Exhibit 10.1
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement"), dated as of August
___, 2003, is entered into by and between UNIVEC, INC., a Delaware corporation
(the "Company"), and THE SHAAR FUND, LTD. (the "Holder" or the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded, inter alia, by Section 3 (a) (9) of the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Buyer is the record and beneficial owner of the
following shares of the specified series of the Company's Preferred Stock (i)
122 shares of the Series B 5% Convertible Preferred Stock, par value $0.001 per
share, of the Company (the "Series B Shares"), with accrued unpaid dividends
through the date hereof (the liquidation preference and accrued dividends on the
Series B Shares, the "Series B Amount"); and (ii) 250 shares of the Series C 5%
Convertible Preferred Stock, par value $0.001 per share, of the Company (the
"Series C Shares"), with accrued unpaid dividends through the date hereof (the
liquidation preference and accrued dividends on the Series C Shares, the "Series
C Amount"); each of the Series B Shares and Series C Shares (collectively, the
"Preferred Shares") was acquired and fully paid for more than two years prior to
the date hereof, and the Buyer desires to exchange the Preferred Shares
(including all accrued dividends thereon and the accrued but unpaid dividends,
if any, on any previously converted shares of Preferred Shares; collectively,
the "Exchanged Shares") for the Buyer's purchase of the Purchased Shares (as
defined below), and the Company is willing to accept the Exchanged Shares as
such consideration for the Purchased Shares; and
WHEREAS, the Buyer wishes to acquire from the Company in
exchange for the Exchanged Shares and the Company desires to deliver to the
Buyer in exchange for the Exchanged Shares, upon the terms and subject to the
conditions of this Agreement, 522 shares of the Series E 5% Convertible
Preferred Stock, par value $0.001 per share, of the Company (the "Series E
Stock"), which shares are convertible into shares (the "Conversion Shares,"
which term includes any shares issued in payment of dividends on the Series E
Stock as provided in the Certificate of Designations, defined below) of Common
Stock of the Company (the "Common Stock") in accordance with the terms of the
Certificate of Designations.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; CONSIDERATION; CERTAIN DEFINITIONS.
a. Purchase. The Buyer hereby agrees to purchase from the
Company, and the Company hereby agrees to sell to the Buyer, the number of
shares of Series E Stock (the "Purchased Shares") specified on the Buyer's
signature page to this Agreement in exchange for the Exchanged Shares. No other
consideration shall be due from the Buyer to the Company for the Purchased
Shares.
b. Certain Definitions. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:
(i) "Buyer Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Buyer pursuant to Section 15 of the 1933 Act or Section 20 of the 1934
Securities Exchange Act of 1934, as amended (the "1934 Act").
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(ii) "Certificate of Designations" means the Certificate of
Designations for the Series E Stock, substantially in the form annexed hereto as
Annex I.
(iii) "Certificates" means the Current Certificates and the
Exchanged Certificates, or either of them, as the context may require.
(iv) "Closing Date" means the date of the closing of the
purchase and sale of the Purchased Shares, as provided herein.
(v) "Company Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Section 15 of the 1933 Act or Section 20 of the 1934 Act.
(vi) "Current Certificates" means the stock certificates
representing the Purchased Shares duly executed by the Company and issued in the
name of the Buyer on the Closing Date.
(vii) "Exchanged Certificates" means the stock certificates
representing the Exchanged Shares being returned to the Company for
cancellation.
(viii) "Last Audited Date" means December 31, 2002.
(ix) "Material Adverse Effect" means an event or combination
of events, which individually or in the aggregate, would reasonably be expected
to (w) adversely affect the legality, validity or enforceability of any of the
Transaction Agreements, (x) have or result in a material adverse effect on the
results of operations, assets, prospects, or condition (financial or otherwise)
of the Company and it subsidiaries, taken as a whole, or (y) adversely impair
the Company's authority or ability to perform fully on a timely basis its
obligations under any of the Transaction Agreements or the transactions
contemplated thereby; provided, that "Material Adverse Effect" shall not be
deemed to include the impact of: (a) changes in the laws of government rules and
regulations relating to the Company's business and the industry in which it
operates as of the date hereof, or interpretations thereof by courts or
governmental authorities promulgated or announced after the date hereof, (b)
changes promulgated after the date hereof in GAAP or regulatory accounting
principles, including those promulgated by the accounting staff of the SEC,
generally applicable to other entities engaged in businesses similar to that of
the Company as of the date hereof, (c) acts and omissions of the Company taken
with the prior informed consent of all other Persons who are a party to this
Agreement in contemplation of the transactions contemplated hereby, and (d) the
transactions contemplated by this Agreement and the other Transaction
Agreements.
(x) "Person" means any living person or any entity, such as,
but not necessarily limited to, a corporation, partnership or trust.
(xi) "Principal Market" means the OTC Bulletin Board.
(xii) "Reporting Service" means Bloomberg LP or if that
service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by the
Buyer and reasonably acceptable to the Company.
(xiii) "Securities" means the Purchased Shares and the
Conversion Shares.
(xiv) "Trading Day" shall mean any day during which the
Principal Market shall be open for business.
(xv) "Transaction Agreements" means this Agreement and the
Certificate of Designations.
c. Delivery of Certificates. The Buyer and the Company shall
exchange the Exchanged Shares for the Purchased Shares by delivering the
relevant Certificates to the other on the Closing Date.
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2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
Except as otherwise provided herein, the Buyer represents and
warrants to, and covenants and agrees with, the Company as follows:
a. The Buyer is the beneficial owner of the Exchanged Shares.
b. The Buyer understands and agrees that it may not offer,
sell, transfer, pledge, hypothecate or otherwise dispose of any of the
Securities unless such Securities are registered under the 1933 Act or an
exemption from such registration is available.
c. The Buyer further understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities hereunder.
d. The Buyer and its advisors, if any, have been furnished
with or have been given access to all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the Securities which have been requested by the Buyer, including Annex
II hereto. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Lender has also had the opportunity to obtain and to review
the Company's filings on XXXXX listed on Annex III hereto (the documents listed
on such Annex III, to the extent available on XXXXX or otherwise provided to the
Lender as indicated on said Annex III, collectively, the "Company's SEC
Documents").
e. The Buyer understands that its investment in the Securities
involves a high degree of risk.
f. The Buyer hereby represents that, in connection with its
purchase of the Securities, it has not relied on any statement or representation
by the Company or its officers, directors and employees or any of its attorneys
or agents, except as specifically set forth herein.
3. COMPANY REPRESENTATIONS, ETC. Except as provided in Annex
II hereto or in the Company's SEC Documents or as otherwise provided herein, the
Company represents and warrants to the Buyer, as of the date hereof and as of
the Closing Date, that,
a. Concerning the Securities. As of the Closing Date, the
Securities shall have been duly authorized by all necessary corporate action on
the part of the Company, and, when issued and delivered against payment therefor
as contemplated by the Transaction Agreements, will be duly and validly issued,
fully paid and non-assessable and will not subject the holder thereof to
personal liability solely by reason of being such holder. No shareholder of the
Company is entitled to any preemptive rights with respect to the sale of the
Securities contemplated by the Transaction Agreements. No party has a currently
exercisable right of first refusal to which the Company is a party or to which
the Company or any Company Control Person is aware that would be applicable to
any or all of the transactions contemplated by the Transaction Agreements.
b. Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted as described in the Company's SEC Documents. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. The Company has registered its stock under, and is obligated to
file reports pursuant to, Section 12 of the 1934 Act. The Common Stock is listed
and quoted on the Principal Market.
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c. Authorized Shares. As of the Closing Date, immediately
before giving effect to the transactions contemplated by the Transaction
Agreements, (i) the authorized capital stock of the Company consists of (x)
75,000,000 shares of Common Stock, par value $.001 per share, of which
33,616,095 are outstanding and (y) 4,995,500 shares of preferred stock, of which
104,663 are outstanding (including, in addition to the 122 Series B Shares and
the 250 Series C Shares, 124 shares of Series A 8% Convertible Preferred Stock,
for which the Company has received a notice of conversion into 4,009,000 shares
of Common Stock, and 104,167 shares of Series D 5% Convertible Preferred Stock)
and (ii) all issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. The Company
has sufficient authorized and unissued shares of Common Stock as may be
necessary to effect the issuance of the Securities, including the Conversion
Shares.
d. Exchange Agreement. This Agreement and the transactions
contemplated thereby have been duly and validly authorized by the Company. This
Agreement has been duly executed and delivered by the Company. This Agreement
is, and the other Transaction Agreements, when executed and delivered by the
Company, will be, valid and binding agreements of the Company enforceable in
accordance with their respective terms, except in all cases to the extent that
(i) enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting the enforcement of
creditors' rights and remedies generally, (ii) the availability of the equitable
remedy of specific performance and injunctive relief is subject to the
discretion of the court before which the proceedings may be brought, and (iii)
the enforceability of the provisions hereof relating to indemnification and
contribution may be limited by applicable federal, state or other securities
laws or the public policy underlying such laws.
e. Non-contravention. The execution and delivery of this
Agreement and the other Transaction Agreements by the Company, the issuance of
the Securities, and the consummation by the Company of the other transactions
contemplated by the Transaction Agreements do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions of, or
constitute a default under (i) the certificate of incorporation or other charter
document and by-laws of the Company, each as currently in effect, (ii) any
material indenture, mortgage, deed of trust, or other material agreement or
instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, or (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its respective properties or assets; except that the foregoing representation
shall not apply in each case to the extent such conflict, breach or default
would not have a Material Adverse Effect.
f. Approvals. Assuming the accuracy of the Buyer's
representations in Section 2 hereof, no authorization, approval or consent of
any court, governmental body, regulatory agency, self-regulatory organization,
stock exchange or market or the shareholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the Buyer
as contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained or for which the failure to obtain such would
not, individually or in the aggregate, have a Material Adverse Effect.
g. Filings. As of their respective filing dates, none of the
Company's SEC Documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements made therein in light of the circumstances under which they
were made, not misleading (except any statements or omissions therein which were
corrected or otherwise disclosed or updated in a filing of any of the subsequent
Company's SEC Documents).
h. Absence of Certain Changes. Since the Last Audited Date,
there has been no Material Adverse Effect. Since the Last Audited Date, except
as provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other
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property to shareholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business
consistent with past practices; (v) suffered any substantial losses or waived
any rights of material value, whether or not in the ordinary course of business,
or suffered the loss of any material amount of existing business; (vi) made any
changes in employee compensation, except in the ordinary course of business
consistent with past practices; or (vii) experienced any material problems with
labor or management in connection with the terms and conditions of their
employment.
i. Full Disclosure. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been disclosed in writing to the Buyer that (i) would reasonably be expected
to materially and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement or any of the other Transaction
Agreements, or (ii) would reasonably be expected to materially and adversely
affect the value of the rights granted to the Buyer in the Transaction
Agreements.
j. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company before or by any governmental authority or nongovernmental
department, commission, board, bureau, agency or instrumentality or any other
Person to which the Company is a party or of which the Company is otherwise
aware, wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect. The Company is not aware of any valid basis for any such claim
that (either individually or in the aggregate with all other such events and
circumstances) could reasonably be expected to have a Material Adverse Effect.
There are no outstanding or unsatisfied judgments, orders, decrees, writs,
injunctions or stipulations to which the Company is a party or by which it or
any of its properties is bound, that involve the transaction contemplated herein
or that, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
k. Absence of Events of Default. Except as set forth in
Section 3(e) hereof, no Event of Default (or its equivalent term), as defined in
the respective agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (or its equivalent term) (as so defined in such agreement), has
occurred and is continuing, which would have a Material Adverse Effect.
l. No Undisclosed Liabilities or Events. Since the Last
Audited Date, the Company has incurred no liabilities or obligations other than
(x) those disclosed in the Transaction Agreements or the Company's SEC
Documents, (y) those incurred in the ordinary course of the Company's business,
or (z) which individually or in the aggregate, do not or would not have a
Material Adverse Effect. No event or circumstances has occurred or exists with
respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (i) change the certificate of incorporation or
other charter document or by-laws of the Company, each as currently in effect,
with or without shareholder approval, which change would reduce or otherwise
adversely affect the rights and powers of the shareholders of the Common Stock
or (ii) materially or substantially change the business, assets or capital of
the Company, including its interests in subsidiaries.
m. Fees to Brokers, Finders and Others. The Company has taken
no action which would give rise to any claim by any person for brokerage
commission, finder's fees or similar payments by Buyer or the Company relating
to this Agreement or the transactions contemplated hereby.
n. Dilution. The number of Conversion Shares issuable upon
conversion of the Series E Shares (including, but not limited to, the
circumstance wherein the trading price of the Common Stock declines prior to the
conversion of the Series E Stock and/or the effects of adjustments to the terms
thereof contemplated by the Transaction Agreements) may have a dilutive effect
on the ownership interests of the other shareholders (and Persons having the
right to become shareholders) of the Company. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges
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that its obligation to issue the Shares upon conversion of the Series E Shares
consistent with and in accordance with the terms of the Transaction Agreements
is binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company, and the Company will honor every duly given Notice of Conversion (as
defined in the Certificate of Designations) relating to the conversion of the
Series E Stock, unless the Company is subject to an injunction (which injunction
was not sought by the Company) prohibiting the Company from doing so. Nothing in
the foregoing provisions of this Section 3(n) shall be deemed to restrict the
Company's rights under the Transaction Agreements.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Certificate of Designations. The Company covenants and
agrees that, prior to the Closing Date, the Company will have obtained all
necessary corporate authorization to file the Certificate of Designations and
will have filed the Certificate of Designations in the State of Delaware and in
any other jurisdiction where such filing is necessary. The Company will provide
to the Buyer evidence of such filing, in form satisfactory to the Buyer on or
before the Closing Date.
b. Rule 144 Sales. (i) The Company hereby represents to and
covenants and agrees with the Buyer that, subject only to the Rule 144(k)
Condition (as defined below) being satisfied as of the date the Buyer proposes
to sell any of the Conversion Shares under said Rule 144(k) (each such date a
"Rule 144(k) Sale Date"), the Buyer may, at any time on or after the Closing
Date, sell the Conversion Shares pursuant to Rule 144 ("Rule 144") promulgated
by the Securities and Exchange Commission under the Securities Act of 1933, as
amended, without any volume or other restrictions, under Rule 144(k),. The term
"Rule 144(k) Condition" means that, as of the relevant Rule 144(k) Sale Date,
the Buyer is not, and for a period of three months immediately prior to such
date has not been, an affiliate (as that term is used in Rule 144(k)) of the
Company. Notwithstanding the foregoing, the Buyer has agreed to the provisions
of Section 4(j) hereof.
(ii) In furtherance of the foregoing, and not in limitation
thereof, at the request of the Buyer, the Company will give its transfer agent
irrevocable instructions to the effect that, upon the transfer agent's receipt
from the Buyer and/or the Company of an opinion of counsel issued by Company
counsel or, if not given by Company counsel, other counsel acceptable to the
Company (for which purposes it is agreed that Xxxxxxx & Xxxxxx LLP shall be
deemed acceptable counsel; provided, however, that the Company agrees to pay the
legal fees of such other counsel for such opinion) that, the Conversion Shares
may be sold pursuant to the provisions of Rule 144, even in the absence of an
effective registration statement, the transfer agent is to effect the transfer
of the Conversion Shares and issue to the buyer(s) or transferee(s) thereof one
or more stock certificates representing the transferred Conversion Shares
without any restrictive legend and without recording any restrictions on the
transferability of such shares on the transfer agent's books and records (except
to the extent any such legend or restriction results from facts other than the
identity of the Buyer, as the seller or transferor thereof, or the status of the
Conversion Shares while held by the Buyer). If the transfer agent reasonably
requires any additional documentation at the time of the transfer, the Company
shall deliver or cause to be delivered all such reasonable additional
documentation within the control of the Company (the Company's officers,
directors, agents and counsel being deemed within such control for purposes of
this provision) as may be necessary to effectuate the issuance of an unlegended
certificate.
c. Filings. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Securities to the Buyer
under any United States laws and regulations applicable to the Company, or by
any domestic securities exchange or trading market, and to provide a copy
thereof to the Buyer promptly after such filing.
d. Reporting Status. So long as the Buyer beneficially owns
any of the Securities, and such Securities are not then registered under an
effective registration statement, the Company shall file all reports required to
be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, shall
take all commercially reasonable action under its control to ensure that
adequate current public information with respect to the Company, as required in
accordance with Rule 144(c)(2) of the 1933 Act, is publicly available. So long
as the Buyer beneficially owns any of the Securities, the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company will take all commercially reasonable action under its
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control to obtain and to continue the listing and trading of its Common Stock
(including, without limitation, all Securities) on the Principal Market.
e. Certain Agreements. The Company covenants and agrees that,
without the prior written consent of the Buyer in each instance, which consent
may be withheld in the Buyer's sole discretion for any reason or for no reason
whatsoever, as long as the Buyer holds any shares of the Series E Stock, (i) the
Company will not create another series of preferred stock which has or purports
to have seniority over or parity with the shares of the Series E Stock and (ii)
will not issue shares of Series E Stock to any other party.
f. Late Delivery of Conversion Shares. The Company understands
that a delay in the issuance of the Conversion Shares beyond the Delivery Date
(as defined in the Certificate of Designations) could result in economic loss to
the Buyer. As compensation to the Buyer for such loss, the Company agrees to pay
late payments to the Buyer for late issuance of Conversion Shares upon
Conversion (as defined in the Certificate of Designations) in accordance with
the following schedule (where "No. Business Days Late" refers to the number of
business days which is beyond two (2) business days after the Delivery Date):1
[Balance of page intentionally left blank]
Late Payment For Each $10,000
of Stated Value or No.
------
Business Days Late Dividends Being Converted
-----------------------------------------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each
Business Day Late beyond
10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Buyer's exclusive remedy (other than the
following provisions of this Section 4(f) and the provisions of the immediately
following Section 4(g) of this Agreement) for such delay. Furthermore, in
addition to any other remedies which may be available to the Buyer, in the event
that the Company fails for any reason to effect delivery of such shares of
Common Stock by close of business on the Delivery Date, the Buyer will be
entitled to revoke the relevant Notice of Conversion by delivering a notice to
such effect to the Company, whereupon the Company and the Buyer shall each be
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1 Example: Notice of Conversion is delivered on Monday, December 1, 2003.
The Delivery Date would be Thursday, December 4 (the third business day
after such delivery). If the certificate is delivered by Monday December 8
(2 business days after the Delivery Date), no payment under this provision is
due. If the certificates are delivered on December 9, that is 1 "Business Day
Late" in the table below; if delivered on December 16, that 6 "Business Days
Late" in the table.
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restored to their respective positions immediately prior to delivery of such
Notice of Conversion; provided, however, that an amount equal to any payments
contemplated by this Section 4(f) which have accrued through the date of such
revocation notice shall remain due and owing to the Buyer notwithstanding such
revocation.
g. Buy-In Adjustment. If, by the relevant Delivery Date, the
Company fails for any reason to deliver the Conversion Shares to be issued upon
conversion of the Series E Stock and after such Delivery Date, the holder of the
Series E Stock being converted (a "Converting Holder") purchases, in an
arm's-length open market transaction or otherwise, shares of Common Stock (the
"Covering Shares") in order to make delivery in satisfaction of a sale of Common
Stock by the Converting Holder (the "Sold Shares"), which delivery such
Converting Holder anticipated to make using the Shares to be issued upon such
conversion (a "Buy-In"), the Converting Holder shall have the right, to require
the Company to pay to the Converting Holder, in addition to and not in lieu of
the amounts due under Section 4(f) hereof, the Buy-In Adjustment Amount (as
defined below). The "Buy-In Adjustment Amount" is the amount equal to the
excess, if any, of (x) the Converting Holder's total purchase price (including
brokerage commissions, if any) for the Covering Shares over (y) the net proceeds
(after brokerage commissions, if any) received by the Converting Holder from the
sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount to
the Converting Holder in immediately available funds immediately upon demand by
the Converting Holder.2
h. DWAC Issuance. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, upon request of the Holder and its
compliance with the provisions contained in this paragraph, so long as the
certificates therefor do not bear a legend and the Holder thereof is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting
the account of Holder's Broker with DTC through its Deposit Withdrawal Agent
Commission system.
i. Conversion after Bankruptcy. The holder of any Series E
Stock shall be entitled to exercise its conversion privilege with respect to
such Series E Stock notwithstanding the commencement of any case under 11 U.S.C.
ss.101 et seq. (the "Bankruptcy Code"). In the event the Company is a debtor
under the Bankruptcy Code, the Company hereby waives, to the fullest extent
permitted, any rights to relief it may have under 11 U.S.C. ss.362 in respect of
such holder's conversion privilege. The Company hereby waives, to the fullest
extent permitted, any rights to relief it may have under 11 U.S.C. ss.362 in
respect of the conversion of the Series E Stock. The Company agrees, without
cost or expense to such holder, to take or to consent to any and all action
necessary to effectuate relief under 11 U.S.C. ss.362.
j. Limitation on Sales.
(i) Any provision in this Agreement or in the Certificate of
Designations to the contrary notwithstanding, the Buyer hereby agrees that,
provided (i) the Company is not in default of its obligations under this
Agreement, any of the other Transaction Agreements, or any other agreement
between the Company and the Buyer or instrument issued by the Company to the
Buyer (collectively "Buyer Agreements"), and (ii) the Company has not made a
material misrepresentation or omitted to make a representation of material fact
herein or in any other Buyer Agreement, the Buyer will not sell Conversion
Shares (including for such purposes shares issued in payment of dividends on the
Series E Stock) during the Lock Up Period in excess of the Lock Up Amount (as
those terms are defined below).
(ii) The term "Lock Up Period" means the period commencing on
the Closing Date and continuing through and including the Trading Day
immediately preceding the first anniversary of the Closing Date.
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2 By way of illustration and not in limitation of the foregoing, if the
Converting Holder purchases shares of Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
shares of Common Stock it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount which Company will be required to pay to the Converting Holder
will be $1,000.
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(iii) The term "Lock Up Amount" means the amount, which when
added to all other Conversion Shares sold by the Buyer during the three months
immediately preceding the date of sale, does not exceed the greater of (x) one
percent (1%) of the outstanding shares of Common Stock of the Company as of the
date of such sale (and for such purposes the outstanding shares shall be deemed
to be the higher of the number of shares stated as being outstanding in the most
recent SEC filing made by the Company and available on XXXXX or the number of
shares outstanding identified to the Buyer or its representatives, advisors or
counsel by an executive officer of the Company, counsel to the Company or the
Company's transfer agent) or (ii) the Average Weekly Volume (as that term is
defined below). The term "Average Weekly Volume" means, (i) the total reported
volume of trading, as reported by the Reporting Service, for the Company's
Common Stock on all securities exchanges for the last twenty (20) Trading Days
ending on the Friday immediately preceding the date of sale, divided by (ii)
four (4).
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company acknowledges that the Securities will be issued
free of any restrictive legend or stop transfer restrictions. The Company will
not issue any instruction to its transfer agent restricting the transfer of the
Securities. The Company warrants that no contrary instruction has been or will
be given by the Company to the transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement. Nothing in this Section shall affect
in any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If the Buyer provides the Company
with an opinion of counsel reasonably satisfactory to the Company that
registration of a resale by the Buyer of any of the Securities is not required
under the 1933 Act, the Company shall take all steps necessary or appropriate to
ensure that the Company shall permit the transfer of the Securities and promptly
instruct the Company's transfer agent to issue one or more certificates for
Common Stock without legend in such name and in such denominations as specified
by the Buyer.
b. The Company will authorize its transfer agent to give
information relating to the Company directly to the Buyer or the Buyer's
representatives upon the request of the Buyer or any such representative, to the
extent such information relates to (i) the status of shares of Common Stock
issued or claimed to be issued to the Buyer in connection with a Notice of
Conversion, or (ii) the number of outstanding shares of Common Stock of all
shareholders as of a current or other specified date. On the Closing Date, the
Company will provide the Buyer with a copy of the authorization so given to the
transfer agent.
6. CLOSING DATE.
a. The Closing Date shall be August ___, 2003 or such other
date agreed by the parties, provided, that each of the conditions contemplated
by Sections 7 and 8 hereof shall have either been satisfied or been waived by
the party in whose favor such conditions run.
b. The closing shall occur on the relevant Closing Date at the
offices of the Xxxxxxx & Prager LLP and shall take place no later than 3:00
P.M., New York time, on such day or such other time as is mutually agreed upon
by the Company and the Buyer.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell
the Purchased Shares to the Buyer pursuant to this Agreement on the Closing Date
is conditioned upon:
a. The execution and delivery of this Agreement by the Buyer
on or prior to the Closing Date;
b. Delivery by the Buyer of the Exchanged Certificates (or a
lost certificate affidavit with respect to the Exchanged Certificates); and
c. The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date (unless another date is specified therein).
9
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to
purchase the Purchased Shares on the Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the other
Transaction Agreements by the Company on or before the Closing Date;
b. The approval of the listing of the Conversion Shares on the
Principal Market (a copy of which will be provided to the Buyer);
c. Delivery by the Company of the Current Certificates in
accordance with this Agreement;
d. On the Closing Date, the Buyer shall have received an
opinion of counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer, substantially to the effect set
forth in Annex IV attached hereto;
e. The accuracy in all material respects on the Closing Date
of the representations and warranties of the Company contained in this
Agreement, each as if made on such date (unless another date is specified
therein);
f. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
9. INDEMNIFICATION.
a. The Company agrees to indemnify and hold harmless Buyer and
its officers, directors, shareholders, employees, affiliates, advisors,
administrators, representatives, and agents, and each Buyer Control Person
(collectively, "Covered Buyers") from and against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees) incurred
(collectively, "Damages"), jointly or severally, and any action in respect
thereof to which a Covered Buyer becomes subject to, resulting from, arising out
of or relating to any misrepresentation, breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of Company contained
in this Agreement, as such Damages are incurred, except to the extent such
Damages result primarily from Buyer's failure to perform any covenant or
agreement contained in this Agreement or Buyer's or any other Covered Buyer's
gross negligence, recklessness or bad faith in performing its obligations under
this Agreement.
b. If
(x) the Buyer becomes involved in any capacity in any action,
proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the
transactions contemplated by this Agreement or the other Transaction
Agreements, or if the Buyer is impleaded in any such action, proceeding
or investigation by any Person, or
(y) the Buyer becomes involved in any capacity in any action,
proceeding or investigation brought by the SEC, any self-regulatory
organization or other body having jurisdiction, against or involving
the Company or in connection with or as a result of the consummation of
the transactions contemplated by this Agreement or the other
Transaction Agreements, or if the Buyer is impleaded in any such
action, proceeding or investigation by any Person,
then in any such case, the Company hereby agrees to indemnify, defend and hold
harmless the Buyer from and against and in respect of all losses, claims,
liabilities, damages or expenses resulting from, imposed upon or incurred by the
Buyer, directly or indirectly, and reimburse such Buyer for its reasonable legal
and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. The
10
indemnification and reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Covered Buyer who
are actually named in such action, proceeding or investigation, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Buyer, any such Covered Buyer. The
Company also agrees that no Covered Buyer shall have any liability to the
Company or any Person asserting claims on behalf of or in right of the Company
in connection with or as a result of the consummation of this Agreement or the
other Transaction Agreements, except as provided in or contemplated by this
Agreement.
c. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to.
10. RELEASES.
a. Subject to the provisions of Section 10(d) hereof,
immediately upon consummation of this Agreement and the transactions
contemplated hereby,
(i) each of the Securities Purchase Agreement, dated as of July 27,
1998, between the Company and the Buyer, the Registration Rights
Agreement, dated as of July 27, 1998, each as heretofore amended, and
each of the agreements (and any amendments thereof) ancillary to each
of them, and
(ii) each of the Securities Purchase Agreement, dated as of February 8,
1999, between the Company and the Buyer, the Registration Rights
Agreement, dated as of February 8, 1999, each as heretofore amended,
and each of the agreements (and any amendments thereof) ancillary to
each of them
shall terminate and be of no further force and effect, and the parties shall
have no continuing obligations under of said prior agreements.
b. Subject to the provisions of Section 10(d) hereof, the
Company (for itself and on behalf of each of its officers, directors,
shareholders, employees, affiliates and representatives; collectively the
"Company Group Members") hereby releases and forever discharges the Buyer and
each of the other Covered Buyers and their respective successors and assigns,
successors in interest and nominees (collectively, the "Buyer Group Members")
from and with respect to any and all claims, demands or causes of action
whatsoever, in law or in equity, fixed or contingent, whether known or unknown
and whether asserted or not, which the Company may have had, may now have or may
hereafter acquire with respect to any matters whatsoever, arising or relating to
actions taken or omitted at any time from the beginning of the world through and
including the Closing Date, including with respect to any transactions or
relating to or arising from any prior purchase agreement, registration rights
agreement or any other document or agreement between the Company and the Buyer
or either one of them in favor of the other and executed prior to the Closing
Date (howsoever denominated, collectively, the "Prior Agreements"). The Company
also fully waives any offsets it may have with respect to the amounts owed under
the Prior Agreements. In addition, the Company represents, warrants and
covenants that it has not, and as of the Closing Date it will not have, sold,
assigned, transferred or otherwise conveyed to any other person or entity all or
any portion of its rights, claims, demands, actions or causes of action herein
released.
c. Subject to the provisions of Section 10(d) hereof, the
Buyer (for itself and on behalf of each of the Buyer Group Members) hereby
releases and forever discharges the Company and each of the other Company Group
Members from and with respect to any and all claims, demands or causes of action
whatsoever, in law or in equity, fixed or contingent, whether known or unknown
and whether asserted or not, which the Buyer may have had, may now have or may
hereafter acquire with respect to any matters whatsoever, arising or relating to
actions taken or omitted at any time from the beginning of the world through and
including the Closing Date, with respect to the Prior Agreements; provided,
however, that the foregoing release shall not apply with respect to any claims
relating to any indemnity obligations of any Company Group Member in favor of
any one or more Buyer Group Members that are referred to in or contemplated by
the Prior Agreements. The Buyer also fully waives any offsets it may have with
respect to the amounts owed under the Prior Agreements. In addition, the Buyer
represents, warrants and covenants that it has not, and as of the Closing Date
11
it will not have, sold, assigned, transferred or otherwise conveyed to any other
person or entity all or any portion of its rights, claims, demands, actions or
causes of action herein released.
d. The releases in the preceding paragraphs of this Section 10
(i) are effective only on the consummation of the transactions contemplated by
this Agreement and (ii) do not apply to any claims arising out of this
Agreement, the other Transaction Agreements or any other agreements entered into
between the Company and the Buyer on or after the date hereof.
11. JURY TRIAL WAIVER. The Company and the Buyer hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out of or
in connection with the Transaction Agreements.
12. GOVERNING LAW; MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflicts of law. Each of the Company and the Buyer hereby submits
to the exclusive jurisdiction of the United States Federal and the state courts
located in New York County, New York with respect to any dispute arising under
any of the Transaction Agreements, or the transactions contemplated hereby or
thereby and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. To the extent determined
by such court, the Company shall reimburse the Buyer for any reasonable legal
fees and disbursements incurred by the Buyer in enforcement of or protection of
any of its rights under any of the Transaction Agreements.
b. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.
g. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
h. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.
j. In no event, except as specifically contemplated by the
terms of any of the Transaction Agreements, shall either party be liable under
any of the Transaction Agreements or otherwise for any consequential,
incidental, indirect, punitive or special damages of any nature whatsoever
(including, without limitation, any damages arising out of or in connection with
any loss of profit, loss of business or anticipatory profits), even if the other
party has been advised of the likelihood of such damages occurring to the
non-defaulting party. The provisions of this Section 12(j) shall not limit the
12
direct obligations of either party to the other party pursuant to a specific
provision of any of the Transaction Agreements.
k. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
l. The language of this Agreement shall, in any and all cases,
for any and all purposes, and in any and all circumstances be construed as a
whole, according to its fair meaning, not strictly for or against the Company or
the Buyer, and with no regard whatsoever to the identity or status of any person
or persons who drafted all or any part of this Agreement.
13. NOTICES. Any notice required or permitted hereunder shall
be given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of
(a) the date delivered, if delivered by personal
delivery as against written receipt therefor or by confirmed
facsimile transmission,
(b) the seventh business day after deposit, postage
prepaid, in the United States Postal Service by registered or
certified mail, or
(c) the third business day after mailing by
international express courier, with delivery costs and fees
prepaid,
in each case, addressed to each of the other parties entitled to notice at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: UNIVEC, Inc.
00 X. Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to: Xxxx Xxxxxx, Esq.
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx, 00xx Xx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
BUYER: The Shaar Fund, Ltd.
c/x Xxxxxxxx Capital Management
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
13
with a copy to: Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Buyer's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the Certificates
until third anniversary of the Closing Date, and shall inure to the benefit of
the Buyer and the Company and their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
and the Company as of the date first above written.
PURCHASED SHARES: 522
UNIVEC, INC.
By: _________________________________
Name:
Title:
THE SHAAR FUND, LTD.
By: InterCaribbean Services Ltd.
Director
By: _________________________________
Name:
Title:
15
ANNEX I CERTIFICATE OF DESIGNATIONS
ANNEX II COMPANY DISCLOSURE MATERIALS
ANNEX III COMPANY'S SEC DOCUMENTS
ANNEX IV FORM OF OPINION OF COUNSEL
16
ANNEX II
TO
EXCHANGE AGREEMENT
COMPANY DISCLOSURE
------------------
None
17
ANNEX III
TO
EXCHANGE AGREEMENT
COMPANY'S SEC DOCUMENTS
1. See attached schedule of documents available on XXXXX.
2. Other: NONE
Documents Available on XXXXX
----------------------------
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002, filed
on May 15, 2003
Quarterly Report on Form 10-QSB filed on May 16, 2003
Definitive Proxy Statement on Schedule 14A filed on August 7, 2003
18
