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EXHIBIT 10.40
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SECURITIES PURCHASE AGREEMENT
Among
GERON CORPORATION,
XXXXX XXXXXXX STRATEGIC GROWTH FUND, LTD.,
XXXXX XXXXXXX STRATEGIC GROWTH FUND, L.P.,
LB I GROUP INC.
and
RGC INTERNATIONAL INVESTORS, LDC
Dated as of December 10, 1998
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as
of December 10, 1998, among Geron Corporation, a Delaware corporation (the
"Company"), Xxxxx Xxxxxxx Strategic Growth Fund, Ltd., a Cayman Islands exempt
company ("Xxxxx Xxxxxxx Limited"), Xxxxx Xxxxxxx Strategic Growth Fund, L.P., a
New York limited partnership ("Xxxxx Xxxxxxx XX"), LB I Group Inc., a Delaware
corporation ("LB Group") and RGC International Investors, LDC, a Cayman Islands
limited duration company ("RGC"). Xxxxx Xxxxxxx Limited, Xxxxx Xxxxxxx XX, LB
Group and RGC are each referred to herein as a "Purchaser" and are collectively
referred to herein as the "Purchasers."
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, an aggregate of seven million
five hundred thousand dollars ($7,500,000) principal amount of Series A
Zero-Coupon Convertible Debentures (the "Tranche A Debentures"), and warrants
(the "Tranche A Warrants") to purchase up to $7,500,000 of the Company's common
stock, par value $.001 per share (the "Common Stock"); and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, an aggregate of seven million
five hundred thousand dollars ($7,500,000) principal amount of Series B
Zero-Coupon Convertible Debentures (the "Tranche B Debentures" and, together
with the Tranche A Debentures, the "Debentures"), and warrants (the "Tranche B
Warrants", and together with the Tranche A Warrants, the "Warrants") to purchase
up to $7,500,000 of the Company's Common Stock.
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE DEBENTURES AND WARRANTS
I.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth herein, the
Company shall issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, shall purchase from the
Company:
(i) On the Tranche A Closing Date (as defined below), the
principal amount of Tranche A Debentures as set forth for
such Purchaser on Schedule I; and
(ii) On the Tranche B Closing Date (as defined below), the
principal amount of Tranche B Debentures as set forth for
such Purchaser on Schedule I.
(b) Each Purchaser shall purchase that principal amount of
Debentures set forth opposite such Purchaser's name on Schedule I
attached hereto and each Purchaser shall deliver to the Company
the portion of the purchase price for each
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of the Tranche A Debentures and the Tranche B Debentures as set
forth next to its name on Schedule I.
I.2 The Closings.
(a) The Tranche A Closing. The closing of the purchase and sale
of the Tranche A Debentures (the "Tranche A Closing") shall take
place at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or by
transmission by facsimile and overnight courier, immediately
following the execution hereof or such later date or different
location as the parties shall agree, but not prior to the date
that the conditions set forth in Section 4.1 have been satisfied
or waived by the appropriate party (the "Tranche A Closing
Date"). At the Tranche A Closing:
(i) Each Purchaser shall deliver to the Company its
portion of the purchase price as set forth next to its
name on Schedule I in United States dollars in immediately
available funds to an account designated in writing by the
Company;
(ii) The Company shall deliver to each Purchaser a
Debenture, substantially in the form of Exhibit A hereto,
representing the principal amount purchased by such
Purchaser as set forth on Schedule I hereto;
(iii) The Company shall deliver to each Purchaser a
Warrant, substantially in the form of Exhibit B hereto,
representing the number of Tranche A Warrants purchased by
such Purchaser as set forth on Schedule I hereto;
(iv) The parties shall execute and deliver each of the
documents referred to in Section 4.1 hereof; and
(v) The Company shall pay to Xxxxx Xxxxxxx Asset
Management, LLC ("Xxxxx Xxxxxxx Asset") a fee of $25,000
(the "Xxxxx Xxxxxxx Asset Fee") in United States dollars
in immediately available funds to an account designated in
writing by Xxxxx Xxxxxxx Asset.
(b) The Tranche B Closing. Subject to the terms and conditions
set forth in Section 4.2 and elsewhere in this Agreement, the
closing of the purchase and sale of the Tranche B Debentures (the
"Tranche B Closing") shall take place in the same manner as the
Tranche A Closing, on the date after the Company fulfills the
conditions set forth in Section 4.2 (the "Tranche B Closing
Date"); provided that in no case shall the Tranche B Closing take
place unless and until the conditions listed in Section 4.2 have
been satisfied or waived by the appropriate party. At the Tranche
B Closing:
(i) Each Purchaser shall deliver to the Company its
portion of the purchase price as set forth next to its
name on Schedule I in United States dollars in immediately
available funds to an account designated in writing by the
Company;
(ii) The Company shall deliver to each Purchaser a
Debenture, substantially in the form of Exhibit A hereto,
representing the principal amount of Tranche B Debentures
purchased by such Purchaser as set forth on Schedule I
hereto;
(iii) The Company shall deliver to each Purchaser a
Warrant, substantially in the form of Exhibit B hereto,
representing the number of
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Tranche B Warrants purchased by such Purchaser as set
forth on Schedule I hereto; and
(iv) The parties shall execute and deliver each of the
documents referred to in Section 4.2 hereof.
With respect to the Tranche B Debentures and Tranche B Warrants,
in no event shall any Purchaser have the right or be required to purchase
Tranche B Debentures or Tranche B Warrants if the aggregate number of shares of
Common Stock beneficially owned by such Purchaser and its affiliates exceeds
9.9% of the outstanding shares of the Common Stock following such conversion.
For purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
II.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to
each of the Purchasers:
(a) Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, with the requisite corporate
power and authority to own and use its properties and assets and
to carry on its business as currently conducted. Except as set
forth on Schedule 2.1(a), the Company has no subsidiaries
(collectively, the "Subsidiaries"). Each of the Subsidiaries is a
corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
with the full corporate power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the
business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not,
individually or in the aggregate, (x) adversely affect the
legality, validity or enforceability of any of this Agreement or
the Transaction Documents (as defined below) or any of the
transactions contemplated thereby, (y) have or result in a
material adverse effect on the results of operations, assets,
prospects, or financial condition of the Company and its
Subsidiaries, taken as a whole or (z) adversely impair the
Company's ability to perform fully on a timely basis its
obligations under any Transaction Document (any of (x), (y) or
(z), being a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the Debentures,
the Warrants and the Registration Rights Agreement (as defined
below) (collectively, the "Transaction Documents"), and otherwise
to carry out its obligations hereunder and thereunder. The
execution and delivery of each of this Agreement and the
Transaction
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Documents 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
action is required by the Company, its Board of Directors or its
stockholders. Each of this Agreement and the Transaction
Documents has been duly executed by the Company and when
delivered in accordance with the terms hereof will constitute the
valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles
of general application.
(c) Capitalization. As of the date hereof and immediately prior
to the Tranche A Closing Date, the authorized capital stock of
the Company is as set forth on Schedule 2.1(c). The issuance and
sale of all interests in such capital stock have been in
compliance with all applicable federal and state securities laws.
No shares of Common Stock are entitled to preemptive or similar
rights, nor is any holder of the Common Stock entitled to
preemptive or similar rights arising out of any agreement or
understanding with the Company by virtue of any of this Agreement
or the Transaction Documents. Except as disclosed on Schedule
2.1(c), other than the Debentures and the Warrants, there are no
outstanding options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to securities,
rights or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire any
shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable
into shares of Common Stock. No anti-dilution or similar
adjustment provision of securities of the Company will be
triggered by the issuance of the Debentures or the Warrants,
except as described on Schedule 2.1(c). The Company is not
subject (contingent or otherwise) to repurchase or otherwise
acquire or retire any units of its capital stock or any security
convertible into or exchangeable for any of its capital stock.
Except as specifically disclosed in the SEC Documents (as defined
below), to the Company's best knowledge, no Person or group of
related Persons beneficially owns (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) or has the right to
acquire by agreement with or by obligation binding upon the
Company beneficial ownership of in excess of 5% of the Common
Stock. "Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
(d) Authorization and Validity; Issuance of Shares. All of the
Debentures and the Warrants have been duly authorized, and when
delivered against payment therefor as contemplated hereby, will
be validly issued, fully paid and non-assessable, free and clear
of all liens, encumbrances and Company rights of first refusal,
other than liens and encumbrances created by the Purchasers
(collectively,
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"Liens") and will not be subject to any preemptive or similar
rights. The shares of Common Stock issuable upon exercise of the
Debentures and the Warrants (collectively, the "Underlying
Shares") are and will at all times hereafter continue to be duly
authorized and reserved for issuance and the shares of Common
Stock issued upon conversion of the Debentures (the "Debenture
Shares") and exercise of the Warrants (the "Warrant Shares") will
be validly issued, fully paid and non-assessable, free and clear
of all Liens.
(e) No Conflicts. The execution, delivery and performance of this
Agreement and the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated
hereby and thereby do not and will not (i) conflict with or
violate any provision of the certificate of incorporation, bylaws
or other charter documents of the Company or any of the
Subsidiaries, (ii) subject to obtaining the consents referred to
in Section 2.1(f), 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 agreement,
indenture or instrument (evidencing a Company or Subsidiary debt
or otherwise) to which the Company or any Subsidiary is a party
or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation
of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to
which the Company or any Subsidiary is subject (including Federal
and state securities laws and regulations), or by which any
material property or asset of the Company or any Subsidiary is
bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations or cancellations that are
not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect).
(f) Consents and Approvals. Except as specifically set forth on
Schedule 2.1(f), neither the Company nor any Subsidiary is
required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with,
any court or other federal, state, local or other governmental
authority or other person in connection with the execution,
delivery and performance by the Company of this Agreement or the
Transaction Documents, other than (i) the filing of a
registration statement with the Securities and Exchange
Commission (the "Commission"), which shall be filed in accordance
with and in the time periods set forth in the Registration Rights
Agreement, (ii) the application(s) or any letter(s) acceptable to
the National Market System of Nasdaq Stock Market ("Nasdaq") for
the listing of the Underlying Shares with Nasdaq (and with any
other national securities exchange or market on which the Common
Stock is then listed), and (iii) any filings, notices or
registrations under applicable state securities laws (together
with the consents, waivers, authorizations, orders, notices and
filings referred to on Schedule 2.1(f), the "Required
Approvals").
(g) Litigation; Proceedings. Except as specifically set forth on
Schedule 2.1(g), there is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the
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Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative
agency or regulatory authority (federal, state, county, local or
foreign) which (i) adversely affects or challenges the legality,
validity or enforceability of any of this Agreement or the
Transaction Documents or (ii) would individually or in the
aggregate, have a Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any
indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound except for such defaults or violations that
are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect, (ii) is in violation of any order
of any court, arbitrator or governmental body applicable to it,
or (iii) is in violation of any statute, rule or regulation of
any governmental authority to which it is subject.
(i) Disclosure; Absence of Certain Changes. Neither this
Agreement, the Schedules to this Agreement, the Transaction
Documents nor the SEC Documents contains any untrue statement of
a material fact or omits to state any material fact necessary in
order to make the statements made herein and therein, in light of
the circumstances under which they were made, not misleading.
Except as disclosed on Schedule 2.1(i) or the SEC Documents filed
on XXXXX at least five business days prior to the date hereof,
since December 31, 1997, there has been no material adverse
change and no material adverse development in the business,
properties, operations, financial condition, liabilities or
results of operations or, insofar as can reasonably be foreseen,
prospects of the Company or the Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps,
to seek protection pursuant to any bankruptcy law nor does the
Company or any of its Subsidiaries have any knowledge or reason
to believe that its creditors intend to initiate involuntary
bankruptcy proceedings. No event, liability, development or
circumstance has occurred or exists, or is contemplated to occur,
with respect to the Company or its Subsidiaries or their
respective businesses, properties, operations or financial
condition or, insofar as can reasonably be foreseen, prospects,
that would be required to be disclosed by the Company under
applicable securities laws on a registration statement (including
by way of incorporation by reference) filed with the SEC, on the
date this representation is made or deemed to be made, relating
to an issuance and sale by the Company of its Common Stock and
which has not been publicly disclosed.
(j) Private Offering. The Company and all Persons acting on its
behalf have not directly or indirectly made, and will not make,
offers or sales of any securities or solicited any offers to buy
any security under circumstances that would require registration
of the Debentures, the Warrants, the Debentures Shares, the
Warrant Shares or the Underlying Shares or the issuance of such
securities under the Securities Act of 1933, as amended (the
"Act"). The issuance of the Debentures, the Warrants, the
Debenture Shares and the Warrant Shares to the Purchasers will
not be integrated with any other issuance of the Company's
securities (past, current, or future). Subject to the accuracy
and completeness of the
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representations and warranties of the respective Purchasers
contained in Section 2.2 hereof, the offer and sale by the
Company to the Purchasers of the Debentures and the Warrants is
exempt from the registration requirements of the Act.
(k) SEC Documents; Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Exchange
Act. The Company has filed all reports required to be filed by it
under the Exchange Act, including pursuant to Section 13, 14 or
15(d) thereof (the foregoing materials being collectively
referred to herein as the "SEC Documents"), on a timely basis or
has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such
extension. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the
Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents,
when filed, contained any untrue statement of a material fact or
omitted 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. All
material agreements to which the Company or any Subsidiary is a
party or to which the property or assets of the Company or any
Subsidiary are subject have been filed as exhibits to the SEC
Documents as required; neither the Company nor any of its
Subsidiaries is in breach of any agreement where such breach,
individually or in the aggregate, would have a Material Adverse
Effect. The financial statements of the Company included in the
SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto as in effect
at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all
material respects the financial position of the Company as of and
for 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.
(l) Investment Company. The Company is not, and is not controlled
by or under common control with an affiliate (an "Affiliate") of
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(m) Broker's Fees. Except for a $25,000 fee paid to Xxxxx Xxxxxxx
Asset upon execution of that certain letter agreement dated
November 25, 1998 between the Company and Xxxxx Xxxxxxx Asset and
an additional fee of $25,000 payable by the Company to Xxxxx
Xxxxxxx Asset at the Tranche A Closing, no fees or commissions or
similar payments with respect to the transactions contemplated by
this Agreement or the Transaction Documents have been paid or
will be payable by the Company to any broker, financial advisor,
finder, investment banker, or bank. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type
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contemplated in this Section 2.1(m) that may be due in connection
with the transactions contemplated by this Agreement and the
Transaction Documents.
(n) Form S-3 Eligibility. The Company is, and at the Tranche A
Closing Date and the Tranche B Closing Date will be, eligible to
register securities (including the Underlying Shares) for resale
with the Commission under Form S-3 (or any successor form)
promulgated under the Securities Act.
(o) Listing and Maintenance Requirements Compliance. The
principal market on which the Common Stock is currently traded is
Nasdaq. Except as disclosed on Schedule 2.1(o), the Company has
not in the three years preceding the date hereof received notice
(written or oral) from Nasdaq (or any stock exchange, market or
trading facility on which the Common Stock is or has been listed
(or on which it has been quoted)) to the effect that the Company
is not in compliance with the listing or maintenance requirements
of such market or exchange. The Company is not aware of any facts
which would reasonably lead to delisting or suspension of the
Common Stock by Nasdaq. After giving effect to the transactions
contemplated by this Agreement and the Transaction Documents, the
Company believes that it is and will be in compliance with all
such maintenance requirements.
(p) Patents and Trademarks. To the Company's best knowledge, the
Company or its Subsidiaries has, or has rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights
(collectively, the "Intellectual Property Rights") which are
necessary for use in connection with its business, as currently
conducted and as described in the SEC Documents. To the best
knowledge of the Company, there is no existing infringement by
another Person of any of the Intellectual Property Rights which
are necessary for use in connection with the Company's business
which would, individually or in the aggregate, have a Material
Adverse Effect and the Company is not infringing on any other
person's Intellectual Property Rights.
(q) Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the
knowledge of the Company or any of its Subsidiaries, is any such
dispute threatened. Neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and
the Company and its Subsidiaries believe that relations with
their employees are good. Except as set forth on Schedule 2.1(q),
no executive officer (as defined in Rule 501(f) of the Act) has
notified the Company that such officer intends to leave the
Company or otherwise terminate such officer's employment with the
Company.
(r) Registration Rights; Rights of Participation. Except as
described on Schedule 2.1(r) hereto, (i) the Company has not
granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental
authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of
the Company, underwriters, brokers or agents, has any right of
first refusal, preemptive right, right of
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participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction
Document.
(s) Title. Except as disclosed on Schedule 2.1(s), the Company
and the Subsidiaries have good and marketable title in fee simple
to all real property and personal property owned by them which is
material to the business of the Company and its Subsidiaries, in
each case free and clear of all Liens, except for Liens that do
not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries. Any real property
and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and, to the
Company's best knowledge, enforceable leases with such exceptions
as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company
and the Subsidiaries.
(t) Permits. The Company and the Subsidiaries possess all
certificates, authorizations, licenses, easements, consents,
approvals, orders and permits necessary to own, lease and operate
their respective properties and to conduct their respective
businesses as currently conducted except where the failure to
possess such permits would not, individually or in the aggregate,
have a Material Adverse Effect ("Material Permits"), and there is
no proceeding pending, or, to the knowledge of the Company,
threatened relating to the revocation, modification, suspension
or cancellation of any Material Permit. Neither the Company nor
any of the Subsidiaries is in conflict with or default or
violation of any Material Permit.
(u) Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged.
Neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverages as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue
its business.
(v) Internal Accounting Controls. The Company and each of the
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(w) Tax Status; Firpta. The Company and each of the Subsidiaries
has made or filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books
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provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on
it books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no
basis for any such claim. The Company is not a "United States
real property holding corporation" within the meaning of Section
847(c)(2) of the Internal Revenue Code of 1986, as amended.
(x) Transactions With Affiliates. Except as set forth on Schedule
2.1(c) or Schedule 2.1(x), none of the officers, directors, or
employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to
or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or
entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or
partner.
(y) [Intentionally omitted.]
(z) Environmental Laws. The Company and its Subsidiaries (i) are
in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permits, licenses or
other approvals except where the failure of any of the foregoing
would not result in a Material Adverse Effect.
(aa) Foreign Corrupt Practices. To the Company's best knowledge,
neither the Company, nor any of its Subsidiaries, nor any
director, officer, agent, employee or other person acting on
behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company used any
corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political
activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee form
corporate funds; violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic
government official or employee.
(bb) Solicitation Materials. The Company has not (i) distributed
any offering materials in connection with the offering and sale
of the Debentures or the Warrants, other than the SEC Documents,
the Schedules to this Agreement, any
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amendments and supplements thereto and the materials listed on
Schedule 2.1(bb), or (ii) solicited any offer to buy or sell the
Debentures or the Warrants by means of any form of general
solicitation or advertising.
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II.2 Representations and Warranties of the Purchasers. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to
the Company as follows:
(a) Organization; Authority. Such Purchaser is a corporation or a
limited duration company duly incorporated or a limited liability
company or limited partnership duly formed, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation or formation with the requisite power and
authority, corporate or otherwise, to enter into and to
consummate the transactions contemplated hereby and by the
Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The purchase by such Purchaser of the
Debentures and the Warrants hereunder has been duly authorized by
all necessary action on the part of such Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly
executed and delivered by such Purchaser and constitutes the
valid and legally binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights
generally and to general principles of equity.
(b) Investment Intent. Such Purchaser is acquiring the Debentures
and the Warrants for its own account for investment purposes only
and not with a view to or for distributing or reselling the
Debentures, the Warrants, the Debentures Shares or the Warrant
Shares or any part thereof or interest therein in violation of
any securities laws; provided, however, that by making the
representations herein, such Purchaser does not agree to hold any
of the Debentures, the Warrants, the Debentures Shares or the
Warrant Shares for any minimum or other specific term and
reserves the right to dispose of the securities at any time in
accordance with or pursuant to a registration statement or an
exemption under the Act.
(c) Purchaser Status. At the time such Purchaser was offered the
Debentures and the Warrants, and at the Tranche A Closing Date
and the Tranche B Closing Date, (i) it was and will be an
"accredited investor" as defined in Rule 501 under the Act or
(ii) such Purchaser, either alone or together with its
representatives, had and will have such knowledge, sophistication
and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective
investment in the Debentures and the Warrants.
(d) Reliance. Each Purchaser understands and acknowledges that
(i) the Debentures and the Warrants are being offered and sold to
the Purchaser without registration under the Act in a private
placement that is exempt from the registration provisions of the
Act under Section 4(2) of the Act or Regulation D promulgated
thereunder and (ii) the availability of such exemption, depends
in part on, and the Company will rely upon the accuracy and
truthfulness of, the representations set forth in this Section
2.2 and such Purchaser hereby consents to such reliance.
(e) Information. Each Purchaser 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 Debentures and Warrants which have been
requested by the Purchaser or its advisors. The Purchaser and its
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advisors, if any, have been afforded the opportunity to ask
questions of the Company and have received what the Purchaser
believes to be satisfactory answer to any such inquiries. Neither
such inquiries nor any other due diligence investigation
conducted by Purchaser or any of its advisors or representatives
shall modify, amend or affect Purchaser's right to rely on the
Company's representations and warranties contained in Section 2.1
above. The Purchaser understands that its investment in the
Debentures and Warrants involves a significant degree of risk.
(f) Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or
endorsement of the Debentures or Warrants.
(g) Residency. Each Purchaser is a resident of the jurisdiction
set forth immediately below such Purchaser's name on the
signature pages hereto.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
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ARTICLE III.
OTHER AGREEMENTS
III.1 Transfer Restrictions.
(a) If any Purchaser should decide to dispose of the Debentures,
the Warrants, the Debentures Shares or the Warrant Shares held by
it, each Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Act, to
the Company or pursuant to an available exemption from the
registration requirements of the Act. In connection with any
transfer of any Debentures, Warrants, Debenture Shares or Warrant
Shares other than pursuant to an effective registration statement
or to the Company, the Company may require the transferor thereof
to provide to the Company a written opinion of counsel
experienced in the area of United States securities laws selected
by the transferor, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect that
such transfer does not require registration of such transferred
securities under the Act; provided, however, that if the
Debentures, Warrants, Debenture Shares or Warrant Shares may be
sold pursuant to Rule 144(k), no written opinion of counsel shall
be required unless a written opinion of counsel is required by
any transfer agent. Notwithstanding the foregoing, the Company
hereby consents to and agrees to register any transfer by any
Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Act. Any such
transferee shall be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.
(b) Each Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the
Debentures, the Warrants, the Debenture Shares and the Warrant
Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT.
Neither the Debentures, the Warrants, the Debenture Shares, nor
the Warrant Shares shall contain the legend set forth above if (i) the issuance
of any of such securities occurs at any time while the Registration Statement
(as defined in the Registration Rights Agreement) is effective under the Act,
(ii) in the written opinion of counsel to the Company experienced in the area of
United States securities laws such legend is not required under applicable
requirements of the Act (including judicial interpretations and pronouncements
issued by the staff of the Commission) or (iii) such Debentures, Warrants,
Debenture Shares or Warrant Shares may be
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sold pursuant to Rule 144. The Company agrees that it will provide each
Purchaser, upon request, with a certificate or certificates representing
Debentures, Warrants, Debenture Shares or Warrant Shares, free from such legend
at such time as such legend is no longer required hereunder.
III.2 Stop Transfer Instruction. The Company may make notations on its
records or give instructions to any transfer agent with regard to the
restrictions on transfer set forth in Section 3.1; provided, however,
the Company may not make any notation on its records or give
instructions to any transfer agent of the Company which enlarge the
restrictions on transfer set forth in Section 3.1.
III.3 Furnishing of Information. As long as any Purchaser owns the
Debentures, the Warrants, the Debenture Shares or the Warrant Shares,
the Company will cause the Common Stock to continue at all times to be
registered under 12(g) of the Exchange Act, will timely file (or obtain
extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date
hereof pursuant to Section 13, 14 or 15(d) of the Exchange Act and will
not take any action or file any document (whether or not permitted by
the Exchange Act or the rules thereunder) to terminate or suspend such
reporting and filing obligations. The Company further covenants that it
will take such further action as any holder of the Debentures, the
Warrants, the Debenture Shares or the Warrant Shares may reasonably
request, all to the extent required from time to time to enable such
Person to sell the Debentures, the Warrants, the Debenture Shares, or
the Warrant Shares without registration under the Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Act.
III.4 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall qualify the Debentures Shares and the
Warrant Shares under the securities or Blue Sky laws of such
jurisdictions as the Purchasers may request and shall continue such
qualification at all times through the third anniversary of the Tranche
B Closing Date.
III.5 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Act) that would be integrated with the offer
or sale of the Debentures, the Warrants, the Debenture Shares or the
Warrant Shares in a manner that would require the registration under the
Act of the sale of the Debentures, the Warrants, the Debenture Shares or
the Warrant Shares to any Purchaser.
III.6 Listing and Reservation of Debenture Shares and Warrant Shares.
(a) The Company shall (i) not later than 5 days after the Tranche
A Closing Date prepare and file with Nasdaq (as well as any other
national securities exchange or market on which the Common Stock
is then listed) an additional shares listing application or a
letter acceptable to Nasdaq covering and listing a number of
shares of Common Stock which is at least equal to the aggregate
amount of Underlying Shares sold or to be sold in the Tranche A
Closing and Tranche B Closing, (ii) take all steps necessary to
cause the Underlying Shares to be approved for listing on Nasdaq
(as well as on any other national securities exchange or market
on which the Common Stock is then listed) as soon as possible
thereafter and (iii) provide to the Purchasers evidence of such
listing.
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Neither the Company nor any of its Subsidiaries shall take any
action which may result in the delisting or suspension of the
Common Stock on Nasdaq. The Company shall promptly provide to
each Purchaser copies of any notices it receives from Nasdaq
regarding the continued eligibility of the Common Stock for
listing on such automated quotation system.
(b) The Company at all times shall reserve the number of shares
of its authorized but unissued Common Stock which would be
issuable upon conversion of the Debentures and exercise of the
Warrants. Shares of Common Stock reserved for issuance upon
conversion of the Debentures and the exercise of the Warrants
shall be allocated pro rata to each of the Purchasers in
accordance with the amount of Debentures and Warrants issued and
delivered to such Purchaser at the Tranche A Closing and Tranche
B Closing, as applicable.
III.7 Notice of Breaches.
(a) The Company and each Purchaser shall give prompt written
notice to the other of any breach by it of any representation,
warranty or other agreement contained in this Agreement or in the
Registration Rights Agreement, as well as any events or
occurrences arising after the date hereof and prior to the
Tranche A Closing Date or the Tranche B Closing Date, as
applicable, which would reasonably be likely to cause any
representation or warranty or other agreement of such party, as
the case may be, contained herein to be incorrect or breached as
of such Closing Date provided such notice will not constitute
material non-public information. However, no disclosure by either
party pursuant to this Section 3.7 shall be deemed to cure any
breach of any representation, warranty or other agreement
contained herein or in the Registration Rights Agreement.
(b) Notwithstanding the generality of Section 3.7(a), the Company
shall promptly notify, provided such notification will not
constitute material non-public information, each Purchaser of any
notice or claim (written or oral) that it receives from any
lender of the Company or any Subsidiary to the effect that the
consummation of the transactions contemplated hereby and by the
Registration Rights Agreement violates or would violate any
written agreement or understanding between such lender and the
Company or any Subsidiary, and the Company shall promptly furnish
by facsimile to the Purchasers a copy of any written statement in
support of or relating to such claim or notice.
(c) The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the
Registration Rights Agreement shall not be imputed to, and shall
have no effect upon, any other Purchaser or affect the Company's
obligations under this Agreement or any Transaction Document to
any non-defaulting Purchaser.
III.8 Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Debentures and Warrants as required by Rule 506 under
Regulation D and to provide a copy thereof to each Purchaser promptly
after such filing. The Company shall, on or before the applicable
closing, take such action as the Company shall reasonably determine is
necessary to qualify the Debentures and Warrants for sale to the
Purchasers at the applicable closing pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United
States (or to obtain an exemption from such
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qualification), and shall provide evidence of any such action so taken
to each Purchaser on or prior to the applicable closing.
III.9 Future Financings. Except for (i) those transactions contemplated
by the Company and Xxxx Xxxx Capital Management, L.P. and certain other
investors pursuant to which the Company intends to complete a private
placement of Common Stock (as described in Schedule 2.1(c) hereto); (ii)
issuance of the Underlying Shares; (iii) shares of Common Stock deemed
to have been issued by the Company in connection with any contract, plan
or agreement which has been approved by the Board of Directors of the
Company, pursuant to which the Company's securities may be issued to any
employee, officer, director or consultant of the Company; (iv) shares of
Common Stock issuable upon the exercise of any options or warrants
outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (v)
shares of Common Stock issued or deemed to have been issued in a
Strategic Venture (as defined below); or (vi) shares of Common Stock
issued or deemed to have been issued as consideration for an acquisition
by the Company of a division, assets or business (or stock constituting
any portion thereof) from another person, if the Company agrees to issue
Securities prior to the first anniversary of the Tranche A Closing Date
at an effective price per share of less than an amount equal to the
Conversion Price (as defined in the Debentures) of the Debentures as of
the date hereof and Debentures are still then outstanding (a "Future
Financing"), the Company shall provide by 5:00 p.m. (New York time) on
the third (3rd) Trading Day after the decision to issue the Securities
has been made, written notice of the Future Financing containing in
reasonable detail (i) the proposed terms of the Future Financing, (ii)
the amount of the proceeds that will be raised and (iii) the Person with
whom such Future Financing shall be effected, and attached to which
shall be a term sheet or similar document relating thereto (the "Future
Financing Notice"). Upon receiving the Future Financing Notice, each
Purchaser shall have the pro rata right to purchase, on the same terms
as the Future Financing, an amount of Securities not to exceed the sum
of (i) the number of Securities which may be purchased by the amount of
the then outstanding principal amount of and any interest owing on such
Purchaser's Debenture and (ii) the number of Securities which is the
product of the Exercise Price (as defined in the Warrants) multiplied by
that number of shares of Common Stock underlying the Warrant. In the
event a Purchaser desires to exercise the right granted under this
Section 3.9, such Purchaser must notify the Company on or prior to the
fifth (5th) Trading Day after the Purchaser has received the Future
Financing Notice. In the event one or more Purchasers elects not to
exercise its rights granted hereby, the Company shall permit those
Purchasers electing to exercise the right granted under this Section 3.9
to purchase, on a basis equal to its percentage ownership of the then
aggregate outstanding principal of the Debentures, the sum of the number
of Securities that the other Purchaser(s) were eligible to Purchase, if
they had exercised their right hereunder. Those Purchasers desiring to
purchase additional Securities must notify the Company of their
intention to do so within three (3) Trading Days after the Company has
informed the Purchasers of their right to purchase additional
Securities. Within five (5) Trading Days of the termination of the final
notice period, the transactions contemplated by this Section 3.9 shall
close and the Company shall tender to each Purchaser certificates
representing that number of the Securities that it agreed to purchase
and the Purchasers shall make payment for the entire purchase price in
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immediately available funds at the closing of such sale; provided,
however, that each Purchaser, in lieu of providing cash as consideration
for the purchase price, may retire all or a portion of the outstanding
principal amount of and any interest owing on the Debentures as payment
of the purchase price for the Securities that it desires to purchase
pursuant to this Section 3.9. "Strategic Venture" shall mean a venture
between the Company and a pharmaceutical or biotechnology company or an
Affiliate thereof, the primary purpose of which is not to raise capital
in the form of equity (including without limitation through the issuance
of warrants, convertible securities, phantom stock rights, stock
appreciation rights or other rights with equity features) and pursuant
to which the Company contributes or issues securities of the Company
valued at less than 50% of the entire contribution of the Company.
III.10 Use of Proceeds. The Company shall use the proceeds from the sale
of the Debentures and the exercise of the Warrants for general corporate
purposes and shall not, directly or indirectly, other than in connection
with a strategic or research collaboration, use such proceeds for any
loan to or investment in any other corporation, partnership, enterprise
or other Person.
III.11 Reimbursement. In the event that any Purchaser, other than by
reason of its gross negligence or willful misconduct, becomes involved
in any capacity in any action, proceeding or investigation brought by or
against any person, including shareholders of the Company, in connection
with or as a result of (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement or the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or
the Transaction Documents or any other certificate, instrument or
document hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Purchaser and arising out of or resulting
from the execution, delivery, performance or enforcement of this
Agreement or the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, the Company will
reimburse such Purchaser for its legal and other actual out-of-pocket
expenses (including the cost of any investigation and preparation)
incurred in connection therewith. The 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 affiliate of the Purchasers and partners, directors,
agents, employees and controlling persons (if any), as the case may be,
of the Purchasers and any such affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such affiliate
and any such Person. The Company also agrees that neither the Purchasers
or any such Affiliates, partners, directors, agents, employees or
controlling persons 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
any of the Transaction Documents except to the extent that any losses,
claims, damages, liabilities or expenses incurred by the Company result
from the gross negligence or willful misconduct of such Purchaser or
entity in connection with the transactions contemplated by this
Agreement or the Registration
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Rights Agreement. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of its obligations
hereunder which is permissible under applicable law.
III.12 [Reserved.]
III.13 Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent,
to issue certificates, registered in the name of each Purchaser or its
respective nominee(s), for the Debenture Shares and the Warrant Shares
in such amounts as specified from time to time by each Purchaser to the
Company in a form acceptable to the Purchasers (the "Irrevocable
Transfer Agent Instructions"). Prior to registration of the Debenture
Shares and Warrant Shares under the Act, all such certificates shall
bear the restrictive legend specified in Section 3.1(b) of this
Agreement. The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section
3.13, and stop transfer instructions to give effect to Section 3.1
hereof, prior to registration of the Debenture Shares and the Warrant
Shares under the Act, will be given by the Company to its transfer agent
and that the Debentures, the Warrants, the Debenture Shares and the
Warrant Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. If a Purchaser provides the
Company with an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that a public sale,
assignment or transfer of the Debentures, the Debenture Shares, the
Warrants and the Warrant Shares may be made without registration under
the Act or the Purchaser provides the Company with reasonable assurances
that the Warrants, the Debenture Shares and the Warrant Shares can be
sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately
sold, the Company shall permit the transfer, and, in the case of the
Debenture Shares and the Warrant Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such
denominations as specified by such Purchaser and without any restrictive
legend. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Purchasers by violating the
intent and purpose of the transactions contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 3.13 will be inadequate and agrees, in
the event of a beach or threatened breach by the Company of the
provisions of this Section 3.13, that the Purchasers, shall be entitled,
in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any
bond or other security being required.
III.14 Filing of Form 8-K. On or before the 10th business day following
each of the Tranche A Closing Date and the Tranche B Closing Date, the
Company shall file a Form 8-K with the Commission describing the terms
of the transaction contemplated by this Agreement and the Transaction
Documents in the form required by the Exchange Act.
III.15 Ordinary Course Brokerage and Trading. Subject to compliance with
all applicable securities laws and Nasdaq regulations, no Purchaser
shall be prohibited from engaging in its ordinary course brokerage and
trading activities in respect of the
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Company's Common Stock (including establishing short positions);
provided that the personnel engaged in such activities have not been
involved with the transactions contemplated hereby and have not been
provided with confidential information with respect to the Company.
ARTICLE IV.
CONDITIONS
IV.1 (a) Conditions Precedent to the Obligation of the Company to Sell
the Tranche A Debentures and Tranche A Warrants. The obligation of the
Company to sell the Tranche A Debentures and Tranche A Warrants (and to
pay the Xxxxx Xxxxxxx Asset Fee) hereunder is subject to the
satisfaction or waiver (with prior written notice to each Purchaser) by
the Company, at or before the Tranche A Closing, of each of the
following conditions:
(i) Accuracy of the Purchasers' Representations and
Warranties. The representations and warranties of each
Purchaser in this Agreement shall be true and correct in
all material respects as of the date when made and as of
the Tranche A Closing Date;
(ii) Performance by the Purchasers. Each Purchaser shall
have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by such Purchaser at or prior to the Tranche
A Closing; and
(iii) 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 or the
Transaction Documents.
(a) Conditions Precedent to the Obligation of the Purchasers to
Purchase the Tranche A Debentures and Tranche A Warrants. The
obligation of each Purchaser hereunder to acquire and pay for the
Tranche A Debentures and Tranche A Warrants is subject to the
satisfaction or waiver (with prior written notice to the Company)
by such Purchaser, at or before the Tranche A Closing, of each of
the following conditions:
(i) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the
Company set forth in this Agreement shall be true and
correct in all material respects as of the date when made
and as of the Tranche A Closing Date;
(ii) 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 to be performed, satisfied or complied with
by the Company at or prior to the Tranche A Closing;
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or
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endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of
any of the transactions contemplated by this Agreement and
the Transaction Documents;
(iv) No Suspensions of Trading in Common Stock. The
trading in the Common Stock shall not have been suspended
by the Commission or on Nasdaq which suspension shall
remain in effect;
(v) Listing of Common Stock. The Common Stock shall have
been at all times since the date hereof, and on the
Tranche A Closing Date shall be, listed for trading on
Nasdaq;
(vi) Required Approvals. All Required Approvals shall have
been obtained other than those relating solely to the
Tranche B Debentures and Tranche B Warrants;
(vii) Shares of Common Stock. The Company shall have duly
reserved the number of Underlying Shares required by this
Agreement and the Transaction Documents to be reserved for
issuance upon conversion of the Tranche A Debentures and
the exercise of the Tranche A Warrants;
(viii) Change of Control. No Change of Control shall have
occurred between the date hereof and the Tranche A Closing
Date. "Change of Control" means the occurrence of any of
(i) an acquisition after the date hereof by an individual
or legal entity or "group" (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act), other
than the Purchasers or any of their Affiliates, of in
excess of 50% of the voting securities of the Company,
(ii) a replacement of more than one-half of the members of
the Company's Board of Directors which is not approved by
those individuals who are members of the Board of
Directors on the date hereof in one or a series of related
transactions, (iii) the merger of the Company with or into
another entity, consolidation or sale of all or
substantially all of the assets of the Company in one or a
series of related transactions or (iv) the execution by
the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the
events set forth above in (i), (ii) or (iii); and
(ix) Transfer Agent Instructions. The Irrevocable Transfer
Agent Instructions, in a form acceptable to the
Purchasers, shall have been delivered to and acknowledged
in writing by the Company's transfer agent.
(b) Documents and Certificates. At the Tranche A Closing, the
Company shall have delivered to the Purchasers the following in
form and substance reasonably satisfactory to the Purchasers:
(i) An opinion of the Company's legal counsel in the form
attached hereto as Exhibit C dated as of the Tranche A
Closing Date;
(ii) A Debenture(s) representing the principal amount of
Tranche A Debentures purchased by such Purchaser as set
forth next to such Purchaser's name on Schedule I,
registered in the name of such Purchaser, each in form
satisfactory to the Purchaser;
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(iii) A Warrant(s) representing the Tranche A Warrants
purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of
such Purchaser;
(iv) The Company shall have executed and delivered the
Registration Rights Agreement;
(v) Officer's Certificate. An Officer's Certificate dated
the Tranche A Closing Date and signed by an executive
officer of the Company confirming the accuracy of the
Company's representations, warranties and covenants as of
such Closing Date and confirming the compliance by the
Company with the conditions precedent set forth in this
Section 4.1 as of the Tranche A Closing Date.
(vi) Secretary's Certificate. A Secretary's Certificate
dated the Tranche A Closing Date and signed by the
Secretary or Assistant Secretary of the Company certifying
(A) that attached thereto is a true and complete copy of
the Certificate of Incorporation of the Company, as in
effect on the Tranche A Closing Date, (B) that attached
thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Tranche A Closing Date and
(C) that attached thereto is a true and complete copy of
the resolutions duly adopted by the Board of Directors of
the Company authorizing the execution, delivery and
performance this Agreement and of the Transaction
Documents, and that such resolutions have not been
modified, rescinded or revoked.
IV.2 (a) Conditions Precedent to the Obligation of the Company to Sell
the Tranche B Debentures and Tranche B Warrants. The obligation of the
Company to sell the Tranche B Debentures and Tranche B Warrants
hereunder is subject to the satisfaction or waiver (with prior written
notice to each Purchaser) by the Company, at or before the Tranche B
Closing, of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and
Warranties. The representations and warranties of each
Purchaser in this Agreement shall be true and correct in
all material respects as of the date when made and as of
the Tranche B Closing Date (except for representations and
warranties that speak as of a specific date);
(ii) Performance by the Purchasers. Each Purchaser shall
have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by such Purchaser at or prior to the Tranche
B Closing; and
(iii) 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 and the
Transaction Documents.
(a) Conditions Precedent to the Obligation of the Purchasers to
Purchase the Tranche B Debentures and Tranche B Warrants. The
obligation of each Purchaser hereunder to acquire and pay for the
Tranche B Debentures and Tranche B
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Warrants is subject to the satisfaction or waiver (with prior
written notice to the Company) by each Purchaser, at or before
the Tranche B Closing, of each of the following conditions:
(i) Tranche A Closing. The Tranche A Closing shall have
occurred;
(ii) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all
material respects as of the date when made and in all
material respects as of the Tranche B Closing Date (except
for representations and warranties that speak as of a
specific date);
(iii) 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 and the Transfer Documents to be performed,
satisfied or complied with by the Company at or prior to
the Tranche B Closing Date;
(iv) 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 and the
Transaction Documents;
(v) Effective Registration Statement. The Registration
Statement with respect to the Underlying Shares shall have
been declared and shall be effective under the Act by the
Commission; not subject to any stop order and not be
subject to any suspension pursuant to Section 3(p) of the
Registration Rights Agreement, and shall have been
effective and shall not have been subject to any stop
order for the thirty (30) business days prior to such
Closing Date and no stop order shall be pending or
threatened as at such Closing Date;
(vi) No Suspensions of Trading in Common Stock. The
trading in the Common Stock shall not have been suspended
by the Commission or on Nasdaq (except for any suspension
of trading of limited duration solely to permit
dissemination of material information regarding the
Company);
(vii) Listing of Common Stock. The Common Stock shall have
been at all times since the date hereof and, on the
Tranche B Closing Date the Common Stock, including the
Underlying Shares, shall be listed for trading on Nasdaq;
(viii) Required Approvals. All Required Approvals shall
have been obtained;
(ix) Shares of Common Stock. The Company shall have duly
reserved the number of Underlying Shares required by this
Agreement to be reserved for issuance upon conversion of
the Tranche B Debentures and exercise of the Tranche B
Warrants;
(x) Change of Control. No Change of Control in the Company
shall have occurred; and
(xi) Transfer Agent Instructions. The Irrevocable Transfer
Agent Instructions, in a form acceptable to the
Purchasers, shall have been
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delivered to and acknowledged in writing by the Company's
transfer agent.
(b) Documents and Certificates. At the Tranche B Closing, the
Company shall have delivered to the Purchasers the following in
form and substance reasonably satisfactory to the Purchasers:
(i) An opinion of the Company's legal counsel, in
substantially the form attached hereto as Exhibit C dated
as of the Tranche B Closing Date;
(ii) A Debenture(s) representing the principal amount of
Tranche B Debentures purchased by such Purchaser as set
forth next to such Purchaser's name on Schedule I,
registered in the name of such Purchaser, each in form
satisfactory to the Purchaser;
(iii) a Warrant(s) representing the Tranche B Warrants
being purchased by such Purchaser as set forth next to
such Purchaser's name on Schedule I, registered in the
name of such Purchaser;
(iv) Officer's Certificate. The Company shall deliver to
the Purchasers an Officer's Certificate dated the Tranche
B Closing Date and signed by an executive officer of the
Company confirming the accuracy of the Company's
representations, warranties and covenants as of the
Tranche B Closing Date and confirming the compliance by
the Company with the conditions precedent set forth in
this Section 4.2 as of the Tranche B Closing Date; and
(v) Secretary's Certificate. A Secretary's Certificate
dated the Tranche B Closing Date and signed by the
Secretary or Assistant Secretary of the Company certifying
(A) that attached thereto is a true and complete copy of
the Certificate of Incorporation of the Company, as in
effect on the Tranche B Closing Date, (B) that attached
thereto is a true and complete copy of the bylaws of the
Company, as in effect on the Tranche B Closing Date and
(C) that attached thereto is a true and complete copy of
the resolutions duly adopted by the Board of Directors of
the Company authorizing the execution, delivery and
performance of the Agreement and the Transaction Documents
and that such resolutions have not been modified,
rescinded or revoked.
ARTICLE V.
MISCELLANEOUS
V.1 Fees and Expenses. Except as set forth in the Registration Rights
Agreement and as otherwise set forth in this Agreement, each party shall
pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Debenture
Shares and the Warrant Shares pursuant hereto.
V.2 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules hereto and the Registration Rights Agreement
contain the entire understanding
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of the parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, oral or written, with respect
to such matters.
V.3 Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been
received (a) upon hand delivery (receipt acknowledged) or delivery by
telex (with correct answer back received), telecopy or facsimile (with
transmission confirmation report) at the address or number designated
below (if received by 8:00 p.m. EST where such notice is to be
received), or the first business day following such delivery (if
delivered on a business day after 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 are
(i) if to the Company to Geron Corporation, 000 Xxxxxxxxxxxx Xxxxx,
Xxxxx Xxxx, Xxxxxxxxxx 00000 attn: Xxxxx Xxxxxxxxx, fax no. (650)
473-7701 and (ii) if to any Purchaser to the address as set forth on
Schedule II hereto with copies to Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxx Xxxx,
fax no. (000) 000-0000, or such other address as may be designated in
writing hereafter, in the same manner, by such Person.
V.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchasers or, in the case of a
waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter. Notwithstanding
the foregoing, no such amendment shall be effective to the extent that
it applies to less than all of the holders of the Debentures
outstanding. The Company shall not offer or pay any consideration to a
Purchaser for consenting to such an amendment or waiver unless the same
consideration is offered to each Purchaser and the same consideration is
paid to each Purchaser which consents to such amendment or waiver.
V.5 Headings; Interpretive Matters. The headings herein are for
convenience only, do not constitute a part of this Agreement and shall
not be deemed to limit or affect any of the provisions hereof. No
provision of this Agreement will be interpreted in favor of, or against,
any of the parties hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason
of the extent to which any such provision is inconsistent with any prior
draft hereof or thereof.
V.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each of the
Purchasers. The Purchasers may assign this Agreement or any rights or
obligations hereunder to any Affiliate thereof without the prior written
consent of the Company, except that any assignees must make the
representations and warranties set forth in Section 2.2 and otherwise
comply with the terms of this Agreement otherwise applicable to its
assignor. This provision shall not limit a Purchaser's right to transfer
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securities in accordance with all of the terms of this Agreement or
under the Registration Rights Agreement.
V.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof
be enforced by, any other Person.
V.8 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the nonexclusive jurisdiction of the state
and federal courts sitting in the City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.
V.9 Survival. The agreements, covenants, representations, warranties and
provisions contained in this Agreement shall survive the delivery of the
Debentures and the Warrants pursuant to this Agreement and each closing
hereunder and any conversion of the Debentures or exercise of the
Warrants.
V.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an
original thereof.
V.11 Publicity. The Company and each Purchaser shall consult with each
other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any
such public statement without the prior written consent of the other,
which consent shall not be unreasonably withheld or delayed, except that
no prior consent shall be required if such disclosure is required by
law, in which such case the disclosing party shall provide the other
party with prior notice of such public statement. The Company shall not
publicly or otherwise disclose the names of any of the Purchasers
without each such Purchaser's prior written consent.
V.12 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision
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which shall be a reasonable substitute therefor, and upon so agreeing,
shall incorporate such substitute provision in this Agreement.
V.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations
of the Company under this Agreement or the Transaction Documents without
the showing of economic loss and without any bond or other security
being required. Each of the Company and the Purchasers (severally and
not jointly) agree that monetary damages would not be adequate
compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agrees to
waive in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
V.14 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with
the obligations of the other Purchasers hereunder, and no Purchaser
shall be responsible in any way for the performance of the obligations
of any other Purchaser hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action
taken by any Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such
obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of
the Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
V.15 Payment Set Aside. To the extent that the Company makes a payment
or payments to the Purchasers hereunder or pursuant to the Registration
Rights Agreement or the Purchasers enforce or exercise their rights
hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently
invalidated, declared fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under
any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or
setoff had not occurred.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
GERON CORPORATION
By:
---------------------------------------
Name:
Title:
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By:
---------------------------------------
Name: Xxxxxxxx Xxxx
Title: Principal
Residence: Grand Cayman, Cayman Islands
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By:
---------------------------------------
Name: Xxxxxxxx Xxxx
Title: Principal
Residence: New York, New York
LB I GROUP INC.
By:
---------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Senior Vice President
Residence: New York, New York
30
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P., Investment Manager
BY: RGC GENERAL PARTNER CORP.,
AS GENERAL PARTNER
By:
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
Residence: Grand Cayman, Cayman Islands
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Schedule I
Principal
Amount of Principal Amount
Convertible of Convertible
Debentures at Debentures at
Tranche A No. of Tranche A Tranche B No. of Tranche B
Name of Purchaser Closing Date Warrants Closing Date Warrants
----------------- ------------ ---------------- ---------------- ----------------
Xxxxx Xxxxxxx
Strategic Growth Fund,
Ltd. $1,400,000 116,667 [$2,000,000 to
be allocated
between Xxxxx
Xxxxxxx
Strategic Growth
Fund, Ltd. and
Xxxxx Xxxxxxx
Strategic Growth
Fund, L.P.]
Xxxxx Xxxxxxx
Strategic Growth Fund,
L.P.
$600,000 50,000
LB I Group Inc. $3,000,000 250,000 $3,000,000
RGC International $2,500,000 208,333 $2,500,000
Investors, LDC
--------
(1) As may be adjusted from time to time in accordance with and subject to
paragraph 6 of the Warrant.
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Schedule II
Name of Purchaser Address
----------------- -------
Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Xxxxx Xxxxxxx Strategic Growth Fund, L.P. 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
LB I Group Inc. c/x Xxxxxx Brothers, Inc.
3 World Financial Center
New York, New York 10285
Attn: Xxxxx Jenirs
Fax: (000) 000-0000
RGC International Investors, LDC c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Fax: (000) 000-0000
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