohibited Transaction".....................................................4
Section 1.29. "Prospectus".................................................................4
Section 1.30. "Registrable Securities".....................................................4
Section 1.31. "Registration Rights Agreement"..............................................4
Section 1.32. "Registration Statement".....................................................4
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 1.33. "Regulation D"...............................................................4
Section 1.34. "Section 4(2)"...............................................................4
Section 1.35. "Securities Act".............................................................4
Section 1.36. "Settlement Date"............................................................4
Section 1.37. "Shares".....................................................................4
Section 1.38. "Threshold Price"............................................................5
Section 1.39. "Trading Day"................................................................5
Section 1.40. "Underwriter"................................................................5
Section 1.41. "VWAP".......................................................................5
Section 1.42. "Warrant"....................................................................5
Section 1.43. "Warrant Shares".............................................................5
ARTICLE II PURCHASE AND SALE OF COMMON STOCK...............................................5
Section 2.01. Purchase and Sale of Stock...................................................5
Section 2.02. Closing......................................................................5
Section 2.03. Registration Statement and Prospectus........................................5
Section 2.04. Intentionally Omitted........................................................5
Section 2.05. Blackout Shares..............................................................5
ARTICLE III DRAW DOWN TERMS.................................................................6
Section 3.01. Draw Down Notice.............................................................6
Section 3.02. Number of Shares.............................................................6
Section 3.03. Limitation on Draw Downs.....................................................6
Section 3.04. Trading Cushion..............................................................6
Section 3.05. Expiration of Draw Downs.....................................................6
Section 3.06. Settlement...................................................................6
Section 3.07. Delivery of Shares; Payment of Draw Down Amount..............................6
Section 3.08. Threshold Price..............................................................7
Section 3.09. Other Issuances..............................................................7
Section 3.10. Failure to Deliver Shares....................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................7
Section 4.01. Organization, Good Standing and Power........................................8
Section 4.02. Authorization; Enforcement...................................................8
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 4.03. Capitalization...............................................................8
Section 4.04. Issuance of Shares...........................................................9
Section 4.05. No Conflicts.................................................................9
Section 4.06. Commission Documents, Financial Statements...................................9
Section 4.07. No Material Adverse Change..................................................10
Section 4.08. No Undisclosed Liabilities..................................................10
Section 4.09. No Undisclosed Events or Circumstances......................................10
Section 4.10. Actions Pending.............................................................10
Section 4.11. Compliance with Law.........................................................11
Section 4.12. Certain Fees................................................................11
Section 4.13. Disclosure..................................................................11
Section 4.14. Material Non-Public Information.............................................11
Section 4.15. Exemption from Registration; Valid Issuances................................11
Section 4.16. No General Solicitation or Advertising in Regard to this Transaction........12
Section 4.17. No Integrated Offering......................................................12
Section 4.18. Acknowledgment Regarding Investor's Purchase of Shares......................12
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR......................12
Section 5.01. Organization and Standing of the Investor...................................12
Section 5.02. Authorization and Power.....................................................12
Section 5.03. No Conflicts................................................................12
Section 5.05. Information.................................................................13
Section 5.06. Selling Restrictions........................................................13
ARTICLE VI COVENANTS OF THE COMPANY.......................................................14
Section 6.01. Securities..................................................................14
Section 6.02. Reservation of Common Stock.................................................14
Section 6.03. Registration and Listing....................................................14
Section 6.04. Registration Statement......................................................14
Section 6.05. Compliance with Laws........................................................14
Section 6.06. Reporting Requirements......................................................15
Section 6.07. Other Financing.............................................................15
Section 6.08. Prohibited Transactions.....................................................15
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 6.09. Corporate Existence.........................................................15
Section 6.10. Non-Disclosure of Non-Public Information....................................15
Section 6.11. Notice of Certain Events Affecting Registration; Suspension of Right to Request a Draw
Down........................................................................16
Section 6.12. Amendments to the Registration Statement....................................16
Section 6.13. Prospectus Delivery.........................................................16
Section 6.14. Expectations Regarding Draw Downs...........................................16
ARTICLE VII CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN.............16
Section 7.01. Accuracy of the Company's Representations and Warranties....................17
Section 7.02. Performance by the Company..................................................17
Section 7.03. Compliance with Law.........................................................17
Section 7.04. Effective Registration Statement............................................17
Section 7.05. No Knowledge................................................................17
Section 7.06. No Suspension...............................................................17
Section 7.07. No Injunction...............................................................17
Section 7.08. No Proceedings or Litigation................................................17
Section 7.09. Section 16 Limitation.......................................................18
Section 7.10. Sufficient Shares Registered for Resale.....................................18
Section 7.11. Warrant.....................................................................18
Section 7.12. Opinion of Counsel..........................................................18
ARTICLE VIII LEGENDS........................................................................18
Section 8.01. Legends.....................................................................18
Section 8.02. No Other Legend or Stock Transfer Restrictions..............................19
ARTICLE IX TERMINATION....................................................................20
Section 9.01. Term........................................................................20
Section 9.02. Other Termination...........................................................20
Section 9.03. Effect of Termination.......................................................20
ARTICLE X INDEMNIFICATION................................................................21
Section 10.01. Indemnification.............................................................21
Section 10.02. Notification of Claims for Indemnification..................................22
Section 10.03. Dispute Resolution..........................................................23
ARTICLE XI MISCELLANEOUS..................................................................24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 11.01. Fees and Expenses...........................................................24
Section 11.02. Reporting Entity for the Common Stock.......................................24
Section 11.03. Brokerage...................................................................24
Section 11.04. Notices.....................................................................24
Section 11.05. Assignment..................................................................25
Section 11.06. Amendment; No Waiver........................................................25
Section 11.07. Entire Agreement............................................................25
Section 11.08. Severability................................................................26
Section 11.09. Title and Subtitles.........................................................26
Section 11.10. Counterparts................................................................26
Section 11.11. Choice of Law...............................................................26
Section 11.12. Specific Enforcement, Consent to Jurisdiction...............................26
Section 11.13. Survival....................................................................26
Section 11.14. Publicity...................................................................26
Section 11.15. Further Assurances..........................................................27
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AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT
BY AND BETWEEN
KINGSBRIDGE CAPITAL LIMITED
AND
AKSYS, LTD.
dated as of January 22, 2002
This AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT is entered
into as of the 22nd day of January (this "AGREEMENT"), by and between
Kingsbridge Capital Limited, an entity organized and existing under the laws of
the British Virgin Islands (the "INVESTOR") and AKSYS, LTD., a corporation
organized and existing under the laws of the State of Delaware (the "COMPANY").
WHEREAS, the parties desire that, upon the terms and subject
to the conditions set forth herein, the Company may issue and sell to the
Investor, from time to time as provided herein, and the Investor shall purchase
from the Company, Common Stock (as defined below) for an aggregate of up to $15
million; and
WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("SECTION 4(2)") and Regulation D ("REGULATION D") of
the United States Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder (the "SECURITIES ACT"), and/or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments in Common Stock to be
made hereunder; and
WHEREAS, the parties hereto are concurrently entering into an
Amended and Restated Registration Rights Agreement in the form of Exhibit A
hereto (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company shall
register the Common Stock issued and sold to the Investor under this Agreement
and under the Warrant, upon the terms and subject to the conditions set forth
therein;
WHEREAS, in consideration for the Investor's execution and
delivery of, and its performance of its obligations under, the Original
Agreement, on October 15, 2002 the Company issued to the Investor a Warrant in
the form of Exhibit B hereto (the "WARRANT") pursuant to which the Investor may
purchase from the Company up to 200,000 shares of Common Stock, upon the terms
and subject to the conditions set forth therein; and
WHEREAS, the parties hereto entered into a
Common Stock
Purchase Agreement, dated as of October 15, 2002 (the "ORIGINAL AGREEMENT"), and
desire to amend and restate the Original Agreement in its entirety hereby;
NOW, THEREFORE, the parties hereto agree to amend and restate the
Original Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.01. "BLACKOUT SHARES" shall have the meaning assigned to such
term in the Registration Rights Agreement.
Section 1.02. "CLOSING DATE" means the date on which this Agreement is
executed and delivered by the Company and the Investor.
Section 1.03. "COMMISSION" means the United States Securities Exchange
Commission.
Section 1.04. "COMMISSION DOCUMENTS" shall have the meaning assigned to
such term in Section 4.06 hereof.
Section 1.05. "COMMITMENT PERIOD" means the period commencing on the
Effective Date and expiring on the earliest to occur of (x) the date on which
the Investor shall have purchased Shares pursuant to this Agreement for an
aggregate purchase price equal to the Maximum Commitment Amount, (y) the date
this Agreement is terminated pursuant to Article IX hereof, and (z) the date
occurring 24 months from the Effective Date.
Section 1.06. "COMMON STOCK" means the common stock of the Company,
$0.01 par value per share.
Section 1.07. "CONDITION SATISFACTION DATE" shall have the meaning
assigned to such term in Article VII hereof.
Section 1.08. "DAMAGES" means any loss, claim, damage, liability, costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses and costs and reasonable expenses of expert witnesses and
investigation).
Section 1.09. "DRAW DOWN" shall have the meaning assigned to such term
in Section 3.01 hereof.
Section 1.10. "DRAW DOWN AMOUNT" means the actual amount of a Draw Down
paid to the Company.
Section 1.11. "DRAW DOWN DISCOUNT PRICE" means (i) 90% of the VWAP on
any Trading Day during the Draw Down Pricing Period when the VWAP is equal to or
exceeds $2.00 but is less than $10.00, and (ii) 92% of the VWAP on any Trading
Day during the Draw Down Pricing Period when the VWAP is equal to or exceeds
$10.00.
2
Section 1.12. "DRAW DOWN NOTICE" shall have the meaning assigned to
such term in Section 3.01 hereof.
Section 1.13. "DRAW DOWN PRICING PERIOD" shall mean, with respect to
each Draw Down, a period of fifteen (15) consecutive Trading Days beginning on
the first Trading Day specified in a Draw Down Notice.
Section 1.14. "EFFECTIVE DATE" means the first Trading Day immediately
following the date on which the Registration Statement is declared effective by
the Commission.
Section 1.15. "EXCHANGE ACT" means the U.S. Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.16. "KNOWLEDGE" means the actual knowledge of the Chief
Executive Officer, Chief Financial Officer or any Senior Vice President of the
Company.
Section 1.17. "LEGEND" shall have the meaning specified in Section 8.1.
Section 1.18. "MAKE WHOLE AMOUNT" shall have the meaning specified in
Section 3.10.
Section 1.19. "MATERIAL ADVERSE EFFECT" means any effect on the
business, operations, properties or financial condition of the Company and its
consolidated subsidiaries that is material and adverse to the Company and such
subsidiaries, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
perform any of its obligations under this Agreement, the Registration Rights
Agreement or the Warrant in any material respect; PROVIDED, that either of the
following shall not constitute a "Material Adverse Effect": (i) the effects of
conditions or events that are generally applicable to the capital, financial,
banking or currency markets and (ii) any changes or effects resulting from the
announcement or consummation of the transactions contemplated by this Agreement,
including, without limitation, any changes or effects associated with any
particular Draw Down.
Section 1.20. "MAXIMUM COMMITMENT AMOUNT" means $15 million in
aggregate Draw Down Amounts.
Section 1.21. "MAXIMUM DRAW DOWN AMOUNT" means 2.5% of the Company's
Market Capitalization (as defined and calculated in accordance with Annex A) at
the time of the Draw Down; PROVIDED, HOWEVER, that such amount shall not exceed
$5 million in respect of any Draw Down.
Section 1.22. "MINIMUM DRAW DOWN AMOUNT" means $250,000.
Section 1.23. "NASD" means the National Association of Securities
Dealers, Inc.
Section 1.24. "OTHER FINANCING" shall have the meaning assigned to such
term in Section 6.07 hereof.
Section 1.25. "PERMITTED TRANSACTION" shall have the meaning assigned
to such term in Section 6.07 hereof.
3
Section 1.26. "PERSON" means any individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including any government or political subdivision or an agency or
instrumentality thereof.
Section 1.27. "PRINCIPAL MARKET" means the Nasdaq National Market, the
Nasdaq SmallCap Market, the American Stock Exchange or the
New York Stock
Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock.
Section 1.28. "PROHIBITED TRANSACTION" shall have the meaning assigned
to such term in Section 6.08 hereof.
Section 1.29. "PROSPECTUS" as used in this Agreement means the
prospectus in the form included in the Registration Statement, as supplemented
from time to time pursuant to Rule 424(b) of the Securities Act.
Section 1.30. "REGISTRABLE SECURITIES" means (i) the Shares, (ii) the
Warrant Shares, and (iii) any securities issued or issuable with respect to any
of the foregoing by way of exchange, stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (w) the Registration Statement has been declared effective by the SEC and
such Registrable Securities have been disposed of pursuant to the Registration
Statement, (x) such Registrable Securities have been sold under circumstances
under which all of the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act ("RULE 144") are met, (y) such
time as such Registrable Securities have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (z) in the opinion of counsel to
the Company such Registrable Securities may be sold without registration and
without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.
Section 1.31. "REGISTRATION RIGHTS AGREEMENT" shall have the meaning
set forth in the recitals of this Agreement.
Section 1.32. "REGISTRATION STATEMENT" shall have the meaning assigned
to such term in the Registration Rights Agreement.
Section 1.33. "REGULATION D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.34. "SECTION 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.35. "SECURITIES ACT" means the U.S. Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
Section 1.36. "SETTLEMENT DATE" shall have the meaning assigned to such
term in Section 3.06 hereof.
Section 1.37. "SHARES" means the shares of Common Stock of the Company
that are and/or may be purchased hereunder.
4
Section 1.38. "THRESHOLD PRICE" means the lowest "Draw Down Discount
Price" (as specified in a Draw Down Notice) at which the Company will agree to
sell Shares during the applicable Draw Down Pricing Period, which price shall
not be less than $2.00 per share.
Section 1.39. "TRADING DAY" means any day other than a Saturday or a
Sunday on which the Principal Market is open for trading in equity securities.
Section 1.40. "UNDERWRITER" shall mean any underwriter participating in
any disposition of the Registrable Securities on behalf of the Investor pursuant
to the Registration Statement.
Section 1.41. "VWAP" means the volume weighted average price of the
Common Stock during any Trading Day as reported by Bloomberg, L.P. using the AQR
function.
Section 1.42. "WARRANT" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.43. "WARRANT SHARES" means the shares of Common Stock
issuable to the Investor upon exercise of the Warrant.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.01. PURCHASE AND SALE OF STOCK. Upon the terms and subject to
the conditions set forth in this Agreement, the Company shall issue and sell to
the Investor and the Investor shall purchase from the Company Common Stock for
an aggregate (in Draw Down Amounts) of up to the Maximum Commitment Amount,
consisting of purchases based on Draw Downs in accordance with Article III
hereof.
Section 2.02. CLOSING. In consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Company agrees to issue and sell to the Investor, and the
Investor agrees to purchase from the Company, that number of the Shares to be
issued in connection with each Draw Down. The closing of the execution and
delivery of this Agreement (the "CLOSING") shall take place at the offices of
Xxxxxxxx Chance US LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 at 11:00 a.m. local
time on January 22, 2003, or at such other time and place or on such date as the
Investor and the Company may agree upon (the "CLOSING DATE"). Each party shall
deliver all documents, instruments and writings required to be delivered by such
party pursuant to this Agreement at or prior to the Closing.
Section 2.03. REGISTRATION STATEMENT AND PROSPECTUS. Promptly after the
Closing, the Company shall prepare and file with the Commission the Registration
Statement (including the Prospectus) in accordance with the provisions of the
Securities Act and the Registration Rights Agreement.
Section 2.04. INTENTIONALLY OMITTED.
Section 2.05. BLACKOUT SHARES. The Company shall issue and deliver any
Blackout Shares, if any, to the Investor in accordance with Section 1(e) of the
Registration Rights Agreement.
5
ARTICLE III
DRAW DOWN TERMS
Subject to the satisfaction of the conditions hereinafter set forth in
this Agreement, the parties agree as follows:
Section 3.01. DRAW DOWN NOTICE. The Company, may, in its sole
discretion, issue a Draw Down Notice with respect to a Draw Down up to a Draw
Down Amount equal to the Maximum Draw Down Amount (each, a "DRAW DOWN") during
the Commitment Period, which Draw Down the Investor will be obligated to accept.
The Company shall inform the Investor via facsimile transmission, with a copy to
the Investor's counsel, as to the Draw Down Amount the Company wishes to
exercise before commencement of trading on the first Trading Day of any Draw
Down Pricing Period (the "DRAW DOWN NOTICE"). In addition to the Draw Down
Amount, each Draw Down Notice shall specify the Threshold Price in respect of
the applicable Draw Down and shall designate the first Trading Day of the Draw
Down Pricing Period. In no event shall any Draw Down Amount be less than the
Minimum Draw Down Amount or exceed the Maximum Draw Down Amount. Each Draw Down
Notice shall be accompanied by a certificate, signed by the Chief Executive
Officer or Chief Financial Officer dated, as of the date of such Draw Down
Notice, in the form of EXHIBIT C hereof.
Section 3.02. NUMBER OF SHARES. The number of Shares to be issued in
connection with each Draw Down shall be equal to the sum of the quotients (for
each Trading Day of the Draw Down Pricing Period for which the Draw Down
Discount Price equals or exceeds the Threshold Price) of one fifteenth (1/15th)
of the Draw Down Amount divided by the applicable Draw Down Discount Price.
Section 3.03. LIMITATION ON DRAW DOWNS. Only one Draw Down shall be
permitted for each Draw Down Pricing Period.
Section 3.04. TRADING CUSHION. There shall be a minimum of five (5)
Trading Days between the expiration of any Draw Down Pricing Period and the
beginning of the next succeeding Draw Down Pricing Period.
Section 3.05. EXPIRATION OF DRAW DOWNS. Each Draw Down will expire on
the last Trading Day of each Draw Down Pricing Period.
Section 3.06. SETTLEMENT. The number of Shares purchased by the
Investor with respect to each Draw Down shall be determined and settled on a
periodic basis in respect of the applicable Draw Down Pricing Period. Settlement
in respect of each determination shall be made no later than the third Trading
Day after the fifth, tenth and fifteenth day of the Draw Down Pricing Period.
Each date on which settlement of the purchase and sale of Shares occurs
hereunder being referred to as a "SETTLEMENT DATE." The Investor shall provide
the Company with delivery instructions for the Shares to be issued at each
Settlement Date at least two Trading Days in advance of such Settlement Date
(except to the extent previously provided). The number of Shares actually issued
shall be rounded to the nearest whole number of Shares.
Section 3.07. DELIVERY OF SHARES; PAYMENT OF DRAW DOWN AMOUNT. On each
Settlement Date, the Company shall deliver the Shares purchased by the Investor
to the Investor or its designees via book-entry through the Depositary Trust
Company to an account designated by the Investor, and upon receipt of the
Shares, the Investor shall cause payment therefor to be
6
made to the Company's designated account by wire transfer of immediately
available funds, if the Shares are received by the Investor no later than 1:00
p.m. (Eastern Time), or next day available funds, if the Shares are received
thereafter.
Section 3.08. THRESHOLD PRICE. For each Trading Day during a Draw Down
Pricing Period that the Draw Down Discount Price is less than the Threshold
Price, no Shares shall be purchased or sold on such Trading Day and the total
amount of the Draw Down Amount in respect of such Draw Down Pricing Period shall
be reduced by one fifteenth (1/15th). At no time shall the Threshold Price be
set below $2.00. If trading in the Company's Common Stock is suspended for any
reason for more than three (3) consecutive or non-consecutive hours during any
Trading Day during a Draw Down Pricing Period, the Draw Down Discount Price
shall be deemed to be less than the Threshold Price for that Trading Day.
Section 3.09. OTHER ISSUANCES. If during any Draw Down Pricing Period
the Company shall (with the consent of the Investor pursuant to Section 6.07 or
6.08 hereof, if applicable) issue any shares of Common Stock to any Person other
than the Investor (other than shares of Common Stock issued in connection with a
Permitted Transaction), that the applicable Draw Down Notice shall be deemed
null and void and the Investor shall promptly return to the Company any and all
Shares transferred to the Investor in respect of any Settlement Date(s) during
such Draw Down Pricing Period and the Company shall promptly thereafter pay to
the Investor by wire transfer of immediately available funds to an account
designated by the Investor that portion of the applicable Draw Down Amount paid
to the Company in respect of such Settlement Date(s).
Section 3.10. FAILURE TO DELIVER SHARES. If on any Settlement Date, the
Company fails to deliver the Shares to be purchased by the Investor, and such
failure is not cured within ten (10) Trading Days following the date on which
the Investor delivered payment for such Shares, the Company shall pay to the
Investor on demand in cash by wire transfer of immediately available funds to an
account designated by the Investor the "MAKE WHOLE AMOUNT;" PROVIDED, HOWEVER,
that in the event that the Company is prevented from delivering Shares in
respect of any such Settlement Date in a timely manner by any fact or
circumstance that is reasonably within the control of, or directly attributable
to, the Investor, then such ten (10) Trading Day period shall be automatically
extended until such time as such fact or circumstance is cured. As used herein,
the Make Whole Amount shall be an amount equal to the sum of (i) the Draw Down
Amount actually paid by the Investor in respect of such Shares plus (ii) an
amount equal to actual loss suffered by the Investor in respect of sales of such
Shares to subsequent purchasers, which shall be based upon documentation
reasonably satisfactory to the Company demonstrating the difference (if greater
than zero) between (A) the price per share paid by the Investor to purchase such
number of shares of Common Stock necessary for the Investor to meet its share
delivery obligations to such subsequent purchasers minus (B) the average Draw
Down Discount Price during the applicable Draw Down Pricing Period. In the event
that the Make Whole Amount is not paid within two (2) Trading Days following a
demand therefor from the Investor, the Make Whole Amount shall accrue interest
compounded daily at a rate of five percent (5%) per annum up to and including
the date on which the Make Whole Amount is actually paid. Notwithstanding
anything to the contrary set forth in this Agreement, in the event that the
Company pays the Make Whole Amount (plus interest, if applicable) in respect of
any Settlement Date in accordance with this Section 3.10, such payment shall be
the Investor's sole remedy in respect of the Company's failure to deliver Shares
in respect of such Settlement Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
7
The Company hereby makes the following representations and warranties
to the Investor:
Section 4.01. ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Except as set forth in the Commission Documents (as defined below), the Company
does not own more than fifty percent (50%) of the outstanding capital stock of
or control any other business entity, other than any wholly-owned subsidiary
that is not "significant" within the meaning of Regulation S-X promulgated by
the Commission. The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify or be in good
standing would not have a Material Adverse Effect.
Section 4.02. AUTHORIZATION; ENFORCEMENT. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement and the
Warrant and to issue the Shares, the Warrant, the Warrant Shares and any
Blackout Shares (except to the extent that the number of Blackout Shares
required to be issued exceeds the number of authorized shares of Common Stock
under the Certificate); (ii) the execution and delivery of this Agreement and
the Registration Rights Agreement, and the execution, issuance and delivery of
the Warrant, by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
Board of Directors or stockholders is required (other than as contemplated by
Section 6.05); and (iii) each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered, and the Warrant has been duly
executed, issued and delivered, by the Company and constitute the valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
Section 4.03. CAPITALIZATION. The authorized capital stock of the
Company and the shares thereof issued and outstanding as of September 30, 2002
are set forth on SCHEDULE 4.03 attached. All of the outstanding shares of the
Common Stock have been duly and validly authorized and issued, and are fully
paid and non-assessable. Except as set forth in this Agreement or on SCHEDULE
4.03 attached hereto, as of the date hereof no shares of Common Stock are
entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for or giving any right to subscribe for, any
shares of capital stock of the Company. Except as set forth in this Agreement or
on SCHEDULE 4.03, as of the date hereof, there are no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company. Except as set forth on
SCHEDULE 4.03, as of the date hereof the Company is not a party to any agreement
granting registration rights to any Person with respect to any of its equity or
debt securities. Except as set forth on SCHEDULE 4.03, as of the date hereof the
Company is not a party to, and it has no Knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of the Company. The
offer and sale of all capital stock, convertible securities, rights, warrants,
or options of the Company issued during the twenty-four month period immediately
prior to the Closing complied with all applicable federal and state securities
laws, and no stockholder has a right of rescission or
8
damages with respect thereto that could reasonably be expected to have a
Material Adverse Effect. The Company has furnished or made available to the
Investor true and correct copies of the Company's Restated Certificate of
Incorporation, as amended and in effect on the date hereof (the "CERTIFICATE"),
and the Company's Bylaws, as amended and in effect on the date hereof (the
"BYLAWS").
Section 4.04. ISSUANCE OF SHARES. The Shares, the Warrant and the
Warrant Shares have been, and any Blackout Shares will be, duly authorized by
all necessary corporate action (except to the extent that the number of Blackout
Shares required to be issued exceeds the number of authorized shares of Common
Stock under the Certificate) and, when issued and paid for in accordance with
the terms of this Agreement, the Registration Rights Agreement and the Warrant,
the Shares and the Warrant Shares shall be validly issued and outstanding, fully
paid and non-assessable, and the Investor shall be entitled to all rights
accorded to a holder of shares of Common Stock.
Section 4.05. NO CONFLICTS. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Warrant and any other
document or instrument contemplated hereby or thereby, by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not: (i) violate any provision of the Certificate or Bylaws, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or any
commitment to which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries are bound or
affected, except, in all cases, for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company is
not required under federal, state or local law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement, the Registration Rights Agreement or
the Warrant, or issue and sell the Shares, the Warrant Shares or the Blackout
Shares (except to the extent that the number of Blackout Shares required to be
issued exceeds the number of authorized shares of Common Stock under the
Certificate) in accordance with the terms hereof and thereof (other than any
filings that may be required to be made by the Company with the Commission, the
NASD/Nasdaq or state securities commissions subsequent to the Closing, and, any
registration statement (including any amendment or supplement thereto) which may
be filed pursuant hereto); PROVIDED that, for purposes of the representation
made in this sentence, the Company is assuming and relying upon the accuracy of
the relevant representations and agreements of the Investor herein.
Section 4.06. COMMISSION DOCUMENTS, FINANCIAL STATEMENTS. The Common
Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act (all of the foregoing, including
filings incorporated by reference therein, being referred to herein as the
"COMMISSION
9
DOCUMENTS"). The Company has maintained all requirements for the continued
listing or quotation of its Common Stock, and such Common Stock is currently
listed or quoted on the Nasdaq National Market. The Company has made available
to the Investor true and complete copies of the Commission Documents filed with
the Commission since December 31, 2001 and prior to the Closing Date. The
Company has not provided to the Investor any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement. As of its date, the Company's Form
10-K for the year ended December 31, 2001 complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such document, and, as of its
date, after giving effect to the information disclosed and incorporated by
reference therein, such Form 10-K did not contain any untrue statement of a
material fact or omit 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. As of their respective dates, the
financial statements of the Company included in the Commission Documents filed
with the Commission since December 31, 2001 complied as to form and substance in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 4.07. NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
Commission Documents, since December 31, 2001 no event or series of events has
or have occurred that would, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 4.08. NO UNDISCLOSED LIABILITIES. Neither the Company nor any
of its subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any subsidiary (including the notes thereto) in conformity with GAAP
and are not disclosed in the Commission Documents, other than those incurred in
the ordinary course of the Company's or its subsidiaries respective businesses
since December 31, 2001 and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect on the Company.
Section 4.09. NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, operations or financial
condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect on the Company.
Section 4.10. ACTIONS PENDING. There is no action, suit, claim,
investigation or proceeding pending or, to the Knowledge of the Company,
threatened against the Company or any subsidiary which questions the validity of
this Agreement or the transactions contemplated hereby or any action taken or to
be taken pursuant hereto or thereto. Except as set forth in the
10
Commission Documents or on SCHEDULE 4.10, there is no action, suit, claim,
investigation or proceeding pending or, to the Knowledge of the Company,
threatened, against or involving the Company, any subsidiary or any of their
respective properties or assets that could be reasonably expected to have a
Material Adverse Effect on the Company. Except as set forth in the Commission
Documents or on SCHEDULE 4.10, no judgment, order, writ, injunction or decree or
award has been issued by or, so far as is known by the Company, requested of any
court, arbitrator or governmental agency which might result in a Material
Adverse Effect.
Section 4.11. COMPLIANCE WITH LAW. The businesses of the Company and
its subsidiaries have been and are presently being conducted in accordance with
all applicable federal, state and local governmental laws, rules, regulations
and ordinances, except as set forth in the Commission Documents or such that
would not reasonably be expected to cause a Material Adverse Effect. The Company
and each of its subsidiaries have all franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals necessary for
the conduct of its business as now being conducted by it, except for such
franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals, the failure to possess which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
Section 4.12. CERTAIN FEES. Except as expressly set forth in this
Agreement, no brokers, finders or financial advisory fees or commissions will be
payable by the Company or any of its subsidiaries in respect of the transactions
contemplated by this Agreement.
Section 4.13. DISCLOSURE. To the best of the Company's Knowledge,
neither this Agreement nor the Schedules hereto nor any other documents,
certificates or instruments furnished to the Investor by or on behalf of the
Company or any subsidiary in connection with the transactions contemplated by
this Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made herein or
therein, not misleading.
Section 4.14. MATERIAL NON-PUBLIC INFORMATION. Except for this
Agreement and the transactions contemplated hereby, neither the Company nor its
agents have disclosed to the Investor, any material non-public information that
,according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
Section 4.15. EXEMPTION FROM REGISTRATION; VALID ISSUANCES. The
issuance and sale of the Shares, the Warrant, the Warrant Shares and any
Blackout Shares in accordance with the terms and on the bases of the
representations and warranties set forth in this Agreement, may and shall be
properly issued pursuant to Section 4(2), Regulation D and/or any other
applicable federal and state securities laws. Neither the sales of the Shares,
the Warrant, the Warrant Shares or any Blackout Shares pursuant to, nor the
Company's performance of its obligations under, this Agreement, the Registration
Rights Agreement, or the Warrant shall (i) result in the creation or imposition
of any liens, charges, claims or other encumbrances upon the Shares, the Warrant
Shares, any Blackout Shares or any of the assets of the Company, or (ii) entitle
the holders of any outstanding shares of capital stock of the Company to
preemptive or other rights to subscribe to or acquire the shares of Common Stock
or other securities of the Company. The Shares, the Warrant Shares and any
Blackout Shares shall not subject the Investor to personal liability by reason
of the ownership thereof.
11
Section 4.16. NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates or any person acting
on its or their behalf (i) has conducted any general solicitation (as that term
is used in Rule 502(c) of Regulation D) or general advertising with respect to
any of the Shares, the Warrant, the Warrant Shares or any Blackout Shares or
(ii) has made any offers or sales of any security or solicited any offers to buy
any security under any circumstances that would require registration of the
Shares under the Securities Act.
Section 4.17. NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement and employee benefit
plans, under circumstances that would require registration under the Securities
Act of shares of the Common Stock issuable hereunder with any other offers or
sales of securities of the Company.
Section 4.18. ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES.
The Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm's length Investor with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Investor's purchase of the
Shares.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR
The Investor hereby makes the following representations, warranties and
covenants to the Company:
Section 5.01. ORGANIZATION AND STANDING OF THE INVESTOR. The Investor
is an entity duly organized, validly existing and in good standing under the
laws of the British Virgin Islands.
Section 5.02. AUTHORIZATION AND POWER. The Investor has the requisite
power and authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement and the Warrant and to purchase the
Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by Investor and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Investor, its
Board of Directors or stockholders is required. This Agreement has been duly
executed and delivered by the Investor and constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of creditor's rights and remedies or by other
equitable principles of general application.
Section 5.03. NO CONFLICTS. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Warrant and any other
document or instrument contemplated hereby, by the Investor and the consummation
of the transactions contemplated thereby do not (i) violate any provision of the
Investor's charter documents or
12
bylaws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Investor is a party,
(iii) create or impose a lien, charge or encumbrance on any property of the
Investor under any agreement or any commitment to which the Investor is a party
or by which the Investor is bound or by which any of its respective properties
or assets are bound or (iv) result in a violation of any federal, state, local
or foreign statute, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) applicable to the Investor or
by which any property or asset of the Investor are bound or affected, except in
all cases, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, prohibit or otherwise interfere with the ability of the Investor to
enter into and perform its obligations under this Agreement in any material
respect. The Investor is not required under federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or to
purchase the Shares in accordance with the terms hereof, PROVIDED that, for
purposes of the representation made in this sentence, the Investor is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Company herein.
Section 5.04. FINANCIAL CAPABILITY The Investor has the financial
capability to perform all of its obligations under this Agreement, including the
capability to purchase the Shares in accordance with the terms hereof.
Section 5.05. INFORMATION. The Investor and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Shares which have been requested by the Investor. The Investor and its advisors,
if any, have been afforded the opportunity to ask questions of the Company. The
Investor has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Shares. The Investor understands that it (and not the
Company) shall be responsible for its own tax liabilities that may arise as a
result of this investment or the transactions contemplated by this Agreement.
Section 5.06. SELLING RESTRICTIONS. The Investor covenants that during
the Commitment Period, neither the Investor nor any of its affiliates nor any
entity managed by the Investor will ever (i) be in a short position with respect
to shares of the Common Stock in any accounts directly or indirectly managed by
the Investor or any affiliate of the Investor or any entity managed by the
Investor or (ii) engage in any transaction intended to reduce the economic risk
of ownership of shares of Common Stock (including, without limitation, the
purchase of any option or contract to sell) that would, directly or indirectly,
have an effect substantially equivalent to selling short such shares of Common
Stock that are subject to, underlie or may be deliverable in satisfaction of
such transaction or otherwise may be reasonably be expected to adversely affect
the market price of the Common Stock. Notwithstanding the foregoing, the
Investor shall have the right during any Draw Down Pricing Period to sell shares
of the Company's Common Stock equal in number to the aggregate number of the
Shares to be purchased pursuant to the applicable Draw Down Notice.
13
ARTICLE VI
COVENANTS OF THE COMPANY
The Company covenants with the Investor as follows, which covenants are
for the benefit of the Investor and its permitted assignees (as defined herein):
Section 6.01. SECURITIES. The Company shall notify the Commission and
the Principal Market, if and as applicable, in accordance with their rules and
regulations, of the transactions contemplated by this Agreement, and shall use
commercially reasonable efforts to take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Shares, the Warrant Shares
and the Blackout Shares, if any, to the Investor.
Section 6.02. RESERVATION OF COMMON STOCK. As of the date hereof, the
Company has available and the Company shall reserve and keep available at all
times, free of preemptive rights and other similar contractual rights of
stockholders, shares of Common Stock for the purpose of enabling the Company to
satisfy any obligation to issue the Shares in connection with all Draw Downs
contemplated hereunder and the Warrant Shares. The number of shares so reserved
from time to time, as theretofore increased or reduced as hereinafter provided,
may be reduced by the number of shares actually delivered hereunder.
Section 6.03. REGISTRATION AND LISTING. During the Commitment Period,
the Company shall use commercially reasonable efforts: (i) to take all action
necessary to cause its Common Stock to continue to be registered under Section
12(b) or 12(g) of the Exchange Act, (ii) to comply in all respects with its
reporting and filing obligations under the Exchange Act, (iii) to prevent the
termination or suspension such registration, or the termination or suspension of
its reporting and filing obligations under the Exchange Act or Securities Act
(except as expressly permitted herein). The Company shall use commercially
reasonable efforts necessary to maintain the listing and trading of its Common
Stock and the listing of the Shares purchased by Investor hereunder on the
Principal Market (including, without limitation, maintaining sufficient net
tangible assets) and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NASD
and the Principal Market.
Section 6.04. REGISTRATION STATEMENT. Without the prior written consent
of the Investor, the Registration Statement shall be used solely in connection
with the transactions between the Company and the Investor contemplated hereby.
Section 6.05. COMPLIANCE WITH LAWS.
(a) The Company shall comply, and cause each subsidiary to
comply, with all applicable laws, rules, regulations and orders, noncompliance
with which could, in the commercially reasonable judgment of the Company, be
expected to have a Material Adverse Effect.
(b) Without the consent of its stockholders in accordance with
NASD rules, the Company will not be obligated to issue, and the Investor will
not be obligated to purchase, any Shares which would result in the issuance
under this Agreement of Shares representing more than the applicable percentage
under the rules of the NASD that would require stockholder approval of the
issuance thereof.
14
Section 6.06. REPORTING REQUIREMENTS. Upon reasonable written request
of the Investor during the Commitment Period, the Company shall furnish copies
of the following to the Investor within three Trading Days of such request (but
not sooner than filed with or submitted to the Commission):
(a) Quarterly Reports on Form 10-Q ;
(b) Annual Reports on Form 10-K;
(c) Periodic Reports on Form 8-K; and
(d) any other documents publicly furnished or submitted to the
Commission.
Section 6.07. OTHER FINANCING. During the term of this Agreement, the
Company shall not enter into any other financing agreement for the issuance,
sale or other disposition of equity or equity-linked securities, including,
without limitation, any securities or other instruments that are convertible
into or exchangeable for Common Stock or Preferred Stock ("OTHER FINANCING")
without the prior written consent of the Investor, which consent will not be
unreasonably withheld, conditioned or delayed; PROVIDED, HOWEVER, that without
the prior written consent of the Investor the Company may (i) establish stock
option or award plans or agreements (for directors, employees, consultants
and/or advisors) and amend such plans or agreements, including increasing the
number of shares available thereunder, (ii) use equity securities to finance the
acquisition of other companies, equipment, technologies or lines of business,
(iii) issue shares of Common Stock and/or Preferred Stock in connection with the
Company's option or award plans, stock purchase plans, rights plans, warrants or
options, (iv) issue shares of Common Stock and/or Preferred Stock in connection
with the acquisition of products, licenses, equipment or other assets and
strategic partnerships or joint ventures (the primary purpose of which is not to
raise equity capital); (v) issue shares of Common and/or Preferred Stock to
consultants and/or advisors as consideration for services rendered, (vi) issue
and sell shares in an underwritten public offering of Common Stock, and (vii)
issue shares of Common Stock to the Investor under any other agreement entered
into between the Investor and the Company (each a "PERMITTED TRANSACTION").
Section 6.08. PROHIBITED TRANSACTIONS. During the term of this
Agreement, the Company shall not enter into any Prohibited Transaction without
the prior written consent of the Investor, which consent may be withheld at the
sole discretion of the Investor. For the purposes of this Agreement, the term
"PROHIBITED TRANSACTION" shall refer to the issuance by the Company of any
"future priced securities," which shall be deemed to mean the issuance of shares
of Common Stock or securities of any type whatsoever that are, or may become,
convertible or exchangeable into shares of Common Stock where the purchase,
conversion or exchange price for such Common Stock is determined using any
floating or otherwise adjustable discount to the market price of Common Stock,
including, without limitation, pursuant to any equity line or other financing
that is substantially similar to the financing provided for under this
Agreement.
Section 6.09. CORPORATE EXISTENCE. The Company shall take all steps
necessary to preserve and continue the corporate existence of the Company.
Section 6.10. NON-DISCLOSURE OF NON-PUBLIC INFORMATION. None of the
Company, its officers, directors, employees nor agents shall disclose material
non-public information to the Investor, its advisors or representatives.
15
Section 6.11. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;
SUSPENSION OF RIGHT TO REQUEST A DRAW DOWN. Notwithstanding the provisions of
SECTION 6.10, the Company shall immediately notify the Investor upon the
occurrence of any of the following events in respect of the Registration
Statement or the Prospectus related to the offer, issuance and sale of the
Shares and the Warrant Shares hereunder: (i) receipt of any request for
additional information by the Commission or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or the
Prospectus; (ii) the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
and (iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not request a Draw Down during
the continuation of any of the foregoing events.
Section 6.12. AMENDMENTS TO THE REGISTRATION STATEMENT. When the
Registration Statement is declared effective by the Commission, the Company
shall not (i) file any amendment to the Registration Statement or make any
amendment or supplement to the Prospectus of which the Investor shall not
previously have been advised or to which the Investor shall reasonably object
after being so advised or (ii) so long as, in the reasonable opinion of counsel
for the Investor, a Prospectus is required to be delivered in connection with
sales of the Shares by the Investor, file any information, documents or reports
pursuant to the Exchange Act without delivering a copy of such information,
documents or reports to the Investor promptly following such filing.
Section 6.13. PROSPECTUS DELIVERY. From time to time for such period as
in the opinion of counsel for the Investor a prospectus is required by the
Securities Act to be delivered in connection with sales by the Investor, the
Company will expeditiously deliver to the Investor, without charge, as many
copies of the Prospectus (and of any amendment or supplement thereto) as the
Investor may reasonably request. The Company consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Securities Act and state securities laws in connection with
the offering and sale of the Shares and the Warrant Shares and for such period
of time thereafter as the Prospectus is required by the Securities Act to be
delivered in connection with sales of the Shares and the Warrant Shares.
Section 6.14. EXPECTATIONS REGARDING DRAW DOWNS. Within ten (10)
calendar days after the commencement of each calendar quarter occurring
subsequent to the date hereof, the Company shall notify the Investor as to its
reasonable expectations as to the dollar amount it intends to raise during such
calendar quarter, if any, through the issuance of Draw Down Notices. Such
notification shall constitute only the Company's good faith estimate with
respect to such calendar quarter and shall in no way obligate the Company to
raise such amount during such calendar quarter or otherwise limit its ability to
deliver Draw Down Notices during such calendar quarter. The failure by the
Company to comply with this provision can be cured by the Company's notifying
the Investor at any time as to its reasonable expectations with respect to the
current calendar quarter.
ARTICLE VII
CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN
16
The obligation of the Investor hereunder to accept a Draw Down Notice
and to acquire and pay for the Shares in accordance therewith is subject to the
satisfaction or waiver, at each Condition Satisfaction Date, of each of the
conditions set forth below. The conditions are for the Investor's sole benefit
and may be waived by the Investor at any time in its sole discretion. As used in
this Agreement, the term "CONDITION SATISFACTION DATE" shall mean, with respect
to each Draw Down, the date on which the applicable Draw Down Notice is
delivered to the Investor and each Settlement Date in respect of the applicable
Draw Down Pricing Period.
Section 7.01. ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties of the Company shall be true and
correct in all material respects as of the date when made as though made at that
time, except for representations and warranties that are expressly made as of a
particular date.
Section 7.02. PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement, the Registration Rights
Agreement and the Warrant to be performed, satisfied or complied with by the
Company.
Section 7.03. COMPLIANCE WITH LAW. The Company shall have complied in
all material respects with all applicable federal, state and local governmental
laws, rules, regulations and ordinances in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
Section 7.04. EFFECTIVE REGISTRATION STATEMENT. Upon the terms and
subject to the conditions as set forth in the Registration Rights Agreement, the
Registration Statement shall have previously become effective and shall remain
effective and (i) neither the Company nor the Investor shall have received
notice that the Commission has issued or intends to issue a stop order with
respect to the Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so (unless the
Commission's concerns have been addressed and the Investor is reasonably
satisfied that the Commission no longer is considering or intends to take such
action), and (ii) no other suspension of the use or withdrawal of the
effectiveness of the Registration Statement or the Prospectus shall exist.
Section 7.05. NO KNOWLEDGE. The Company shall have no Knowledge of any
event more likely than not to have the effect of causing the Registration
Statement with respect to the resale of the Registrable Securities by the
Investor to be suspended or otherwise ineffective (which event is more likely
than not to occur within fifteen Trading Days following the Trading Day on which
a Draw Down Notice is delivered).
Section 7.06. NO SUSPENSION. Trading in the Company's Common Stock
shall not have been suspended by the Commission, the Principal Market or the
NASD and trading in securities generally as reported on the Principal Market
shall not have been suspended or limited.
Section 7.07. NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
Section 7.08. NO PROCEEDINGS OR LITIGATION. No action, suit or
proceeding before any arbitrator or any governmental authority shall have been
commenced, and no investigation by any
17
governmental authority shall have been threatened, against the Company or any
subsidiary, or any of the officers, directors or affiliates of the Company or
any subsidiary seeking to enjoin, prevent or change the transactions
contemplated by this Agreement.
Section 7.09. SECTION 16 LIMITATION. On each Settlement Date, the
number of Shares then to be purchased by the Investor shall not exceed the
number of such shares that, when aggregated with all other Registrable
Securities then owned by the Investor beneficially or deemed beneficially owned
by the Investor, would result in the Investor owning more than 9.9% of all of
such Common Stock as would be outstanding on such Settlement Date, as determined
in accordance with Section 16 of the Exchange Act. For purposes of this Section
7.09, in the event that the amount of Common Stock outstanding as determined in
accordance with Section 16 of the Exchange Act and the regulations promulgated
thereunder is greater on a Settlement Date than on the date upon which the Draw
Down Notice associated with such Settlement Date is given, the amount of Common
Stock outstanding on such Settlement Date shall govern for purposes of
determining whether the Investor, when aggregating all purchases of Common Stock
made pursuant to this Agreement and, if any, Warrant Shares and Blackout Shares,
would own more than 9.9% of the Common Stock following such Settlement Date.
Section 7.10. SUFFICIENT SHARES REGISTERED FOR RESALE. The Company
shall have sufficient Shares, calculated using the closing trade price of the
Common Stock as of the Trading Day immediately preceding such Draw Down Notice,
registered under the Registration Statement to issue and sell such Shares in
accordance with such Draw Down Notice.
Section 7.11. WARRANT. The Warrant shall have been duly executed,
delivered and issued to the Investor, and the Company shall not be in default in
any material respect under any of the provisions thereof, PROVIDED that any
refusal by or failure of the Company to issue and deliver Warrant Shares in
respect of any exercise (in whole or in part) thereof shall be deemed to be
material for the purposes of this Section 7.11.
Section 7.12. OPINION OF COUNSEL. The Investor shall have received an
opinion of counsel to the Company, dated as of the Effective Date, in form and
substance reasonably satisfactory to the Investor and its counsel.
ARTICLE VIII
LEGENDS
Section 8.01. LEGENDS. Unless otherwise provided below, each
certificate representing Registrable Securities will bear the following legend
(the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
18
THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER
OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE
COMPANY SET FORTH IN A PRIVATE EQUITY LINE AGREEMENT BETWEEN AKSYS,
LTD. AND KINGSBRIDGE CAPITAL LIMITED DATED AS OF JANUARY 22, 2003. A
COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES.
As soon as practicable after the execution and delivery hereof, but in any event
within five (5) Trading Days hereafter, the Company shall issue to the transfer
agent for its Common Stock (and to any substitute or replacement transfer agent
for its Common Stock upon the Company's appointment of any such substitute or
replacement transfer agent) instructions, with a copy to the Investor. Such
instructions shall be irrevocable by the Company from and after the date hereof
or from and after the issuance thereof to any such substitute or replacement
transfer agent, as the case may be, except as otherwise expressly provided in
the Registration Rights Agreement. It is the intent and purpose of such
instructions, as provided therein, to require the transfer agent for the Common
Stock from time to time upon transfer of Registrable Securities by the Investor
to issue certificates evidencing such Registrable Securities free of the Legend
during the following periods and under the following circumstances and without
consultation by the transfer agent with the Company or its counsel and without
the need for any further advice or instruction or documentation to the transfer
agent by or from the Company or its counsel or the Investor, unless an opinion
of Investor's counsel is reasonably required by the Transfer Agent or the
Company:
(a) At any time after the Effective Date to the extent
accompanied by a notice requesting the issuance of certificates free of the
Legend; provided that (i) the Company is reasonably able to confirm to the
transfer agent that the Registration Statement shall then be effective and (ii)
if reasonably requested by the transfer agent the Investor confirms to the
transfer agent that the Investor has complied with the prospectus delivery
requirement under the Securities Act.
(b) At any time upon any surrender of one or more certificates
evidencing Registrable Securities that bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates free of the
Legend to replace those surrendered and containing representations that (i) the
Investor is permitted to dispose of such Registrable Securities without
limitation as to amount or manner of sale pursuant to Rule 144(k) under the
Securities Act and there is no requirement for the Investor to deliver a
prospectus or (ii) the Investor has sold, pledged or otherwise transferred or
agreed to sell, pledge or otherwise transfer such Registrable Securities in a
manner other than pursuant to an effective registration statement, to a
transferee who shall upon such transfer be entitled to freely tradeable
securities.
Section 8.02. NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend
other than the one specified in Section 8.1 has been or shall be placed on the
share certificates representing the Common Stock issued to the Investor and no
instructions or "stop transfer orders," so called "stock transfer restrictions,"
or other restrictions have been or shall be given to the Company's transfer
agent with respect thereto other than as expressly set forth in this Article
VIII.
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ARTICLE IX
TERMINATION
Section 9.01. TERM. Unless otherwise terminated in accordance with
Section 9.02 below, this Agreement shall terminate upon the expiration of the
Commitment Period.
Section 9.02. OTHER TERMINATION.
(a) The Investor may terminate this Agreement upon (x) one (1)
day's notice if the Company enters into any Other Financing as set forth in
Section 6.07 or any Prohibited Transaction as set forth in Section 6.08 without
the Investor's prior written consent, or (y) one (1) day's notice within ten
(10) Trading Days after the Investor obtains actual knowledge that an event
resulting in a Material Adverse Effect has occurred; PROVIDED, HOWEVER, that the
Investor shall be deemed to possess such actual knowledge within five (5)
Trading Days after such event has been publicly disclosed by the Company in
accordance with its periodic reporting requirements under the Exchange Act.
(b) The Investor may terminate this Agreement upon one (1)
day's notice to the Company at any time in the event that the Registration
Statement is not declared effective in accordance with the Registration Rights
Agreement.
(c) The Company may terminate this Agreement upon one (1)
day's notice; PROVIDED, HOWEVER, that the Company shall not terminate this
Agreement pursuant to this SECTION 9.02(C) effective during any Draw Down
Pricing Period; PROVIDED FURTHER; that, in the event of any termination of this
Agreement by the Company hereunder, so long as the Investor owns Shares
purchased hereunder and/or Warrant Shares, unless all of such shares of Common
Stock may be resold by the Investor without registration and without any time,
volume or manner limitations pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities Act, the Company shall not suspend or
withdraw the Registration Statement or otherwise cause the Registration
Statement to become ineffective, or delist the Common Stock from the Principal
Market.
(d) Each of the parties hereto may terminate this Agreement
upon one (1) day's notice if the other party has breached a material
representation, warranty or covenant to this Agreement and such breach is not
remedied within ten (10) Trading Days after notice of such breach is delivered
to the breaching party.
(e) The obligation of the Investor to purchase shares of
Common Stock shall terminate permanently in the event that there shall occur any
stop order or suspension of effectiveness of the Registration Statement for an
aggregate of thirty (30) calendar days during the Commitment Period.
Section 9.03. EFFECT OF TERMINATION. In the event of termination by the
Company or the Investor, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is
terminated as provided in Section 9.01 or 9.02 herein, this Agreement shall
become void and of no further force and effect, except as provided in Section
11.13. Nothing in this Section 9.03 shall be deemed to release the Company or
the Investor from any liability for any breach under this Agreement, or to
impair the rights of the Company and the Investor to compel specific performance
by the other party of its obligations under this Agreement.
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ARTICLE X
INDEMNIFICATION
Section 10.01. INDEMNIFICATION.
(a) Except as otherwise provided in this Article X, unless
disputed as set forth in Section 10.02, the Company agrees to indemnify, defend
and hold harmless the Investor and its affiliates and their respective officers,
directors, agents, employees, subsidiaries, partners, members and controlling
persons (each, an "INVESTOR INDEMNIFIED PARTY"), to the fullest extent permitted
by law from and against any and all Damages directly resulting from or directly
arising out of any breach of any representation or warranty, covenant or
agreement by the Company in this Agreement, the Registration Rights Agreement or
the Warrant; PROVIDED, HOWEVER, that the Company shall not be liable under this
Article X to an Investor Indemnified Party to the extent that such Damages
resulted or arose from the breach by an Investor Indemnified Party of any
representation or warranty of an Investor Indemnified Party contained in this
Agreement or the gross negligence, recklessness, willful misconduct or bad faith
of an Investor Indemnified Party. The parties intend that any Damages subject to
indemnification pursuant to this Article X will be net of insurance proceeds.
Accordingly, the amount which the Company is required to pay to any Investor
Indemnified Party hereunder (a "COMPANY INDEMNITY PAYMENT") will be reduced by
any insurance proceeds actually recovered by or on behalf of any Investor
Indemnified Party in reduction of the related Damages. In addition, if an
Investor Indemnified Party receives a Company Indemnity Payment required by this
Article X in respect of any Damages and subsequently receives any such insurance
proceeds, then the Investor Indemnified Party will pay to the Company an amount
equal to the Company Indemnity Payment received less the amount of the Company
Indemnity Payment that would have been due if the insurance proceeds had been
received, realized or recovered before the Company Indemnity Payment was made.
(b) Except as otherwise provided in this Article X, unless
disputed as set forth in Section 10.02, the Investor agrees to indemnify, defend
and hold harmless the Company and its affiliates and their respective officers,
directors, agents, employees, subsidiaries, partners, members and controlling
persons (each, a "COMPANY INDEMNIFIED PARTY"), to the fullest extent permitted
by law from and against any and all Damages directly resulting from or directly
arising out of any breach of any representation or warranty, covenant or
agreement by the Investor in this Agreement; PROVIDED, HOWEVER, that the
Investor shall not be liable under this Article X to a Company Indemnified Party
to the extent that such Damages resulted or arose from the breach by a Company
Indemnified Party of any representation or warranty of a Company Indemnified
Party contained in this Agreement or gross negligence, recklessness, willful
misconduct or bad faith of a Company Indemnified Party. The parties intend that
any Damages subject to indemnification pursuant to this Article X will be net of
insurance proceeds. Accordingly, the amount which the Investor is required to
pay to any Company Indemnified Party hereunder (a "INVESTOR INDEMNITY PAYMENT")
will be reduced by any insurance proceeds theretofore actually recovered by or
on behalf of any Company Indemnified Party in reduction of the related Damages.
In addition, if a Company Indemnified Party receives a Investor Indemnity
Payment required by this Article X in respect of any Damages and subsequently
receives insurance such proceeds, then the Company Indemnified Party will pay to
the Investor an amount equal to the Investor Indemnity Payment received less the
amount of the Investor Indemnity Payment that would have been due if the
insurance proceeds had been received, realized or recovered before the Investor
Indemnity Payment was made.
21
Section 10.02. NOTIFICATION OF CLAIMS FOR INDEMNIFICATION. Each party
entitled to indemnification under this Article X (an "INDEMNIFIED PARTY") shall,
promptly after the receipt of notice of the commencement of any claim against
such Indemnified Party in respect of which indemnity may be sought from the
party obligated to indemnify such Indemnified Party under this Article X (the
"INDEMNIFYING PARTY"), notify the Indemnifying Party in writing of the
commencement thereof. Any such notice shall describe the claim in reasonable
detail. The failure of any Indemnified Party to so notify the Indemnifying Party
of any such action shall not relieve the Indemnifying Party from any liability
which it may have to such Indemnified Party (a) other than pursuant to this
Article X or (b) under this Article X unless, and only to the extent that, such
failure results in the Indemnifying Party's forfeiture of substantive rights or
defenses or the Indemnifying Party is prejudiced by such delay. The procedures
listed below shall govern the procedures for the handling of indemnification
claims.
(a) Any claim for indemnification for Damages that do not
result from a Third Party Claim as defined in the following paragraph, shall be
asserted by written notice given by the Indemnified Party to the Indemnifying
Party. Such Indemnifying Party shall have a period of thirty (30) days after the
receipt of such notice within which to respond thereto. If such Indemnifying
Party does not respond within such thirty (30) day period, such Indemnifying
Party shall be deemed to have refused to accept responsibility to make payment
as set forth in Section 10.01. If such Indemnifying Party does not respond
within such thirty (30) day period or rejects such claim in whole or in part,
the Indemnified Party shall be free to pursue such remedies as specified in this
Agreement, including the dispute resolution provisions set forth in Section
10.03 below.
(b) If an Indemnified Party shall receive notice or otherwise
learn of the assertion by a person or entity not a party to this Agreement of
any threatened legal action or claim (collectively a "THIRD PARTY CLAIM"), with
respect to which an Indemnifying Party may be obligated to provide
indemnification, the Indemnified Party shall give such Indemnifying Party
written notice thereof within twenty (20) days after becoming aware of such
Third Party Claim.
(c) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise) at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within thirty (30) days
after the receipt of notice from an Indemnified Party (or sooner if the nature
of such Third Party Claim so requires), the Indemnifying Party shall notify the
Indemnified Party whether the Indemnifying Party will assume responsibility for
defending such Third Party Claim, which election shall specify any reservations
or exceptions. If such Indemnifying Party does not respond within such thirty
(30) day period or rejects such claim in whole or in part, the Indemnified Party
shall be free to pursue such remedies as specified in this Agreement, including
the dispute resolution provisions set forth in Section 10.03 below. In case any
such Third Party Claim shall be brought against any Indemnified Party, and it
shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to assume the defense thereof at its own
expense, with counsel satisfactory to such Indemnified Party in its reasonable
judgment; provided, however, that at any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense at its own
expense. Notwithstanding the foregoing, in any claim in which both the
Indemnifying Party, on the one hand, and an Indemnified Party, on the other
hand, are, or are reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel and to control its own defense
of such claim if, in the reasonable opinion of counsel to such Indemnified
Party, either (x) one or more defenses are available to the Indemnified Party
that are not available to the Indemnifying Party or (y) a conflict or potential
conflict exists between the Indemnifying Party,
22
on the one hand, and such Indemnified Party, on the other hand, that would make
such separate representation advisable; PROVIDED, HOWEVER, that the Indemnifying
Party (i) shall not be liable for the fees and expenses of more than one counsel
to all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for
such reasonable fees and expenses of such counsel incurred in any such action
between the Indemnifying Party and the Indemnified Parties or between such
Indemnified Parties and any third party, as such expenses are incurred. The
Indemnifying Party agrees that it will not, without the prior written consent of
the Indemnified Party, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim relating to the matters contemplated
hereby (if any Indemnified Party is a party thereto or has been actually
threatened to be made a party thereto) unless such settlement, compromise or
consent includes an unconditional release of such Indemnified Party from all
liability arising or that may arise out of such claim. The Indemnifying Party
shall not be liable for any settlement of any claim effected against an
Indemnified Party without the Indemnifying Party's written consent, which
consent shall not be unreasonably withheld, conditioned or delayed. The rights
accorded to an Indemnified Party hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate agreement or
otherwise; PROVIDED, HOWEVER, that notwithstanding the foregoing or anything to
the contrary contained in this Agreement, nothing in this Article X (other than
Section 10.03) shall restrict or limit any rights that any Indemnified Party may
have to seek equitable relief.
Section 10.03. DISPUTE RESOLUTION. Any dispute under this Agreement,
the Registration Rights Agreement or the Warrant shall be submitted to
arbitration (including, without limitation, pursuant to this Article X) and
shall be finally and conclusively determined by the decision of a board of
arbitration consisting of three (3) members (the "BOARD OF ARBITRATION")
selected as hereinafter provided. Each of the Indemnified Party and the
Indemnifying Party shall select one (1) member and the third member shall be
selected by mutual agreement of the other members, or if the other members fail
to reach agreement on a third member within twenty (20) days after their
selection, such third member shall thereafter be selected by the American
Arbitration Association upon application made to it for such purpose by the
Indemnified Party. The Board of Arbitration shall meet on consecutive business
days in Chicago, Illinois or such other place as a majority of the members of
the Board of Arbitration determines more appropriate, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the Indemnifying Party is
required to pay to the Indemnified Party in respect of a claim filed by the
Indemnified Party. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow such rules and procedures as a majority of
the members of the Board of Arbitration deems necessary or appropriate. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Indemnified Party and the Indemnifying Party. Any decision made
by the Board of Arbitration (either prior to or after the expiration of such
thirty (30) calendar day period) shall be final, binding and conclusive on the
Indemnified Party and the Indemnifying Party and entitled to be enforced to the
fullest extent permitted by law and entered in any court of competent
jurisdiction. Each party to any arbitration shall bear its own expense in
relation thereto, including but not limited to such party's attorneys' fees, if
any, and the expenses and fees of the Board of Arbitration shall be divided
between the Indemnifying Party and the Indemnified Party in the same proportion
as the portion of the related claim determined by the Board of Arbitration to be
payable to the Indemnified Party bears to the portion of such claim determined
not to be so payable.
ARTICLE XI
23
MISCELLANEOUS
Section 11.01. FEES AND EXPENSES. The Company shall be solely
responsible for (i) all reasonable attorneys fees and expenses incurred by the
Investor in connection with the preparation, negotiation, execution and delivery
of this Agreement up to an aggregate maximum of $12,500, (ii) all reasonable
fees and expenses incurred by the Investor in connection with any amendments,
modifications or waivers of this Agreement or incurred in connection with the
Investor's enforcement of this Agreement, including, without limitation, all
reasonable attorneys fees and expenses, (iii) all reasonable due diligence
expenses incurred by the Investor during the term of this Agreement up to
aggregate maximum amount of $10,000 per calendar quarter, and (iv) all stamp or
other similar taxes and duties, if any, levied in connection with issuance of
the Shares pursuant hereto.
Section 11.02. REPORTING ENTITY FOR THE COMMON STOCK. The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of
the Investor and the Company shall be required to employ any other reporting
entity.
Section 11.03. BROKERAGE. Each of the parties hereto represents that it
has had no dealings in connection with this transaction with any finder or
broker who will demand payment of any fee or commission from the other party.
The Company on the one hand, and the Investor, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all
liabilities to any Persons claiming brokerage commissions or finder's fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 11.04. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company:
Aksys, Ltd.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
Attention: Chief Financial Officer
24
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
Attention: Xxxxx X. Xxxx
if to the Investor:
Kingsbridge Capital Limited/ c/o Kingsbridge Corporate
Services Limited
Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxx
Xxxxxxxx xx Xxxxxxx
Telephone: 000-000-00-000-000
Facsimile: 011-353-45-482-003
Attention: Xxxx Xxxxxx, Director
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxxxxx, Esq. and Xxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile number
for notices under this Section by giving at least ten (10) days' prior written
notice of such changed address or facsimile number to the other party hereto.
Section 11.05. ASSIGNMENT. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
Person. Notwithstanding the foregoing, the provisions of this Agreement shall
inure to the benefit of, and be enforceable by, any private transferee of any of
the Common Stock purchased or acquired by the Investor hereunder with respect to
the Common Stock held by such Person.
Section 11.06. AMENDMENT; NO WAIVER. No party shall be liable or bound
to any other party in any manner by any warranties, representations or covenants
except as specifically set forth in this Agreement or therein. Except as
expressly provided in this Agreement, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. The failure of the either party to
insist on strict compliance with this Agreement, or to exercise any right or
remedy under this Agreement, shall not constitute a waiver of any rights
provided under this Agreement, nor estop the parties from thereafter demanding
full and complete compliance nor prevent the parties from exercising such a
right or remedy in the future.
Section 11.07. ENTIRE AGREEMENT. This Agreement, the Registration
Rights Agreement and the Warrant set forth the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written, relating to the
subject matter hereof.
25
Section 11.08. SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; PROVIDED that, such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
Section 11.09. TITLE AND SUBTITLES. The titles and subtitles used in
this Agreement are used for the convenience of reference and are not to be
considered in construing or interpreting this Agreement.
Section 11.10. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 11.11. CHOICE OF LAW. This Agreement shall be construed under
the laws of the State of
New York.
Section 11.12. SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.
(a) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
(b) Subject to Section 10.03, each of the Company and the
Investor (i) hereby irrevocably submits to the jurisdiction of the United States
District Court and other courts of the United States sitting in the State of
New
York for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement and (ii) hereby waives, and agrees not to assert in
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Company and the Investor consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.
Section 11.13. SURVIVAL. The representations and warranties of the
Company and the Investor contained in Articles IV and V and the covenants
contained in Article V and Article VI shall survive the execution and delivery
hereof and the Closing until the termination of this Agreement, and the
agreements and covenants set forth in Article IX and Article X of this Agreement
shall survive the execution and delivery hereof and the Closing hereunder.
Section 11.14. PUBLICITY. Prior to the Closing, neither the Company nor
the Investor shall issue any press release or otherwise make any public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby or the existence of this Agreement. In the event the Company
is required by law, based upon an opinion of the Company's counsel, to issue a
press release or otherwise make a public statement or
26
announcement with respect to this Agreement prior to the Closing, the Company
shall consult with the Investor on the form and substance of such press release.
Promptly after the Closing, each party may issue a press release or otherwise
make a public statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this Agreement; PROVIDED
that, prior to issuing any such press release, making any such public statement
or announcement, the party wishing to make such release, statement or
announcement consults and cooperates in good faith with the other party in order
to formulate such press release, public statement or announcement in form and
substance reasonably acceptable to both parties.
Section 11.15. FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of the Investor or the Company, each of the Company
and the Investor shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
[Remainder of this page intentionally left blank]
27
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officer as of the
date first written.
KINGSBRIDGE CAPITAL LIMITED
By: /s/ Valentine X'Xxxxxxxx
-------------------------
Name: Valentine X'Xxxxxxxx
Title: Director
AKSYS, LTD.
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chief Financial Officer
28
ANNEX A
MARKET CAPITALIZATION
The market capitalization of Aksys, Ltd. shall be calculated on the
Trading Day preceding the first Trading Day of the Draw Down Pricing Period and
shall be based upon the product of (x) the closing bid price of the Company's
Common Stock as reported by Bloomberg L.P. using the AQR function, (y) the
number of outstanding shares of Common Stock of the Company as reported by
Bloomberg L.P. using the DES function (such product, the "MARKET
CAPITALIZATION").
SCHEDULE 4.03
Capitalizaton
o As of September 30, 2002, the authorized capital stock of the Company
consists (i) 50,000,000 shares of Common Stock, par value $0.01 per
share, of which 25,485,944 are issued and outstanding, and (ii)
1,000,000 shares of Preferred Stock, par value $0.01 per share, 50,000
of which have been designated Junior Participating Preferred Stock,
Series A, none of which are issued and outstanding as of September 30,
2002
o As of September 30, 2002, 2,190,249 shares of Common Stock are reserved
for issuance under equity incentive and stock compensation plans.
o As of September 30, 2002, there are outstanding options and warrants
and other rights to acquire up to approximately 2,154,103 million
shares of Common Stock. Such options, warrants and other rights have
been issued pursuant to the Company's 1996 Stock Awards Plan, 1993
Stock Option Plan, 2001 Employee Stock Purchase Plan and warrants dated
as of December 19, 2001 held by the following investors: (i) Durus Life
Sciences Master Fund, (ii) Domain Public Equity Partners, L.P., (iii)
Steelhead Investments, Ltd., (iv) OTATO L.P., (v) Redwood Partners,
LLC, (vi) Managed Risk Trading, L.P., (vii) DMG Legacy Fund LLC, (viii)
DMG Legacy Institutional Fund LLC, (ix) DMG Legacy International Ltd.,
(x) Royal Bank of Canada, (xi) Ascend Partners LP, (xii) Ascend
Partners Sapient LP, Ascend Offshore Fund Ltd., and (xiii) U.S. Bancorp
Xxxxx Xxxxxxx Inc.
o The Company has granted certain of its investors registration rights
under the following registration rights agreements:
o Registration Rights Agreement, dated as of April 7, 2000, by
and among Aksys, Ltd. and the investors named in the signature
pages thereto.
o Registration Rights Agreement, dated as of August 14, 2000, by
and among Aksys, Ltd. and the investors named in the signature
pages thereto.
o Registration Rights Agreement, dated as of December 19, 2001,
by and among Aksys, Ltd. and the investors named in the
signature pages thereto.
o Registration Rights Agreement, dated as of May 7, 2002, by and
among Aksys, Ltd. and the investors named in the signature
pages thereto.
o The shares of Common Stock issued under to the following agreements
were issued pursuant to an exemption from the registration requirements
of the Securities Act of 1933, and are subject to transfer
restrictions:
o Securities Purchase Agreement, dated as of April 7, 2000, by
and among Aksys, Ltd. and the investors named in the signature
pages thereto. Approximately 1.52 million shares of Common
Stock were purchased thereunder.
o Securities Purchase Agreement, dated as of August 14, 2000, by
and among Aksys, Ltd. and the investors named in the signature
pages thereto. Approximately .96 million shares of Common
Stock were purchased thereunder.
o Securities Purchase Agreement, dated as of December 14, 2001,
by and among Aksys, Ltd. and the investors named in the
signature pages thereto. Approximately 3.78 million shares of
Common Stock were purchased thereunder, approximately .58
million of which were subject to warrants issued in connection
with such Securities Purchase Agreement.
o Securities Purchase Agreement, dated as of May 7, 2002, by and
among Aksys, Ltd. and the investors named in the signature
pages thereto. Approximately 3.3 million shares of Common
Stock were purchased thereunder.
SCHEDULE 4.10
Litigation
None
EXHIBIT A
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT"), dated as of January 22, 2003, is by and between AKSYS, LTD. (the
"COMPANY") and KINGSBRIDGE CAPITAL LIMITED (the "INVESTOR").
WHEREAS, the Company and the Investor have entered into that certain
Amended and Restated
Common Stock Purchase Agreement, dated as of the date
hereof (the "PURCHASE AGREEMENT"), pursuant to which the Company may issue, from
time to time, to the Investor up to $15 million worth (as determined in
accordance with the Purchase Agreement) of Common Stock;
WHEREAS, on October 15, 2002 the Company issued to the Investor a
warrant, exercisable from time to time within five (5) years following the
six-month anniversary of the date of issuance (the "WARRANT") for the purchase
of an aggregate of up to 200,000 shares of Common Stock at a price specified in
such Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the Registrable Securities (as defined in the Purchase Agreement) as set forth
herein;
WHEREAS, the parties hereto entered into a Registration Rights
Agreement, dated as of October 15, 2002 (the "ORIGINAL REGISTRATION RIGHTS
AGREEMENT"), and desire to amend and restate the Original Registration Rights
Agreement in its entirety hereby;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrant, and in
the Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree to amend and restate the Original
Registration Rights Agreement in its entirety as follows (capitalized terms used
herein and not defined herein shall have the respective meanings ascribed to
them in the Purchase Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENT.
(a) FILING OF THE REGISTRATION STATEMENT. Upon the terms and
subject to the conditions set forth in this Agreement, the Company shall file
with the Commission within ten (10) Trading Days following the Closing Date a
registration statement on Form S-3 under the Securities Act or such other form
as deemed appropriate by counsel to the Company for the registration for the
resale by the Investor of the Registrable Securities (the "REGISTRATION
STATEMENT").
(b) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Company
shall use commercially reasonable efforts (i) to have the Registration Statement
declared effective by the Commission as soon as reasonably practicable, but in
any event no later than forty-five (45) calendar days, or ninety (90) calendar
days in the event that the Commission reviews the Registration Statement,
following the Closing Date and (ii) to ensure that the Registration Statement
remains in effect throughout the term of this Agreement as set forth in Section
4.2, subject to the terms and conditions of this Agreement.
(c) REGULATORY DISAPPROVAL. Notwithstanding the provisions of
Sections 1.1 (b), the date by which a Registration Statement is required to
become effective shall be extended without default or liquidated damages
hereunder or under the Purchase Agreement in the event that the Company's
failure to obtain the effectiveness of the Registration Statement on a timely
basis results solely from the Commission's disapproval of the structure of the
transactions contemplated by the Purchase Agreement. In such event, the parties
agree to cooperate with one another in good faith to arrive at a resolution
acceptable to the Commission; PROVIDED, HOWEVER, that nothing contained in this
subsection 1.1(c) shall relieve the Company from its obligation to effect and
maintain the registration of the Warrant Shares on a timely basis.
(d) FAILURE TO MAINTAIN EFFECTIVENESS OF REGISTRATION
STATEMENT. In the event the Company fails to maintain the effectiveness of the
Registration Statement (or the Prospectus) throughout the period set forth in
Section 4.2, other than temporary suspensions as set forth in Section 1.1(e) or
2.1(h), and the Investor holds any Registrable Securities at any time during the
period of such ineffectiveness (an "INEFFECTIVE PERIOD"), the Company shall pay
to the Investor in immediately available funds into an account designated by the
Investor an amount equal to the product of (x) the total number of Registrable
Securities issued to the Investor under the Purchase Agreement and owned by the
Investor at any time during such Ineffective Period and (y) the result, if
greater than zero, obtained by subtracting the VWAP on the Trading Day
immediately following the last day of such Ineffective Period from the VWAP on
the Trading Day immediately preceding the day on which any such Ineffective
Period began; PROVIDED, HOWEVER, that the foregoing payments shall not apply in
respect of Registrable Securities that are otherwise freely tradable by the
Investor.
(e) DEFERRAL OR SUSPENSION DURING A BLACKOUT PERIOD.
Notwithstanding the provisions of Section 1.1 (d), if in the good faith judgment
of the Company, following consultation with legal counsel, it would be
detrimental to the Company or its stockholders for the Registration Statement to
be filed or for resales of Registrable Securities to be made pursuant to the
Registration Statement due to (i) the existence of a material development or
potential material development involving the Company that the Company would be
obligated to disclose in the Registration Statement, which disclosure would be
premature or otherwise inadvisable at such time or would have a Material Adverse
Effect on the Company or its stockholders, or (ii) a filing of a
Company-initiated registration of any class of its equity securities, which, in
the good faith judgment of the Company, would adversely effect or require
premature disclosure of the filing of such Company-initiated registration
(notice thereof, a "BLACKOUT NOTICE"), the Company shall have the right to (A)
immediately defer such filing for a period of not more than sixty (60) days
beyond the date by which such Registration Statement was otherwise required
hereunder to be filed or (B) suspend use of such Registration Statement for a
period of not more than thirty (30) days (any such deferral or suspension
period, a "BLACKOUT PERIOD"). The Investor acknowledges that it would be
seriously detrimental to the Company and its stockholders for such Registration
Statement to be filed (or remain in effect) during a Blackout Period and
therefore essential to defer such filing (or suspend the use thereof) during
such Blackout Period and agrees to cease any disposition of the Registrable
Securities during such Blackout Period. The Company may not utilize any of its
rights under this Section 1.1(e) to defer the filing of a Registration Statement
(or suspend its effectiveness) more than twice in any twelve (12) month period.
In the event that, within sixty (60) calendar days following any Settlement
Date, the Company gives a Blackout Notice to the Investor of a Blackout Period
and the VWAP on the Trading Day immediately preceding such Blackout Period ("OLD
VWAP") is greater than the VWAP on the first Trading Day following such Blackout
Period that the Investor may sell its Registrable Securities pursuant to an
effective Registration Statement ("NEW VWAP"), then the Company shall either:
(X) issue to the Investor the number of additional shares of Common Stock
("BLACKOUT SHARES") equal to one hundred twenty percent (120%) of the difference
between (1) the product of the number of Registrable Securities purchased by the
Investor during the
2
preceding sixty (60) calendar days under the Purchase Agreement and actually
held by Investor immediately prior to the Blackout Period multiplied by the Old
VWAP, divided by the New VWAP, and (2) the number of Registrable Securities
purchased by the Investor under the Purchase Agreement during the preceding
sixty (60) calendar days and actually held by Investor immediately prior to the
Blackout Period or (Y) pay to the Investor an amount equal to the product of (1)
the number of Registrable Securities purchased by the Investor under the
Purchase Agreement during the preceding sixty (60) calendar days and actually
held by Investor immediately prior to the Blackout Period and (2) the result
obtained by subtracting the New VWAP from the Old VWAP.
(f) LIQUIDATED DAMAGES. The Company and the Investor hereto
acknowledge and agree that the amounts payable under subsection 1(d) and 1.1(e)
and the Blackout Shares deliverable under subsection 1(e) above shall constitute
liquidated damages and not penalties. The parties further acknowledge that (i)
the amount of loss or damages likely to be incurred by the Investor is incapable
or is difficult to precisely estimate, (ii) the amounts specified in such
subsections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of the
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.
(g) ADDITIONAL REGISTRATION STATEMENTS. In the event and to
the extent that the Registration Statement fails to register a sufficient amount
of Common Stock necessary for the Company to issue and sell to the Investor and
the Investor to purchase from the Company all of the Registrable Securities to
be issued, sold and purchased under the Purchase Agreement and the Warrant, the
Company shall prepare and file with the Commission an additional registration
statement or statements in order to effectuate the purpose of this Agreement,
the Purchase Agreement, and the Warrant.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company shall effect the
registration with respect to the sale of the Registrable Securities by the
Investor in accordance with the intended methods of disposition thereof. Without
limiting the foregoing, the Company in each such case will do the following as
expeditiously as possible, but in no event later than the deadline, if any,
prescribed therefor in this Agreement:
(a) Subject to Section 1.1 (e), the Company shall (i)
prepare and file with the Commission the Registration Statement; (ii) use
commercially reasonable efforts to cause such filed Registration Statement to
become and to remain effective (pursuant to Rule 415 under the Securities Act
or otherwise); (iii) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
the time period prescribed by Section 4.2 and in order to effectuate the purpose
of this Agreement, the Purchase Agreement, and the Warrant; and (iv) 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 Investor set forth
in such Registration Statement; PROVIDED, HOWEVER, that the Investor shall be
responsible for the delivery of the Prospectus to the Persons to whom the
Investor sells the Shares and the Warrant Shares.
(b) If so requested by a managing underwriter or
underwriters, if any, or the holders of a majority of the Registrable Securities
being sold in connection with the filing of a Registration
3
Statement under the Securities Act for the offering on a continuous or delayed
basis in the future of all of the Registrable Securities (a "SHELF
REGISTRATION"), the Company shall (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such holders agree should be included therein, and
(ii) make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; PROVIDED, HOWEVER, that the Company shall not be required to take any
action pursuant to this Section 2.1(b)(ii) that would, in the opinion of counsel
for the Company, violate applicable law.
(c) In connection with the filing of a Shelf Registration, the
Company shall enter into such reasonable agreements and take all such other
reasonable actions in connection therewith (including those reasonably requested
by the managing underwriters, if any, or the holders of a majority of the
Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities, and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, the Company shall (i) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company (including
with respect to businesses or assets acquired or to be acquired by the Company),
and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm such representations and warranties if and
when requested; (ii) if an underwriting agreement is entered into, it shall
contain indemnification provision and procedures no less favorable to the
selling holders of such Registrable Securities and the underwriters, if any,
than those set forth herein (or such other provisions and procedures acceptable
to the holders of a majority of Registrable Securities covered by such
Registration Statement and the managing underwriters, if any); and (iii) deliver
such documents and certificates as may be reasonably requested by the holders of
a majority of the Registrable Securities being sold, their counsel and the
managing underwriters, if any, to evidence the continued validity of their
representations and warranties made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company.
(d) If the Investor determines to engage an underwriter in
connection with the offering of any Registrable Securities, the Investor will
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary indemnification and
contribution obligation, with the managing underwriter of such offering, and
will take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless the Investor
has notified the Company in writing of its election to exclude all of its
Registrable Securities from such Registration Statement; PROVIDED, HOWEVER, that
the Investor shall consult with the Company prior to any such underwritten
offering and defer such offering for a reasonable period upon the commercially
reasonable request of the Company.
(e) The Investor may not participate in any underwriting
distribution hereunder unless it (i) agrees to sell its Registrable Securities
on the basis provided in any underwriting agreements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting agreements, and (iii) agrees to pay all underwriting discounts and
commissions and other fees and expenses of investment bankers and any manager or
managers of such underwriting, and legal expenses of the underwriter, applicable
with respect to its Registrable Securities.
(f) Three (3) Trading Days prior to filing the Registration
Statement or Prospectus, or any amendment or supplement thereto (excluding
amendments deemed to result from the filing of documents incorporated by
reference therein), the Company shall deliver to the Investor and to counsel
representing the Investor, in accordance with the notice provisions of Section
4.8, copies of the
4
Registration Statement, Prospectus and/or any amendments or supplements thereto
as proposed to be filed, together with exhibits thereto, which documents will be
subject to review by the Investor and such counsel, and thereafter deliver to
the Investor and such counsel, in accordance with the notice provisions of
Section 4.8, such number of copies of the Registration Statement, each amendment
and supplement thereto (in each case including all exhibits thereto), the
Prospectus (including each preliminary prospectus) and such other documents or
information as the Investor or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities.
(g) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each seller of Registrable Securities covered by
the Registration Statement such number of conformed copies of the Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the Prospectus (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 promulgated under the
Securities Act relating to such seller's Registrable Securities, and such other
documents, as such seller may reasonably request to facilitate the disposition
of its Registrable Securities.
(h) After the filing of the Registration Statement, the
Company shall promptly notify the Investor of any stop order issued or
threatened by the Commission in connection therewith and take all commercially
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(i) The Company shall use commercially reasonable efforts to
(i) register or qualify the Registrable Securities under such other securities
or blue sky laws of each jurisdiction in the United States as the Investor may
reasonably (in light of its intended plan of distribution) request, and (ii)
cause the Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Investor to consummate the disposition of the Registrable Securities; PROVIDED,
HOWEVER, that the Company will not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (g), subject itself to taxation in any such jurisdiction,
consent or subject itself to general service of process in any such
jurisdiction, change any existing business practices, benefit plans or
outstanding securities or amend or otherwise modify the Charter or Bylaws.
(j) The Company shall enter into customary agreements and take
such other actions as are reasonably required in order to expedite the
disposition of such Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Investor).
(k) The Company shall make available to the Investor (and will
deliver to Investor's counsel),(A) subject to restrictions imposed by the United
States federal government or any agency or instrumentality thereof, copies of
all public correspondence between the Commission and the Company concerning the
Registration Statement and will also make available for inspection by the
Investor and any attorney, accountant or other professional retained by the
Investor (collectively, the "INSPECTORS"),(B) upon reasonable advance notice
during normal business hours all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "RECORDS")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with the
Registration Statement. Records that the Company determines, in good faith, to
be confidential and that it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless the disclosure or release of such Records
is requested or required pursuant to oral questions, interrogatories, requests
for information or documents or a subpoena or other order from a court of
competent jurisdiction or other
5
process; PROVIDED, HOWEVER, that prior to any disclosure or release pursuant to
the immediately preceding clause, the Inspectors shall provide the Company with
prompt notice of any such request or requirement so that the Company may seek an
appropriate protective order or waive such Inspectors' obligation not to
disclose such Records; and, PROVIDED, FURTHER, that if failing the entry of a
protective order or the waiver by the Company permitting the disclosure or
release of such Records, the Inspectors, upon advice of counsel, are compelled
to disclose such Records, the Inspectors may disclose that portion of the
Records that counsel has advised the Inspectors that the Inspectors are
compelled to disclose; PROVIDED, HOWEVER, that upon any such required
disclosure, such Inspector shall use his or her best efforts to obtain
reasonable assurances that confidential treatment will be afforded such
information. The Investor agrees that information obtained by it solely as a
result of such inspections (not including any information obtained from a third
party who, insofar as is known to the Investor after reasonable inquiry, is not
prohibited from providing such information by a contractual, legal or fiduciary
obligation to the Company) shall be deemed confidential and shall not be used
for any purposes other than as indicated above or by it as the basis for any
market transactions in the securities of the Company or its affiliates unless
and until such information is made generally available to the public. The
Investor further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
(l) To the extent required by law or reasonably necessary to
effect a sale of Registrable Securities in accordance with prevailing business
practices at the time of any sale of Registrable Securities pursuant to a
Registration Statement, the Company shall deliver to the Investor a signed
counterpart, addressed to the Investor, of (1) an opinion or opinions of counsel
to the Company, and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Investor therefor reasonably requests.
(m) The Company shall otherwise comply with all applicable
rules and regulations of the Commission, including, without limitation,
compliance with applicable reporting requirements under the Exchange Act.
(n) The Company shall appoint a transfer agent and registrar
for all of the Registrable Securities covered by such Registration Statement not
later than the effective date of such Registration Statement.
(o) The Company may require the Investor to promptly furnish
in writing to the Company such information as may be required in connection with
such registration including, without limitation, all such information as may be
requested by the Commission or the NASD or any state securities commission and
all such information regarding the Investor, the Registrable Securities held by
the Investor and the intended method of disposition of the Registrable
Securities. The Investor agrees to provide such information requested in
connection with such registration within five (5) Business days after receiving
such written request and the Company shall not be responsible for any delays in
obtaining or maintaining the effectiveness of the Registration Statement caused
by the Investor's failure to timely provide such information.
(p) The Investor will cooperate with the Company, as
reasonably requested by the Company, in connection with the preparation and
filing of any Registration Statement hereunder, unless the Investor has notified
the Company in writing of such Investor's irrevocable election to exclude all of
the Investor's Registrable Securities from such Registration Statement.
(q) Upon receipt of a Blackout Notice from the Company, the
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until (i) the Company advises the Investor that the Blackout Period
6
has terminated and (ii) the Investor receives copies of a supplemented or
amended prospectus, if necessary. If so directed by the Company, the Investor
will deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in the
Investor's possession (other than a limited number of file copies) of the
prospectus covering such Registrable Securities that is current at the time of
receipt of such notice.
Section 2.2. REGISTRATION EXPENSES. The Company shall pay all registration
expenses incurred in connection with the Registration Statement (the
"REGISTRATION EXPENSES"), including, without limitation: (i) all registration,
filing, securities exchange listing and fees required by the National
Association of Securities Dealers, (ii) all registration, filing, qualification
and other fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (iii) all word processing,
duplicating, printing, messenger and delivery expenses, (iv) the Company's
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred by the Company in connection with the listing of the
Registrable Securities, (vi) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any special
audits or comfort letters or costs associated with the delivery by independent
certified public accountants of such special audit(s) or comfort letter(s)
requested pursuant to Section 2.1(k) hereof), (vii) the fees and expenses of any
special experts retained by the Company in connection with such registration and
amendments and supplements to the Registration Statement and Prospectus, (viii)
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities, if any but excluding in all cases underwriting fees, discounts,
transfer taxes or commissions, if any, attributable to the sale of Registrable
Securities, which shall be payable by each holder of Registrable Securities PRO
RATA on the basis of the number of Registrable Securities of each such holder
that are included in a registration under this Agreement.
ARTICLE III
INDEMNIFICATION
Section 3.1. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Investor, and each Person or entity, if any, who controls the
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively, the "CONTROLLING PERSONS"), from and against any
loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable and accurate attorneys' fees and reasonable disbursements
and costs and expenses of investigating and defending any such claim)
(collectively, "DAMAGES"), joint or several, and any action or proceeding in
respect thereof to which any Controlling Person, may become subject under the
Securities Act or otherwise, as incurred, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arises out of, or are based upon, any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein under the circumstances not misleading, and shall
reimburse such Controlling Person, for any reasonable and documented legal and
other expenses reasonably incurred by such Controlling Person, as incurred, in
investigating or defending or preparing to defend against any such Damages or
actions or proceedings; PROVIDED, HOWEVER, that the Company shall not be liable
to the extent that any such Damages arise out of the Investor's (or any other
Indemnified Person's) failure to send or give a copy of the final prospectus or
supplement (as then amended or supplemented) to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
person if such statement or omission was corrected in such final prospectus or
supplement; PROVIDED, FURTHER, that the Company shall not be liable
7
to the extent that any such Damages arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement, or any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Investor or any other person who participates as an underwriter in the
offering or sale of such securities.
In connection with any Registration Statement with respect to which the Investor
is participating, such Investor will indemnify and hold harmless, to the same
extent and in the same manner set forth in the preceding paragraph, the Company,
each of directors, each its officers who signs the Registration Statement, each
Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (each a "COMPANY INDEMNIFIED
PERSON") against any Damages to which any Company Indemnified Person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as the
such Damages arises out of or is based upon (a) any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement, or
in any preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement relating to the Registrable Securities or arises out of, or are
based upon, any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein under
the circumstances not misleading to the extent that such violation occurs in
reliance upon and in conformity with written information furnished to the
Company by the Investor or on behalf of the Investor expressly for use in
connection with such Registration Statement or (b) any failure by the Investor
to comply with prospectus delivery requirements of the Securities Act, the
Exchange Act or any other law or legal requirement applicable to sales under the
Registration Statement.
Section 3.2. CONDUCT OF INDEMNIFICATION PROCEEDINGS. All claims for
indemnification under Section 3.1 shall be asserted and resolved in accordance
with the provisions of Section 10.02 and 10.03 of the Purchase Agreement.
Section 3.3. ADDITIONAL INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will make the maximum contribution with
respect to any amounts for which it would otherwise be liable under this Article
III to the fullest extent permitted by law. However, (a) no contribution will be
make under circumstances where maker of such contribution would not have been
required to indemnify the indemnified party under the fault standards set forth
in this Article III, (b) or seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation, and (c) contribution (together with
any indemnification obligations under this Agreement) by any seller of
Registrable Securities will be limited in amount of proceeds received by such
seller from the sale of such Registrable Securities.
ARTICLE IV
MISCELLANEOUS
Section 4.1. NO OUTSTANDING REGISTRATION RIGHTS. Except as set forth on
Schedule 4.1, the Company represents and warrants to the Investor that, except
as set forth in the Commission
8
Documents, there is not in effect on the date hereof any agreement by the
Company pursuant to which any holders of securities of the Company have a right
to cause the Company to register or qualify such securities under the Securities
Act or any securities or blue sky laws of any jurisdiction.
Section 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at the earlier of (i) such time
that is two years following the termination of the Purchase Agreement or (ii)
such time as all Registrable Securities have been issued and have ceased to be
Registrable Securities. Notwithstanding the foregoing, paragraphs (c) and (d) of
Section 1.1, Article III, Section 4.8, and Section 4.9 shall survive the
termination of this Agreement.
Section 4.3. RULE 144. The Company will, at its expense, promptly take such
action as holders of Registrable Securities may reasonably request to enable
such holders of Registrable Securities to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act ("RULE 144"), as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. If at any time the Company is not required to file
such reports, it will, at its expense, forthwith upon the written request of any
holder of Registrable Securities, make available adequate current public
information with respect to the Company within the meaning of paragraph (c)(2)
of Rule 144 or such other information as necessary to permit sales pursuant to
Rule 144. Upon the request of the Investor, which request shall not be made more
than once per calendar quarter the Company will deliver to the Investor a
written statement, signed by the Company's principal financial officer, as to
whether it has complied with such requirements.
Section 4.4. CERTIFICATE. The Company will, at its expense, forthwith upon
the request of any holder of Registrable Securities, which request shall not be
made more than once per calendar quarter deliver to such holder a certificate,
signed by the Company's principal financial officer, stating (a) the Company's
name, address and telephone number (including area code), (b) the Company's
Internal Revenue Service identification number, (c) the Company's Commission
file number, (d) the number of shares of each class of Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least ninety (90) days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
both parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any
9
subsequent holder of the Registrable Securities (unless sold pursuant to an
effective registration statement or in accordance with Rule 144 under the
Securities Act), provided that the Company shall have the right to require any
holder of Registrable Securities to execute a counterpart of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Purchase Agreement and the Warrant(s) sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
Section 4.7. SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party hereto.
Section 4.8. NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be given in
accordance with Section 10.04 of the Purchase Agreement.
Section 4.9. GOVERNING LAW. This Agreement shall be construed under the
laws of the State of
New York.
Section 4.10. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.
Section 4.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
10
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
AKSYS, LTD.
By:
---------------------------------
Name:
Title:
KINGSBRIDGE CAPITAL LIMITED
By:
---------------------------------
Valentine X'Xxxxxxxx
Director
EXHIBIT B
WARRANT
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION.
OCTOBER 15, 2002
Warrant to Purchase up to 200,000 shares of Common Stock of Aksys, Ltd.
(the "COMPANY").
In consideration for Kingsbridge Capital Limited (the "INVESTOR")
agreeing to enter into that certain
Common Stock Purchase Agreement, dated as of
the date hereof, between the Investor and the Company (the "AGREEMENT"), the
Company hereby agrees that the Investor or any other Warrant Holder (as defined
below) is entitled, on the terms and conditions set forth below, to purchase
from the Company at any time during the Exercise Period (as defined below) up to
200,000 fully paid and nonassessable shares of common stock, par value $.01 per
share, of the Company (the "COMMON STOCK") at the Exercise Price (hereinafter
defined), as the same may be adjusted from time to time pursuant to Section 6.1
hereof. The resale of the shares of Common Stock or other securities issuable
upon exercise or exchange of this Warrant is subject to the provisions of the
Registration Rights Agreement (as defined in the Agreement).
Section 1. DEFINITIONS.
"AFFILIATE" shall mean any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
direct or indirect common control with any other Person. For the purposes of
this definition, "control," when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the term "controls" and "controlled" have meanings correlative to
the foregoing.
"BID PRICE" shall mean the closing bid price of the Company's
Common Stock as reported by Bloomberg L.P. using the AQR function.
"EXERCISE PERIOD" shall mean that period beginning six months
after the date of this Warrant and continuing until the expiration of the
five-year period thereafter.
"EXERCISE PRICE" as of the date hereof shall mean FIVE DOLLARS
AND SEVENTY-FIVE CENTS ($5.75), subject to adjustment for the events specified
in Section 6.1 below.
"PER SHARE WARRANT VALUE" shall mean the difference resulting
from subtracting the Exercise Price from the Bid Price on the Trading Day
immediately preceding the Exercise Date.
"PERSON" shall mean an individual, a corporation, a
partnership, a limited liability company, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
"PRINCIPAL MARKET" shall mean the Nasdaq National Market, the
Nasdaq SmallCap Market, the American Stock Exchange or the
New York Stock
Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock.
"SEC" shall mean the United States Securities and Exchange
Commission.
"TRADING DAY" shall mean any day other than a Saturday or a
Sunday on which the Principal Market is open for trading in equity securities.
"WARRANT HOLDER" shall mean the Investor or any assignee or
transferee of all or any portion of this Warrant.
"WARRANT SHARES" shall mean those shares of Common Stock
received upon exercise of this Warrant.
Section 2. EXERCISE.
(a) METHOD OF EXERCISE. This Warrant may be
exercised in whole or in part (but not as to a fractional share of Common
Stock), at any time and from time to time during the Exercise Period, by the
Warrant Holder by (i) surrender of this Warrant, with the form of exercise
attached hereto as Exhibit A completed and duly executed by the Warrant Holder
(the "EXERCISE NOTICE"), to the Company at the address set forth in Section 13
hereof, accompanied by payment of the Exercise Price multiplied by the number of
shares of Common Stock for which this Warrant is being exercised (the "AGGREGATE
EXERCISE PRICE") or (ii) telecopying an executed and completed Exercise Notice
to the Company and delivering to the Company within five (5) business days
thereafter the original Exercise Notice, this Warrant and the Aggregate Exercise
Price. Each date on which an Exercise Notice is received by the Company in
accordance with clause (i) and each date on which the Exercise Notice is
telecopied to the Company in accordance with clause (ii) above shall be deemed
an "EXERCISE DATE."
(b) PAYMENT OF AGGREGATE EXERCISE PRICE. Subject
to paragraph (c) below, payment of the Aggregate Exercise Price shall be made by
wire transfer of immediate available funds to an account designated by the
Company. If the amount of the payment received by the Company is less than the
Aggregate Exercise Price, the Warrant Holder will be notified of the deficiency
and shall make payment in that amount within three (3) Trading Days. In the
event the payment exceeds the Aggregate Exercise Price, the Company will refund
the excess to the Warrant Holder within three (3) Trading Days of receipt.
(c) CASHLESS EXERCISE. In the event that the
Warrant Shares to be received by the Warrant Holder upon exercise of the Warrant
may not be resold pursuant to an effective registration statement or an
exemption to the registration requirements of the Securities Act of 1933, as
amended, and applicable state laws, the Warrant Holder may, as an alternative to
payment of the Aggregate Exercise Price upon exercise in accordance with
paragraph (b) above, elect to effect a cashless exercise by so indicating on the
Exercise Notice and including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
"CASHLESS EXERCISE"). In the event of a Cashless Exercise, the Warrant Holder
shall receive that number of shares of Common Stock determined by (i)
multiplying the number of Warrant Shares for which this Warrant is being
exercised by the Per Share Warrant Value and (ii) dividing the product by the
Bid Price on the Trading Day immediately preceding the Exercise Date, rounded to
the nearest whole share. The Company shall cancel the total number of Warrant
Shares equal to the excess of the number of the Warrant Shares for which this
Warrant is being exercised over the number of Warrant Shares to be received by
the Warrant Holder pursuant to such Cashless Exercise.
(d) REPLACEMENT WARRANT. In the event that the
Warrant is not exercised in full, the number of Warrant Shares shall be reduced
by the number of such Warrant Shares for which this Warrant is exercised, and
the Company, at its expense, shall forthwith issue and deliver to or upon the
order of the Warrant Holder a new Warrant of like tenor in the name of the
Warrant Holder, reflecting such adjusted number of Warrant Shares.
Section 3. TEN PERCENT LIMITATION. The Warrant Holder
may not exercise this Warrant such that the number of Warrant Shares to be
received pursuant to such exercise aggregated with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
by the Warrant Holder would result in the Warrant Holder owning more than 9.9%
of all of such Common Stock as would be outstanding on such Exercise Date, as
determined in accordance with Section 13(d) of the Exchange Act of 1934 and the
rules and regulations promulgated thereunder.
Section 4. DELIVERY OF STOCK CERTIFICATES.
(a) Subject to the terms and conditions of this Warrant,
as soon as practicable after the exercise of this Warrant in full or in part,
and in any event within ten (10) Trading Days thereafter, the Company at its
expense (including, without limitation, the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered to the Warrant
Holder, or as the Warrant Holder may lawfully direct, a certificate or
certificates for the number of validly issued, fully paid and non-assessable
Warrant Shares to which the Warrant Holder shall be entitled on such exercise,
together with any other stock or other securities or property (including cash,
where applicable) to which the Warrant Holder is entitled upon such exercise in
accordance with the provisions hereof.
(b) This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this Warrant, in full
or in part, would result in the issuance of any fractional share of Common
Stock, then in such event the Warrant Holder shall receive the number of shares
rounded to the nearest whole share.
Section 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE COMPANY.
(a) The Warrant Shares, when issued in accordance with
the terms hereof, will be duly authorized and, when paid for or issued in
accordance with the terms hereof, shall be validly issued, fully paid and
non-assessable.
(b) The Company shall take all commercially reasonable
action and proceedings as may be required and permitted by applicable law, rule
and regulation for the legal and valid issuance of this Warrant and the Warrant
Shares to the Warrant Holder.
(c) The Company has authorized and reserved for issuance
to the Warrant Holder the requisite number of shares of Common Stock to be
issued pursuant to this Warrant. The Company shall at all times reserve and keep
available, solely for issuance and delivery as Warrant Shares hereunder, such
shares of Common Stock as shall from time to time be issuable as Warrant Shares.
(d) From the date hereof through the last date on which
this Warrant is exercisable, the Company shall take all steps commercially
reasonable to ensure that the Common Stock remains listed or quoted on the
Principal Market.
Section 6.1. ADJUSTMENT OF THE EXERCISE PRICE. The
Exercise Price and, accordingly, the number of Warrant Shares issuable upon
exercise of the Warrant, shall be subject to adjustment from time to time upon
the happening of certain events as follows:
(a) RECLASSIFICATION, CONSOLIDATION, MERGER, MANDATORY
SHARE EXCHANGE, SALE OR TRANSFER.
(i) Upon occurrence of any of the events specified in
subsection (a)(ii) below (the "ADJUSTMENT EVENTS") while this Warrant is
unexpired and not exercised in full, the Warrant Holder may in its sole
discretion require the Company, or any successor or purchasing corporation, as
the case may be, without payment of any additional consideration therefor, to
execute and deliver to the Warrant Holder a new Warrant providing that the
Warrant Holder shall have the right to exercise such new Warrant (upon terms not
less favorable to the Warrant Holder than those then applicable to this Warrant)
and to receive upon such exercise, in lieu of each share of Common Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money or property receivable upon such
Adjustment Event by the holder of one share of Common Stock issuable upon
exercise of this Warrant had this Warrant been exercised immediately prior to
such Adjustment Event. Such new Warrant shall provide for adjustments that shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Section 6.
(ii) The Adjustment Events shall be (1) any
reclassification or change of Common Stock (other than a change in par value or
as a result of a subdivision or combination of Common Stock), (2) any
consolidation, merger or mandatory share exchange of the Company with or into
another corporation (other than a merger or mandatory share exchange with
another corporation in which the Company is a continuing corporation and which
does not result in any reclassification or change other than a change in par
value or as a result of a subdivision or combination of Common Stock), and (3)
any sale or transfer to another corporation of all or substantially all of the
assets of the Company.
(iii) If the Company shall fail to maintain the listing or
quotation of the Common Stock on a Principal Market, the Warrant Holder may in
its sole discretion at any time thereafter require any publicly traded Affiliate
of the Company, without payment by the Warrant Holder of any additional
consideration therefor, to execute and deliver to the Warrant Holder a new
Warrant providing that the Warrant Holder shall have the right to exercise such
new Warrant (in an amount and upon terms not less favorable to the Warrant
Holder than those then applicable to this Warrant) and to receive upon such
exercise, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, publicly traded shares of common stock of such
Affiliate.
The provisions of this subsection (a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, mandatory share
exchanges, sales and transfers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company,
at any time while this Warrant is unexpired and not exercised in full, shall
subdivide its Common Stock, the Exercise Price shall be proportionately reduced
as of the effective date of such subdivision, or, if the Company shall take a
record of holders of its Common Stock for the purpose of so subdividing, as of
such record date, whichever is earlier. If the Company, at any time while this
Warrant is unexpired and not exercised in full, shall combine its Common Stock,
the Exercise Price shall be proportionately increased as of the effective date
of such combination, or, if the Company shall take a record of holders of its
Common Stock for the purpose of so combining, as of such record date, whichever
is earlier.
(c) STOCK DIVIDENDS. If the Company, at any time while
this Warrant is unexpired and not exercised in full, shall pay a dividend or
other distribution in shares of Common Stock to all holders of Common Stock,
then the Exercise Price shall be adjusted, as of the date the Company shall take
a record of the holders of its Common Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the date of
such payment or other distribution), to that price determined by multiplying the
Exercise Price in effect immediately prior to such payment or other distribution
by a fraction:
1. the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to such dividend or
distribution, and
2. the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution.
The provisions of this subsection (c) shall not apply under
any of the circumstances for which an adjustment is provided in subsections (a)
or (b).
(d) LIQUIDATING DIVIDENDS, ETC. If the Company, at any
time while this Warrant is unexpired and not exercised in full, makes a
distribution of its assets or evidences of indebtedness to the holders of its
Common Stock as a dividend in liquidation or by way of return of capital or
other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing subsections (a)
through (c)), then the Warrant Holder shall be entitled to receive upon exercise
of this Warrant in addition to the Warrant Shares receivable in connection
therewith, and without payment of any consideration other than the Exercise
Price, the kind and amount of such distribution per share of Common Stock
multiplied by the number of Warrant Shares that, on the record date for such
distribution, are issuable upon such exercise of the Warrant (with no further
adjustment being made following any event which causes a subsequent adjustment
in the number of Warrant Shares issuable), and an appropriate provision therefor
shall be made a part of any such distribution. The value of a distribution that
is paid in other than cash shall be determined in good faith by the Board of
Directors of the Company.
Section 6.2 NO ADJUSTMENTS UNDER CERTAIN CIRCUMSTANCES.
Notwithstanding anything contained in the foregoing to the contrary, there shall
be no adjustment to the Exercise Price based upon, related to or in connection
with any instrument or other benefit issued or conferred by the Company (a)
under any of its employee or director stock award plans, employee or director
stock compensation plans or employee or director stock purchase plans or (b)
with respect to the granting of stock or stock options to advisors or
consultants engaged by the Company, but only if such grant is in consideration
for services rendered or to be rendered and not for capital raising purposes.
Section 6.3 NOTICE OF ADJUSTMENTS. Whenever the Exercise
Price or number of Warrant Shares shall be adjusted pursuant to Section 6.1
hereof, the Company shall promptly prepare a certificate signed by its
President, Chief Financial Officer or Controller setting forth in reasonable
detail the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Company's Board of Directors made any determination
hereunder), and the Exercise Price and number of Warrant Shares purchasable at
that Exercise Price after giving effect to such adjustment, and shall promptly
cause copies of such certificate to be sent by overnight courier to the Warrant
Holder. In the event the Company shall, at a time while the Warrant is unexpired
and not exercised in full, take any action that pursuant to subsections (a)
through (c) of Section 6.1 may result in an adjustment of the Exercise Price,
the Company shall give to the Warrant Holder at its last address known to the
Company written notice of such action ten (10) days in advance of its effective
date in order to afford to the Warrant Holder an opportunity to exercise the
Warrant prior to such action becoming effective.
Section 7. NO IMPAIRMENT. The Company will not, by
amendment of its Restated Certificate of Incorporation or By-Laws or through any
reorganization, transfer of assets, consolidation, merger, dissolution or issue
or sale of securities, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Warrant Holder
against impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) will take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
Section 8. RIGHTS AS STOCKHOLDER. Except as set forth
in Section 6 above, prior to exercise of this Warrant, the Warrant Holder shall
not be entitled to any rights as a stockholder of the Company with respect to
the Warrant Shares, including (without limitation) the right to vote such
shares, receive dividends or other distributions thereon or be notified of
stockholder meetings. However, in the
event of any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend) or other distribution, any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, the
Company shall mail to each Warrant Holder, at least ten (10) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
Section 9. REPLACEMENT OF WARRANT. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of the Warrant and, in the case of any such loss, theft or
destruction of the Warrant, upon delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
Section 10. CHOICE OF LAW. This Warrant shall be
construed under the laws of the State of
New York.
Section 11. ENTIRE AGREEMENT; AMENDMENTS. Except for any
written instrument concurrent or subsequent to the date hereof executed by the
Company and the Investor, this Warrant and the Agreement contain the entire
understanding of the parties with respect to the matters covered hereby and
thereby. No provision of this Warrant may be waived or amended other than by a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
Section 12. RESTRICTED SECURITIES.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has
been issued in a transaction exempt from the registration requirements of the
Securities Act of 1933, as amended, in reliance upon the provisions of Section
4(2) thereof. This Warrant and the Warrant Shares issuable upon exercise of this
Warrant may not be resold except pursuant to an effective registration statement
or an exemption to the registration requirements of the Securities Act of 1933
and applicable state laws.
(b) LEGEND. Any replacement Warrants issued pursuant to
Section 2 and Section 9 hereof and, unless a registration statement has been
declared effective by the SEC in accordance with the Securities Act of 1933, as
amended, with respect thereto, any Warrant Shares issued upon exercise hereof,
shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES
LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION."
(c) NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No
legend other than the one specified in Section 12(b) has been or shall be placed
on the share certificates representing the Warrant Shares and no instructions or
"stop transfer orders" (so called "stock
transfer restrictions") or other restrictions have been or shall be given to the
Company's transfer agent with respect thereto other than as expressly set forth
in this Section 12.
(d) ASSIGNMENT. Assuming the conditions of Section 12(a)
above regarding registration or exemption have been satisfied, the Warrant
Holder, with the prior written consent of the Company (which consent shall not
be unreasonably withheld, conditioned or delayed), may sell, transfer, assign,
pledge or otherwise dispose of this Warrant, in whole or in part. In the event
of a transfer in accordance with the preceding sentence, (i) the Warrant Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee, and (ii) the Company shall effect the assignment
within ten (10) days, and shall deliver to the assignee(s) designated by the
Warrant Holder a Warrant or Warrants of like tenor and terms for the appropriate
number of shares.
(e) INVESTOR'S COMPLIANCE. Nothing in this Section 12
shall affect in any way the Investor's obligations under any agreement to comply
with all applicable securities laws upon resale of the Common Stock.
Section 13. NOTICES. All notices, demands, requests,
consents, approvals, and other communications required or permitted hereunder
shall be in writing and shall be (i) personally served, (ii) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile (with accurate confirmation generated by the transmitting facsimile
machine) at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Company:
Aksys, Ltd.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
Attention: Chief Financial Officer
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
Attention: Xxxxx X. Xxxx, P.C.
if to the Investor:
Kingsbridge Capital Limited c/o Kingsbridge Corporate Services
Limited
Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxx
Xxxxxxxx xx Xxxxxxx
Telephone: 000-000-00-000-000
Facsimile: 011-353-45-482-003
Attention: Xxxx Xxxxxx, Director
with a copy (which shall not constitute notice) to:
Xxxxxxxx Chance US LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx, Esq. / Xxxxx X. Xxxxxxxxxx, Esq.
Either party hereto may from time to time change its address
or facsimile number for notices under this Section 13 by giving at least ten
(10) days prior written notice of such changed address or facsimile number to
the other party hereto.
Section 14. MISCELLANEOUS. This Warrant and any term
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
IN WITNESS WHEREOF, this Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set forth above.
AKSYS, LTD.
By:
------------------------------------
Name:
Title:
EXHIBIT A TO THE WARRANT
EXERCISE FORM
AKSYS, LTD.
The undersigned hereby irrevocably exercises the right to purchase
__________________ shares of Common Stock of Aksys, Ltd., a Delaware
corporation, evidenced by the attached Warrant, and (CIRCLE EITHER (i) or (ii))
(i) tenders herewith payment of the Aggregate Exercise Price with respect to
such shares in full, in the amount of $________, in cash, by certified or
official bank check or by wire transfer for the account of the Company or (ii)
elects, pursuant to Section 2(c) of the Warrant, to convert such Warrant into
shares of Common Stock of Aksys, Ltd. on a cashless exercise basis, all in
accordance with the conditions and provisions of said Warrant.
The undersigned requests that stock certificates for such Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to this Warrant, in the name of the registered Warrant Holder
and delivered to the undersigned at the address set forth below.
Dated:_______________________________________
_____________________________________________
Signature of Registered Holder
Name of Registered Holder (Print)
_____________________________________________
Address
EXHIBIT B TO THE WARRANT
ASSIGNMENT
(To be executed by the registered Warrant Holder desiring to transfer
the Warrant)
FOR VALUED RECEIVED, the undersigned Warrant Holder of the attached
Warrant hereby sells, assigns and transfers unto the persons below named the
right to purchase ______________ shares of Common Stock of Aksys, Ltd. evidenced
by the attached Warrant and does hereby irrevocably constitute and appoint
______________________ attorney to transfer the said Warrant on the books of the
Company, with full power of substitution in the premises.
Dated:
__________________________________
Signature
Fill in for new Registration of Warrant:
_________________________________________
Name
_________________________________________
Address
_________________________________________
Please print name and address of assignee
(including zip code number)
EXHIBIT C
Officer's Certificate
I, [NAME OF OFFICER], do hereby certify to Kingsbridge Capital Limited (the
"Investor"), with respect to the common stock of Aksys, Ltd. (the "Company")
issuable in connection with the Draw Down Notice, dated _____________ (the
"Notice") attached hereto and delivered pursuant to Article II of the
Common
Stock Purchase Agreement, dated January __, 2003 (the "Agreement"), by and
between the Company and the Investor, as follows:
1. I am the duly elected [OFFICER] of the Company.
2. The representations and warranties of the Company set forth in Article
IV of the Agreement are true and correct in all material respects as though made
on and as of the date hereof (except for such representations and warranties
that are made as of a particular date).
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the date hereof related
to the Notice and has satisfied each of the conditions to the obligation of the
Investor set forth in Article VII of the Agreement.
The undersigned has executed this Certificate this ____ day of _________, 200__.
_____________________________________
Name:
Title:
