SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement"),
dated as of December 13, 1999, by and among HYBRIDON, INC., a
Delaware corporation (the "Company"), and the Persons listed
on the signature pages hereof (the "Current Purchasers") and
such other Persons that from time to time hereafter may become
party hereto pursuant to Section 13.10 (the "Additional
Purchasers" and, collectively with the Current Purchasers, the
"Purchasers").
The Company desires to issue and sell to Purchasers, and
Purchasers desire to purchase from the Company, Notes due 2002 (the "Notes") in
substantially the form attached hereto as Exhibit A, upon and subject to the
terms and conditions hereinafter set forth. As used herein, the term "Offering"
shall mean the offering of Notes by the Company during the Offering Period
hereinafter referred to pursuant to this Agreement and substantially similar
agreements.
Accordingly, in consideration of the premises and the mutual
agreements contained herein, Purchasers and the Company hereby agree as follows:
1. Purchase and Sale of the Notes. Subject to the terms and
conditions set forth herein, the Company hereby agrees to issue and sell to
Purchasers, and Purchasers, severally and not jointly, hereby agree to purchase
from the Company Notes. The aggregate purchase price for the respective Notes
sold to each Purchaser pursuant to this Agreement shall be one hundred percent
(100%) of the aggregate principal amount of such Notes. "Operative Documents" as
used herein shall mean this Agreement, the Notes, the Subordination and
Intercreditor Agreement of even date herewith (the "Intercreditor Agreement")
and the form of Warrant Agreement attached hereto as Exhibit B (the "Warrant
Agreement").
2. Delivery of Notes.
2.1. Delivery of Notes. (a) The Company shall offer the Notes
for sale. Upon receipt of subscriptions for Notes pursuant to the Offering, the
Company may conduct an initial closing (any closing hereunder, a "Closing" and
the date thereof, a "Closing Date") and may conduct subsequent Closings on an
interim basis during the Offering Period. The Offering Period shall terminate at
12:00 noon (New York Time) on December 31, 1999, subject to extension at the
sole option of the Company, for an additional 60 days (the "Termination Date").
(b) Contemporaneously with the execution and delivery of this
Agreement by a Purchaser and pending the sale of Notes at a Closing, such
Purchaser will be required to deposit the Purchase Price in escrow with the
Escrow Agent (as defined in the Escrow Agreement hereinafter referred to) by
wire transfer of immediately available funds for the account of the Escrow Agent
made payable to Xxxxxxxx & Xxxxxx, 00 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxx, 00000, Attention Xxxxxxx Xxxxxxx, pursuant to the terms of an escrow
agreement in substantially the form attached hereto as Exhibit C (the "Escrow
Agreement").
(c) At a Closing, the funds required for the purchase of the
Notes by respective Purchasers will be released by the Escrow Agent net of any
Required Deductions (as
defined in the Escrow Agreement) from the escrow account in accordance with the
terms of the Escrow Agreement. The Company will promptly deliver to Purchasers
the Notes to be purchased on the date of a Closing as set forth in Article 1
hereof against the receipt by the Company of the Purchase Price net of any
Required Deductions from escrow in accordance with the Escrow Agreement. Each
Purchaser hereby authorizes the Secured Party (as defined below) to accept
delivery of Notes on such Purchaser's behalf unless the Purchaser is in
attendance at such Closing. The Notes shall be registered in the Purchasers'
respective names or the name of the nominee(s) of such Purchasers in
denominations of $1,000 and integral multiples thereof pursuant to instructions
delivered to the Company not less than two days prior to a Closing. Interest on
each Note sold in the Offering shall accrue only from the date of issuance of
such Note.
2.2. Warrants. Pursuant to the Notes, if the Company prepays
the Notes (or any portions thereof), then the Company shall simultaneously issue
to the holders of such prepaid Notes (or portions) warrants ("Warrants") to
purchase a number of shares of Common Stock equal to the number of shares of
Common Stock then issuable upon conversion of such prepaid Notes (or the prepaid
portions thereof, if prepaid in part). The terms of the Warrants shall be as
more fully described in the Warrant Agreement between the Company ChaseMellon
Shareholder Services LLC, as Warrant Agent and the Secured Party (the "Warrant
Agreement"), a form of which is attached hereto as Exhibit B.
3. Conditions to the Obligations of Purchasers at a Closing.
The obligation of Purchasers to purchase and pay for the Notes to be purchased
by Purchasers at a Closing is subject to the satisfaction on or prior to the
relevant Closing Date of the following conditions, which may only be waived by
written consent of the Secured Party.
3.1. Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects when made, and shall be true and correct in all
material respects at and as of the date of such Closing as if they had been made
on and as of such Closing.
3.2. Performance of Covenants. All of the covenants and
agreements of the Company contained in this Agreement and required to be
performed on or prior to the relevant Closing Date shall have been performed in
a manner reasonably satisfactory to the Secured Party.
3.3. Closing Documents. The Company shall have delivered to
the Secured Party the following:
(a) a certificate executed by the President or Chief Executive
Officer of the Company dated the relevant Closing Date stating that the
conditions set forth in Sections 3.1 and 3.2 have been satisfied; and
(b) a certificate of the Secretary or Assistant Secretary of
the Company, dated the relevant Closing Date, certifying the attached copy of
the By-laws of the Company, the authorization of the execution, delivery and
performance of the Operative Documents, and the resolutions authorizing the
actions to be taken by the Company under the Operative Documents.
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3.4. No Legal Order Pending. There shall not then be in effect
any legal or other order enjoining or restraining the transactions contemplated
by this Agreement.
3.5. No Law Prohibiting or Restricting Such Sale. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale or requiring any consent or approval of any person which shall not have
been obtained to issue the Notes (except as otherwise provided in this
Agreement).
3.6. Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby to be
consummated at each Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Secured Party, including
but not limited to the authorization of the issuance of the Notes, Warrants and
the Note-Underlying Common Stock (as defined below).
4. Conditions to the Obligations of the Company at a Closing.
The obligation of the Company to issue and sell Notes to Purchasers at a Closing
is subject to the satisfaction of the following conditions, each of which may be
waived by the Company:
4.1. Representations and Warranties. The representations and
warranties of each Purchaser contained in this Agreement shall be true and
correct when made, and shall be true and correct at and as of the date of such
Closing as if they had been made on and as of such Closing.
4.2. No Law Prohibiting or Restricting Such Sale. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale or requiring any consent or approval of any person which shall not have
been obtained to issue the Notes (except as otherwise provided in this
Agreement).
5. Creation of Security Interest.
5.1. Grant of Security Interest. The Company hereby grants and
pledges to Youssef El-Zein (a representative designated by Pillar Investments
Ltd.) or a successor representative chosen, at any time, by the holders of a
majority (measured by dollar amount) of the Notes outstanding from time to time
(the "Secured Party"), solely as agent for Purchasers and not in his individual
capacity, a continuing security interest in all presently existing and hereafter
acquired or arising assets and property of the Company described on Exhibit D
hereto (the "Collateral") in order to secure prompt payment of the principal sum
and interest evidenced by the Notes, and the performance by the Company of each
of its obligations under this Agreement and the Notes. Such security interest
shall automatically terminate upon the earlier of (i) the payment of principal
and interest on the Notes and (ii) such time as the Notes are no longer
outstanding (the "Security Interest Termination Date"). Purchasers hereby
acknowledge and agree that the security interests granted hereby are subordinate
and subject to any prior security interest in the Collateral granted by the
Company, except as modified by the Intercreditor Agreement, and are subordinate
and subject to any lien granted in the future to secure Operating Indebtedness
of the Company. Purchasers and the Secured Party hereby agree not to exercise
any of their rights with respect to the Collateral under this Agreement, at law,
in equity or otherwise until the holders of Operating Indebtedness have been
paid in full.
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5.2. Designation of Secured Party as Agent. Purchasers, by
their acceptance of the benefits of this Agreement and the Notes, hereby
irrevocably designate the Secured Party to act as Secured Party with respect to
this Agreement and as specified in the other Operative Documents. Each Purchaser
hereby irrevocably authorizes, and each holder of any Note, by such holder's
acceptance of such Note, shall be deemed irrevocably to authorize, the Secured
Party to take such action on its behalf under the provisions of this Agreement
and the other Operative Documents and any other instruments and agreements
referred to herein or therein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to, or required
of, the Secured Party by the terms hereof or thereof and such other powers as
are reasonably incidental thereto. Each Purchaser, on behalf of itself and
future holders of the Notes issued to such Purchaser, hereby authorizes and
directs the Secured Party, from time to time in the Secured Party's discretion
to take any action and promptly to execute and deliver on its behalf any
document or instrument that the Company may reasonably request to effect,
confirm or evidence the provisions of this Article 5, including, without
limitation, the occurrence of the Security Interest Termination Date, any
subordination agreement, or otherwise. In addition, Purchasers and Secured Party
hereby covenant and agree promptly to execute and deliver any such document or
instrument in respect of such subordination, and in respect of the occurrence of
the Security Interest Termination Date, as the Company may reasonably request.
5.3. Delivery of Additional Documentation Required. The
Company shall from time to time execute and deliver to Secured Party, at the
request of Secured Party, all financing statements and other documents that
Secured Party may reasonably request to perfect and continue perfected Secured
Party's security interests in the Collateral and in order fully to consummate
all of the transactions contemplated under this Agreement, it being understood
and agreed by the Purchasers and the Secured Party that the Company need not
deliver possession of any Collateral to the Secured Party, take any action to
perfect the security interest granted hereby other than the filing of financing
statements under the Uniform Commercial Code or take any other action that
would, in its sole judgment, conflict with the terms of or pertaining to any
Operating Indebtedness.
6. Representations and Warranties of Purchasers. Purchasers
hereby severally represent and warrant to the Company as follows:
6.1. Investment Intent. Each Purchaser recognizes that the
purchase of the Notes involves a high degree of risk including, but not limited
to, the following: (i) the Company remains a development stage business with
limited operating history and requires substantial funds in addition to the
proceeds of the Offering; (ii) an investment in the Company is highly
speculative, and only investors who can afford the loss of their entire
investment should consider investing in the Company, the Notes, the Warrants, or
the shares of Note-Underlying Common Stock, (iii) such Purchaser may not be able
to liquidate his investment; (iv) transferability of the Notes, the Warrants and
the Note-Underlying Common Stock is extremely limited; (v) in the event of a
disposition of the Notes, the Warrants and the Note-Underlying Common Stock,
such Purchaser could sustain the loss of his entire investment and (vi) the
Company has not paid any dividends since inception and does not anticipate the
payment of dividends on the Common Stock in the foreseeable future. Such risks
are more fully set forth in the SEC Reports (as hereinafter defined).
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6.2. Lack of Liquidity. Each Purchaser confirms that he or it
is able (i) to bear the economic risk of this investment, (ii) to hold the
Notes, the Warrants and any shares of Note-Underlying Common Stock for an
indefinite period of time, and (iii) presently to afford a complete loss of his
or its investment; and represents that he or it has sufficient liquid assets so
that the illiquidity associated with this investment will not cause any undue
financial difficulties or affect such Purchaser's ability to provide for his or
its current needs and possible financial contingencies, and that his or its
commitment to all speculative investments is reasonable in relation to his or
its net worth and annual income. Furthermore, each Purchaser acknowledges that
the Warrants contain certain restrictions on exercise, voting, conversion and
certain other rights, as more particularly set forth in the Warrant Agreement
attached hereto as Exhibit B.
6.3. Knowledge and Experience. Each Purchaser hereby
acknowledges and represents that such Purchaser has prior investment experience,
including investment in securities that are non-listed, unregistered and are not
traded on the Nasdaq National or SmallCap Market, nor on the National
Association of Securities Dealers, Inc.'s (the "NASD") automated quotation
system, or such Purchaser has employed at its own expense the services of an
investment advisor, attorney and/or accountant to request documents from the
Company pursuant to Section 6.5 hereof and to read all of the documents
furnished or made available by the Company to such Purchaser and to evaluate the
investment, tax and legal merits and the consequences and risks of such a
transaction on such Purchaser's behalf, that such Purchaser or such professional
advisor has such knowledge and experience in financial and business matters and
that such Purchaser or such professional advisor is capable of evaluating the
merits and risks of the prospective investment and, if applicable, satisfies the
conditions set out in Rule 501(h) under the Securities Act.
6.4. Purchaser Capacity. Each Purchaser hereby represents that
such Purchaser either by reason of such Purchaser's business or financial
experience, or the business or financial experience of such Purchaser's
professional advisors (who are unaffiliated with, and who are not compensated
by, the Company or any affiliate or selling agent of the Company, directly or
indirectly), has the capacity to protect such Purchaser's own interests in
connection with the transaction contemplated hereby.
6.5. Receipt of Information. Each Purchaser hereby
acknowledges that such Purchaser has carefully reviewed (a) the SEC Reports and
(b) this Agreement and all attachments to it, and hereby represents that such
Purchaser has been furnished by the Company during the course of this
transaction with all information regarding the Company which such Purchaser or
its representative has requested or desired to know, has been afforded the
opportunity to ask questions of, and to receive answers from, duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering, the Notes, the Warrants and the Note-Underlying
Common Stock and the affairs of the Company and has received any additional
information which such Purchaser or its representative has requested.
6.6. Reliance on Information. Each Purchaser has relied solely
upon the information provided by the Company in the SEC Reports and in this
Agreement in making the decision to invest in the Notes. To the extent
necessary, each Purchaser has retained, at the sole expense of such Purchaser,
and relied upon, appropriate professional advice regarding the investment, tax
and legal merits and consequences of this Agreement and its purchase of the
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Notes, its potential acquisition of the Warrants and the conversion of the Notes
into, or exercise of the Warrants for, Note-Underlying Common Stock.
6.7. No Solicitation. Each Purchaser represents that (i) such
Purchaser was contacted regarding the sale of the Notes by the Company (or an
authorized agent or representative thereof) with whom such Purchaser had a prior
substantial pre-existing relationship and (ii) no Notes were offered or sold to
such Purchaser by means of any form of general solicitation or general
advertising, and in connection therewith no Purchaser (A) received or reviewed
any advertisement, article, notice or other communication published in a
newspaper or magazine or similar media or broadcast over television or radio
whether closed circuit, or generally available; or (B) attended any seminar
meeting or industry investor conference whose attendees were invited by any
general solicitation or general advertising.
6.8. Registration. Each Purchaser hereby acknowledges that the
Offering has not been reviewed by the Securities and Exchange Commission or any
state regulatory authority, since the Offering is intended to be exempt from the
registration requirements of Section 5 of the Securities Act pursuant to
Regulation D. No Purchaser shall sell or otherwise transfer the Notes, the
Warrants or any Note-Underlying Common Stock unless such securities are
registered under the Securities Act or unless an exemption from such
registration is available.
6.9. Purchase for own Account. Each Purchaser understands that
neither the Notes nor the Warrants nor any shares of Note-Underlying Common
Stock have been registered under the Securities Act by reason of a claimed
exemption under the provisions of the Securities Act which depends, in part,
upon such Purchaser's investment intention. In this connection, each Purchaser
hereby represents that such Purchaser is purchasing Notes for such Purchaser's
own account for investment and not with a view toward the resale or distribution
to others or for resale in connection with, any distribution or public offering
(within the meaning of the Securities Act), nor with any present intention of
distributing or selling the same and such Purchaser has no present or
contemplated agreement, undertaking, arrangement, obligation or commitment
providing for the disposition thereof. No Purchaser, if an entity, was formed
for the purpose of purchasing the Notes.
6.10. Holding Period. Nothing in this Section 6.10 shall be
construed to relieve the Company of its registration obligations pursuant to
Section 12, hereof. Each Purchaser understands that there is no public market
for the Notes or the Warrants and that no market is expected to develop for any
such Notes or Warrants. Each Purchaser understands that even if a public market
develops for such Notes or Warrants, reliance upon Rule 144 under the Securities
Act for resales requires, among other conditions, a one-year holding period
prior to the resale (in limited amounts) of securities acquired in a non-public
offering without having to satisfy the registration requirements under the
Securities Act. Each Purchaser understands and hereby acknowledges that the
Company is under no obligation to register any of the Notes or any Warrants
under the Securities Act or any applicable non-United States, state securities
or "blue sky" laws. Each Purchaser shall hold the Company and its directors,
officers, employees, controlling persons and agents and the Secured Party and
their respective heirs, representatives, successors and assigns harmless from,
and shall indemnify them against, all liabilities, costs and expenses incurred
by them as a result of (i) any misrepresentation made by such Purchaser
contained in this Agreement (including in Article 14 hereof), (ii) any sale or
distribution by such
6
Purchaser in violation of the Securities Act or any applicable non-United
States, state securities or "blue sky" laws or (iii) any untrue statement made
by such Purchaser.
6.11. Legends. Each Purchaser consents to the placement of the
legend set forth below on any certificate or other document evidencing the
Notes:
THE TERMS OF THIS NOTE ARE SUBJECT TO THE TERMS OF A
SUBSCRIPTION AGREEMENT AND AN INTERCREDITOR AGREEMENT, COPIES
OF WHICH ARE AVAILABLE FROM HYBRIDON, INC. (THE "COMPANY").
THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO
THE SECURITIES UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
THE SECURITIES ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND THE LAWS
OF OTHER APPLICABLE JURISDICTIONS.
THE SECURED PARTY (AS DEFINED IN THE SUBSCRIPTION AGREEMENT)
IS THE EXCLUSIVE AGENT OF THE HOLDER OF THIS NOTE WITH RESPECT
TO CERTAIN ACTIONS HEREUNDER AND UNDER THE SUBSCRIPTION
AGREEMENT; THE SECURED PARTY, IN HIS SOLE DISCRETION, MAY TAKE
OR FOREBEAR FROM TAKING CERTAIN ACTIONS HEREUNDER AND UNDER
THE SUBSCRIPTION AGREEMENT ON BEHALF OF THE HOLDERS OF NOTES.
Each Purchaser further consents to the placement of one or more restrictive
legends on the Warrants and the Note-Underlying Common Stock as required by
applicable securities laws. Each Purchaser is aware that the Company will make a
notation in its appropriate records with respect to the restrictions on the
transferability of such Notes, Warrants and Note-Underlying Common Stock.
6.12. Financial Review. Each Purchaser understands that the
Company will review this Agreement and is hereby given authority by each
Purchaser to call such Purchaser's bank or place of employment or otherwise
review the financial standing of such Purchaser; and it is further agreed that
the Company, at its sole discretion, reserves the unrestricted right, without
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further documentation or agreement on the part of such Purchaser, to reject or
limit any purchase, and to close the Offering to such Purchaser at any time.
6.13. Residence of Purchaser. Each Purchaser hereby represents
that the address of such Purchaser furnished by such Purchaser on the signature
page hereof is such Purchaser's principal residence if such Purchaser is an
individual or its principal business address if it is a corporation or other
entity.
6.14. Power and Authority. Each Purchaser represents that such
Purchaser has full power and authority (corporate, statutory and otherwise) to
execute and deliver this Agreement and to purchase the Notes, the Warrants and
any shares of Note-Underlying Common Stock. This Agreement constitutes the
legal, valid and binding obligation of each Purchaser, enforceable against such
Purchaser in accordance with its terms.
6.15. Plans. If a Purchaser is a corporation, partnership,
limited liability company, trust, employee benefit plan, individual retirement
account or other entity, then subject to the terms contained in this Agreement
(a) it is authorized and qualified to become an investor in the Company and the
person signing this Agreement on behalf of such entity has been duly authorized
by such entity to do so, and (b) it is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization.
6.16. NASD. Each Purchaser acknowledges that if he or she is a
registered representative of an NASD member firm, he or she must give such firm
the notice required by the NASD's Rules of Fair Practice, receipt of which must
be acknowledged by such firm in Section 14.3 below.
6.17. Securities Laws. Each Purchaser acknowledges that at
such time, if ever, as the Notes, the Warrants or Note-Underlying Common Stock
are registered, sales of the Notes, the Warrants and Note-Underlying Common
Stock will be subject to applicable non-United States and state securities laws,
including, without limitation, those of the State of New Jersey which require
any securities sold in New Jersey to be sold through a registered broker-dealer
or in reliance upon an exemption from registration.
6.18. Brokers. Each Purchaser represents and warrants that it
has not engaged, consented to nor authorized any broker, finder or intermediary
to act on its behalf, directly or indirectly, as a broker, finder or
intermediary in connection with the transactions contemplated by this Agreement.
Each Purchaser shall indemnify and hold harmless the Company from and against
all fees, commissions or other payments owing to any such person or firm acting
on behalf of such Purchaser hereunder.
6.19. Recent Financing Activities. Each Purchaser acknowledges
that it is aware of the following recent financing activities of the Company
that have not yet been disclosed in the SEC Reports, and that such Purchaser has
had the opportunity to review the agreements and instruments relating thereto,
and to ask questions of the Company regarding the same: (a) an aggregate of
$1,000,000 principal amount of promissory notes were sold to X. Xxxxxxx
Xxxxxxxxx III, who is the Company's President and Chief Executive Officer, at
face value during September 1999; (b) an additional $500,000 principal amount of
promissory notes
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were sold to X. Xxxxxxx Xxxxxxxxx III, at face value during November 1999; and
(c) an aggregate of approximately $455,000 of debt was sold to purchasers in a
private placement transaction in October 1999, which debt will, on December 31,
1999, automatically convert into either Notes or preferred stock of the Company
having the terms set forth in the term sheet attached hereto as Exhibit E.
6.20. Beneficial Owner. Each Purchaser, whose name appears on
the signature line below, will be the beneficial owner of the Notes that such
Purchaser acquires.
6.21. Accredited Investor. Each Purchaser represents that it
is an "accredited investor" as such term is defined in Rule 501 of Regulation D.
6.22. Reliance on Representation and Warranties. Each
Purchaser understands that the Notes are being offered and sold to the
undersigned 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 the representations,
warranties, agreements, acknowledgments and understandings of the undersigned
set forth herein in order to determine the applicability of such exemptions and
the suitability of the undersigned to acquire the Notes, the Warrants and the
Note-Underlying Common Stock.
6.23. Reserved.
6.24. Abdication of Rights to Secured Party. Each Purchaser
acknowledges that such Purchaser has irrevocably designated Secured Party to act
on such Purchaser's behalf with respect to the Notes, the Warrants and the
Collateral, under the Notes, the Warrant Agreement and this Agreement. Each
Purchaser further acknowledges and accepts that the actions of Secured Party on
such Purchaser's behalf may be materially different than how such Purchaser
would have acted in such Purchaser's own capacity, and that such Purchaser may
be materially and adversely affected thereby.
7. [Reserved]
8. Representation, Warranties and Covenants of the Company.
The Company hereby represents, warrants and covenants to each Purchaser that all
reports required to be filed by the Company since and including the most recent
filing of the Company's Annual Report on Form 10-K, to and including the
relevant Closing Date (collectively, the "SEC Reports") have been duly filed
with the Securities and Exchange Commission, complied at the time of filing in
all material respects with the requirements of their respective forms and were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
9. [Reserved]
10. Secured Party's Rights and Remedies
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10.1. Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default (as defined in the Note), the Secured Party
may, in addition to the remedies pursuant to Section 6 of the Notes, at its
election, without notice of its election and without demand, take any action
permitted by law, including the exercise of any rights accorded a secured
creditor under the Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts at such time.
11. Certain Definitions. For the purposes of this Agreement
the following terms have the respective meanings set forth below:
11.1. "Business Day" means a Monday through Friday on which
banks are generally open for business in New York, Massachusetts and California.
11.2. "Common Stock" means the Company's common stock, par
value $.001 per share.
11.3. "Note-Underlying Common Stock" shall mean the Common
Stock issuable upon conversion of, or in lieu of cash interest on, the Notes and
any Common Stock issuable upon exercise of any Warrants that may be issued upon
prepayment of Notes.
11.4. "Offering" shall have the meaning ascribed to such terms
in the first paragraph of this Agreement.
11.5. "Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
11.6. "Regulation D" means Regulation D promulgated under the
Securities Act.
11.7. "Secured Party" shall have the meaning ascribed to such
term in Section 5.1.
11.8. "Securities Act" means, as of any given time, the
Securities Act of 1933, as amended, or any similar federal law then in force.
11.9. "Securities and Exchange Commission" includes any
governmental body or agency succeeding to the functions thereof.
11.10. "Operating Indebtedness" means the principal of (and
premium, if any) and accrued interest on (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) all reimbursement obligations and other liabilities (contingent or
otherwise) with respect to letters of credit, bank guarantees or bankers'
acceptances, and any amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligation. Notwithstanding the
foregoing, the Operating Indebtedness shall not include any
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such obligations or liabilities to the extent they exceed $1,000,000 in the
aggregate at any time outstanding.
11.11. "SEC Reports" shall have the meaning ascribed thereto
in Article 8.
11.12. "Transfer Restricted Securities" means each Warrant,
each Note and, if any Note has been converted or any Warrant has been exercised,
the Note-Underlying Common Stock issued upon such conversion or exercise, until
the earlier of (a) the date on which such Note, Warrant or Note-Underlying
Common Stock, as applicable, has been effectively registered under the
Securities Act and disposed of pursuant to, and in accordance with, an effective
registration statement under the Securities Act, (b) the date on which such
Note, Warrant or Note-Underlying Common Stock, as applicable, is distributed to
the public pursuant to Rule 144 or any other applicable exemption under the
Securities Act without additional restriction upon public resale or (c) at such
time as such Note, Warrant or Note-Underlying Common Stock, as applicable, may
be sold by a Holder under Rule 144(k).
12. Registration Rights.
12.1 As used in this Article 12, the following terms shall
have the following meanings:
(a) "Affiliate" shall mean, with respect to any Person (as
defined below), any other Person controlling, controlled by, or under direct or
indirect common control with, such Person (for the purposes of this definition
"control," when used with respect to any specified Person, shall mean the power
to direct the management and policies of such person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) [Reserved].
(c) "Holders" shall mean the Purchasers and any person holding
Registrable Securities or any person to whom the rights under Article 12 have
been transferred in accordance with Section 12.10 hereof.
(d) [Reserved]
(e) The terms "register," "registered" and "registration"
refer to the registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
(f) "Registrable Securities" shall mean the shares of Common
Stock issuable upon conversion of the Notes; provided, however, that securities
shall only be treated as Registrable Securities if and only for so long as they
(A) have not been disposed of pursuant to a registration statement declared
effective by the Securities and Exchange Commission, (B) have not been sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale, (C) are
held by a Holder or a permitted
11
transferee pursuant to Section 12.10 or (D) are not freely tradeable without
limitations as to volume or filing requirements under applicable federal
securities laws.
(g) "Registration Expenses" shall mean all expenses incurred
by the Company in complying with Section 12.2 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and expenses of counsel for the Company, blue sky fees and
expenses and the expense of any special audits incident to, or required by, any
such registration (but excluding the fees of legal counsel for any Holder).
(h) "Registration Statement" shall have the meaning ascribed
to such term in Section 12.2.
(i) "Registration Period" shall have the meaning ascribed to
such term in Section 12.4.
(j) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities and all
fees and expenses of legal counsel for any Holder.
12.2. The Company shall use its reasonable best efforts to
file a "shelf" registration statement on the appropriate form (the "Registration
Statement") with the Securities and Exchange Commission, by ninety (90) days
after the Termination Date and shall use its reasonable best efforts to effect
the registration, qualifications or compliances (including, without limitation,
the execution of any required undertaking to file post-effective amendments,
appropriate qualifications or exemptions under applicable blue sky or other
state securities laws and appropriate compliance with applicable securities
laws, requirements or regulations) prior to the date which is two hundred ten
(210) days after the Termination Date. Notwithstanding the foregoing, the
Company shall not be obligated to enter into any underwriting agreement for the
sale of any of the Registrable Securities.
12.3. All Registration Expenses incurred in connection with
any registration, qualification or compliance pursuant to Section 12.2 shall be
borne by the Company. All Selling Expenses relating to the sale of securities
registered by or on behalf of Holders shall be borne by such Holders pro rata on
the basis of the number of securities so registered; provided that if a Holder
uses its own legal counsel in addition to one counsel for all of the Holders of
securities registered on behalf of the Holders, such Holder shall bear the cost
of such counsel.
12.4. In the case of the registration, qualification or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
registration, qualification and compliance. At its expense the Company shall:
(a) use its reasonable best efforts to keep such registration,
and any qualification, exemption or compliance under state securities laws which
the Company determines to obtain, continuously effective until the Holders have
completed the distribution described in the registration statement relating
thereto. Notwithstanding the foregoing, at the Company's election, the Company
may cease to keep such registration, qualification or compliance effective with
respect to any Registrable Securities, and the registration rights of a
12
Holder shall expire, upon the earlier of (i) such time as the Holder may sell
under Rule 144(k) under the Securities Act (or other exemption from registration
acceptable to the Company) in a three-month period all Registrable Securities
then held by such Holder and (ii) November 30, 2002. The period of time during
which the Company is required hereunder to keep the Registration Statement
effective is referred to herein as the "Registration Period."; and
(b) advise the Holders:
(i) when the Registration Statement or any amendment thereto
has been filed with the Securities and Exchange Commission and when the
Registration Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Securities and Exchange Commission
for amendments or supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in the Registration Statement or the prospectus included therein so
that, as of such date, the statements therein are not misleading and do not omit
to state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in the light of the
circumstances under which they were made) not misleading;
(vi) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of any Registration Statement at the
earliest possible time;
(vii) furnish to each Holder, without charge, at least one
copy of such Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits (including those incorporated by reference) in the form
filed with the Securities and Exchange Commission;
(viii) during the Registration Period, deliver to each Holder,
without charge, as many copies of the prospectus included in such Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and the Company consents to the use, consistent with the provisions
hereof, of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the prospectus and any amendment
or supplement thereto. In addition, upon the reasonable request of the Holder
and subject in all cases to confidentiality protections reasonably acceptable to
the Company, the Company will meet with a Holder or a representative thereof at
the Company's headquarters to discuss all information relevant for disclosure in
the Registration Statement covering the Registrable
13
Securities, and will otherwise cooperate with any Holder conducting an
investigation for the purpose of reducing or eliminating such Holder's exposure
to liability under the Securities Act, including the reasonable production of
information at the Company's headquarters;
(ix) during the Registration Period, deliver to each Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the Company) one copy of: (A) its annual report to its stockholders, if
any (which annual report shall contain financial statements audited in
accordance with generally accepted accounting principles in the United States of
America by a firm of certified public accountants of recognized standing); (B)
if not included in substance in its annual report to stockholders, its annual
report on Form 10-K (or similar form); (C) each of its quarterly reports to its
stockholders, and, if not included in substance in its quarterly reports to
stockholders, its quarterly report on Form 10-Q (or similar form), and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;
(x) prior to any public offering of Registrable Securities
pursuant to any Registration Statement, register or qualify for offer and sale
under the securities or blue sky laws of such jurisdictions as any such Holders
reasonably request in writing, provided that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction, and do any and all other
acts or things reasonably necessary or advisable to enable the offer and sale in
such jurisdictions of the Registrable Securities covered by such Registration
Statement;
(xi) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to any Registration Statement free of any restrictive legends
to the extent not required at such time and in such denominations and registered
in such names as Holders may request at least three (3) business days prior to
sales of Registrable Securities pursuant to such Registration Statement;
(xii) upon the occurrence of any event contemplated by Section
12.4(b)(v) above, the Company shall promptly prepare a post-effective amendment
to the Registration Statement or a supplement to the related prospectus, or file
any other required document so that, as thereafter delivered to purchasers of
the Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and
(xiii) use its reasonable best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
will make generally available to the Holders not later than 45 days (or 90 days
if the fiscal quarter is the fourth fiscal quarter) after the end of its fiscal
quarter in which the first anniversary date of the effective date of the
Registration Statement occurs, an earnings statement satisfying the provisions
of Section 11(a) of the Securities Act.
14
12.5. Delay Periods; Suspension of Sales. Each Holder shall
suspend, upon request of the Company, any disposition of Registrable Securities
pursuant to the Registration Statement and prospectus contemplated by Section
12.2 during (i) any period not to exceed two 30-day periods within any one
12-month period the Company requires in connection with a primary underwritten
offering of equity securities and (ii) any period, not to exceed one 45-day
period per circumstance or development, when the Company determines in good
faith that offers and sales pursuant thereto should not be made by reason of the
presence of material undisclosed circumstances or developments with respect to
which the disclosure that would be required in such a prospectus is premature,
would have an adverse effect on the Company or is otherwise inadvisable;
provided that the Company makes such determination and applies such halts of
offers and sales uniformly and universally to all Persons then offering shares
of Common Stock pursuant to effective Registration Statements (including
Registration Statements on Forms S-4 and S-8).
12.6. The Holders shall have no right to take any action to
restrain, enjoin or otherwise delay any registration pursuant to Section 12.2
hereof as a result of any controversy that may arise with respect to the
interpretation or implementation of this Agreement.
12.7. (a) To the extent permitted by law, the Company shall
indemnify each Holder, each underwriter of the Registrable Securities and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which any registration, qualification or
compliance has been effected pursuant to this Agreement, against all claims,
losses, damages and liabilities (or action in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened
(subject to Subsection 12.7(c) below), arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus or offering circular, or any amendment or
supplement thereof, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances in which they were made,
and shall reimburse each Holder, each underwriter of the Registrable Securities
and each person controlling such Holder, for legal and other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred; provided that the Company shall not be
liable in any such case to the extent that any untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with information
furnished to the Company by or on behalf of such Holder and stated to be
specifically for use in preparation of such registration statement, prospectus
or offering circular; provided that the Company shall not be liable in any such
case where the claim, loss, damage or liability arises out of or is related to
the failure of the Holder to comply with the covenants and agreements contained
in this Agreement respecting sales of Registrable Securities, and except that
the foregoing indemnity agreement is subject to the condition that, insofar as
it relates to any such untrue statement or alleged untrue statement or omission
or alleged omission made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Securities and Exchange
Commission at the time the registration statement becomes effective or in the
amended prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) of the Securities Act or in the prospectus subject to completion and
term sheet under Rule 434 of the Securities Act, which together meet the
requirements of Section 10(a) of the Securities Act (the "Final Prospectus"),
such indemnity agreement shall not inure to
15
the benefit of any such Holder, any such underwriter or any such controlling
person, if a copy of the Final Prospectus furnished by the Company to the Holder
for delivery was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act and the Final Prospectus would have cured the defect
giving rise to such loss, liability, claim or damage.
(b) Each Holder will severally, if Registrable Securities held
by such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter of the Registrable Securities and
each person who controls the Company within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof), including any of the foregoing incurred in settlement of
any litigation, commenced or threatened (subject to Subsection 12.7(c) below),
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, and will reimburse the Company, such
directors and officers, each underwriter of the Registrable Securities and each
person controlling the Company for reasonable legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred, in each case to the
extent, but only to the extent, that such untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder and stated to
be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided that the indemnity shall not apply to
the extent that such claim, loss, damage or liability results from the fact that
a current copy of the prospectus was not made available to the Holder and such
current copy of the prospectus would have cured the defect giving rise to such
loss, claim, damage or liability. Notwithstanding the foregoing, in no event
shall a Holder be liable for any such claims, losses, damages or liabilities in
excess of the proceeds received by such Holder in the offering, except in the
event of fraud by such Holder.
(c) Each party entitled to indemnification under this Section
12.7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such Indemnified Party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement, unless
such failure is materially prejudicial to the Indemnifying Party in defending
such claim or litigation. An Indemnifying Party shall not be liable for any
settlement of an action or claim effected without its written consent (which
consent will not be unreasonably withheld).
16
(d) If the indemnification provided for in this Section 12.7
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
12.8. (a) Each Holder agrees that, upon receipt of any notice
from the Company of the happening of any event requiring the preparation of a
supplement or amendment to a prospectus relating to Registrable Securities so
that, as thereafter delivered to the Holders, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, each Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement contemplated by Section 12.2
until its receipt of copies of the supplemented or amended prospectus from the
Company and, if so directed by the Company, each Holder shall deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice.
(b) As a condition to the inclusion of its Registrable
Securities, each Holder shall furnish to the Company such information regarding
such Holder and the distribution proposed by such Holder as the Company may
request in writing or as shall be required in connection with any registration,
qualification or compliance referred to in this Article 12.
(c) Each Holder hereby covenants with the Company (i) not to
make any sale of the Registrable Securities without effectively causing the
prospectus delivery requirements under the Securities Act to be satisfied, and
(ii) if such Registrable Securities are to be sold by any method or in any
transaction other than on a national securities exchange, the Nasdaq National
Market, Nasdaq SmallCap Market or in the over-the-counter market, in privately
negotiated transactions, or in a combination of such methods, to notify the
Company at least five (5) business days prior to the date on which the Holder
first offers to sell any such Registrable Securities.
(d) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement described in this Article
12 are not transferable on the books of the Company unless the stock certificate
submitted to the transfer agent evidencing such Registrable Securities is
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (i) the Registrable Securities have been sold in accordance with
such
17
Registration Statement and (ii) the requirement of delivering a current
prospectus has been satisfied.
(e) Each Holder shall not take any action with respect to any
distribution deemed to be made pursuant to such registration statement, which
would constitute a violation of Regulation M under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or any other applicable rule,
regulation or law.
(f) At the end of the Registration Period, the Holders of
Registrable Securities included in the Registration Statement shall discontinue
sales of shares pursuant to such Registration Statement upon receipt of notice
from the Company of its intention to remove from registration the shares covered
by such Registration Statement which remain unsold, and such Holders shall
notify the Company of the number of shares registered which remain unsold
immediately upon receipt of such notice from the Company.
12.9. With a view to making available to the Holders the
benefits of certain rules and regulations of the Securities and Exchange
Commission which at any time permit the sale of the Registrable Securities to
the public without registration, the Company shall use its reasonable best
efforts:
(a) to make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times;
(b) to file with the Securities and Exchange Commission in a
timely manner all reports and other documents required of the Company under the
Exchange Act; and
(c) so long as a Holder owns any unregistered Registrable
Securities, to furnish to such Holder upon any reasonable request a written
statement by the Company as to its compliance with Rule 144 under the Securities
Act, and of the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as
such Holder may reasonably request in availing itself of any rule or regulation
of the Securities and Exchange Commission allowing a Holder to sell any such
securities without registration.
12.10. The rights to cause the Company to register Registrable
Securities granted to the Holders by the Company under Section 12.2 may be
assigned in full by a Holder in connection with a transfer by such Holder of its
Registrable Securities, provided that (i) such transfer may otherwise be
effected in accordance with applicable securities laws; (ii) such transfer
involves not fewer than the fewer of all or 20,000 shares of such Holder's
Registrable Securities, (iii) such Holder gives prior written notice to the
Company; and (iv) such transferee agrees to comply with the terms and provisions
of this Agreement, and such transfer is otherwise in compliance with this
Agreement. Except as specifically permitted by this Section 12.10, the rights of
a Holder with respect to Registrable Securities as set out herein shall not be
transferable to any other Person, and any attempted transfer shall cause all
rights of such Holder therein to be forfeited.
12.11. With the written consent of the Company and the Secured
Party, any provision of this Article 12 may be waived (either
18
generally or in a particular instance, either retroactively or prospectively and
either for a specified period of time or indefinitely) or amended. Upon the
effectuation of each such waiver or amendment, the Company shall promptly give
written notice thereof to the Holders, if any, who have not previously received
notice thereof.
13. Miscellaneous.
13.1. Amendments and Waivers. (a) This Agreement and all
exhibits and schedules hereto set forth the entire agreement and understanding
among the parties as to the subject matter hereof and merges and supersedes all
prior discussions, agreements and understandings of any and every nature among
them. This Agreement may be amended only by mutual written agreement of the
Company and the Secured Party, and the Company may take any action herein
prohibited or omit to take any action herein required to be performed by it, and
any breach of any covenant, agreement, warranty or representation may be waived,
only if the Company has obtained the written consent or waiver of the Secured
Party. No course of dealing between or among any persons having any interest in
this Agreement will be deemed effective to modify, amend or discharge any part
of this Agreement or any rights or obligations of any person under or by reason
of this Agreement.
(b) After an amendment or waiver becomes effective it shall
bind every holder of a Note regardless of whether such holder held such Note at
the time such amendment or waiver became effective, or subsequently acquired
such Note.
13.2. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company and its successors and assigns and
Purchasers and their successors and registered assigns. The provisions hereof
which are for Purchasers' benefit as purchasers or holders of the Notes are also
for the benefit of, and enforceable by, any subsequent registered holder of such
Notes.
13.3. Notices. All notices, demands and other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given personally or when
mailed by certified or registered mail, return receipt requested and postage
prepaid, and addressed to the addresses of the respective parties set forth
below or to such changed addresses as such parties may have fixed by notice;
provided, however, that any notice of change of address shall be effective only
upon receipt:
If to the Company:
Hybridon, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attn: X. Xxxxxxx Xxxxxxxxx, III
If to Secured Party or Purchasers:
x/x Xxxxxx
00 Xxxxxx xx Xxxxxxx
00000 Xxxxx, Xxxxxx; and
19
c/o Pecks Management
0 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Attn: Art Xxxxx
Xxx Xxxx, XX 00000; and
c/o Forum Capital Markets
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
13.4. Governing Law. The validity, performance, construction
and effect of this Agreement shall be governed by the internal laws of the State
of Massachusetts without giving effect to such State's principles of conflict of
laws.
13.5. Counterparts. This Agreement may be executed in any
number of counterparts and, notwithstanding that any of the parties did not
execute the same counterpart, each of such counterparts (or facsimile copies
thereof) shall, for all purposes, be deemed an original, and all such
counterparts shall constitute one and the same instrument binding on all of the
parties hereto. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be as effective as delivery of a manually executed
counterpart of a signature page of this Agreement.
13.6. Headings. The headings of the Sections hereof are
inserted as a matter of convenience and for reference only and in no way define,
limit or describe the scope of this Agreement or the meaning of any provision
hereof.
13.7. Severability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless the provision
held invalid shall substantially impair the benefit of the remaining portion of
this Agreement.
13.8. Exculpation Among Purchasers. Each Purchaser
acknowledges and agrees that it is not relying upon any other Purchaser, or any
officer, director, employee partner or affiliate of any such other Purchaser, in
making its investment or decision to invest in the Company or in monitoring such
investment. Each Purchaser agrees that no Purchaser nor any controlling person,
officer, director, stockholder, partner, agent or employee of any Purchaser
shall be liable for any action heretofore or hereafter taken or omitted to be
taken by any of them relating to or in connection with the Company or the
securities, or both.
13.9. Actions by Purchasers. Any actions permitted to be taken
by the Secured Party and any consents required to be obtained from the same
under this Agreement, may be taken or given only by the Secured Party and if the
Secured Party takes any action or grants any consent, such action or consent
shall be deemed given or taken by all holders or Purchasers' who
20
shall be bound by the decision or action taken by the Secured Party without any
liability on the part of the Secured Party to any holder or Purchasers of
securities hereunder.
13.10. Additional Purchasers. Upon the execution and delivery
by any Person of this Agreement after the date hereof with the written consent
of the Company, such Person shall be referred to as an Additional Purchaser and
shall become a Purchaser, and each reference in this Agreement to "Purchaser"
shall also mean and be a reference to such Additional Purchaser.
14. Confidential Investor Questionnaire.
14.1. Each Purchaser represents and warrants that he, she or
it comes within one of category A through H below. ALL INFORMATION IN RESPONSE
TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to
furnish any additional information which the Company deems necessary in order to
verify the answers set forth below.
Category A: The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint
net worth with his or her spouse, presently exceeds
$1,000,000.
Explanation. In calculating net worth you
may include equity in personal property and
real estate, including your principal
residence, cash, short-term investments,
stock and securities. Equity in personal
property and real estate should be based on
the fair market value of such property less
debt secured by such property.
Category B: The undersigned is an individual (not a partnership,
corporation, etc.) who had an individual income in
excess of $200,000 in each of the two most recent
years, or joint income with his or her spouse in excess
of $300,000 in each of those years (in each case
including foreign income, tax exempt income and full
amount of capital gains and losses but excluding any
income of other family members and any unrealized
capital appreciation) and has a reasonable expectation
of reaching the same income level in the current year.
Category C: The undersigned is a director or executive officer of
the Company which is issuing and selling the Notes.
Category D: The undersigned is a bank; a savings and loan
association; insurance company; registered investment
company; registered business development company;
licensed small business investment company ("SBIC"); or
employee benefit plan within the meaning of Title 1 of
ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan
association, insurance company or registered investment
advisor, or (b) the plan has total assets in excess of
$5,000,000 or is a self directed plan with investment
decisions made solely by persons that are accredited
investors.
21
Category E: The undersigned is a private business development
company as defined in section 202(a)(22) of the
Investment Advisors Act of 1940.
Category F: The undersigned is either a corporation,
partnership, Massachusetts business trust, or
non-profit organization within the meaning of Section
501(c)(3) of the Internal Revenue Code, in each case
not formed for the specific purpose of acquiring the
Notes and with total assets in excess of $5,000,000.
Category G: The undersigned is a trust with total assets in
excess of $5,000,000, not formed for the specific
purpose of acquiring the Notes, where the purchase is
directed by a "sophisticated person" as defined in
Regulation 506(b)(2)(ii) under the Securities Act.
Category H: The undersigned is an entity (other than a trust)
all the equity owners of which are "accredited
investors" within one or more of the above categories.
If relying upon this Category alone, each equity owner
must complete a separate copy of this Agreement.
The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Final Closing Date in the event that the representations and
warranties in this Agreement shall cease to be true, accurate and complete.
14.2. Manner in Which Title Is To Be Held. (circle one)
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of
Survivorship (both parties
must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other
*If Notes are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
14.3. NASD Affiliation.
Are you affiliated or associated with an NASD member firm (please check one):
Yes _________ No __________
If Yes, please describe:
_______________________________________________
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_______________________________________________
_______________________________________________
*If Purchaser is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
__________________________________
Name of NASD Member Firm
By: ______________________________
Authorized Officer
Date: ____________________________
14.4. Reliance on Confidential Investor Questionnaire. The
undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in the Confidential Investor Questionnaire
contained in this Article 14 and such answers have been provided under the
assumption that the Company will rely on them.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year indicated.
[Signature Page for each Purchaser]
$_____________ principal amount of Notes, at face value, for an aggregate of
$___________ (the "Purchase Price")
By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Subscription Agreement (the "Purchase Agreement") by and among Hybridon, Inc.
(the "Company") and the Purchasers (as defined therein), as to the aggregate
principal amount of Notes set forth above and authorizes this signature page to
be attached to the Purchase Agreement or counterparts thereof.
-------------------------------- ---------------------------------
Signature Signature (if purchasing jointly)
-------------------------------- ---------------------------------
Name Typed or Printed Name Typed or Printed
-------------------------------- ---------------------------------
Entity Name Entity Name
-------------------------------- ---------------------------------
Address Address
-------------------------------- ---------------------------------
City, State and Zip Code City, State and Zip Code
-------------------------------- ---------------------------------
Telephone-Business Telephone--Business
-------------------------------- ---------------------------------
Telephone-Residence Telephone--Residence
-------------------------------- ---------------------------------
Facsimile-Business Facsimile--Business
-------------------------------- ---------------------------------
Facsimile-Residence Facsimile--Residence
-------------------------------- ---------------------------------
Tax ID # or Social Security # Tax ID # or Social Security #
Dated: ___________ _____, ___
This Agreement is agreed to and accepted as of
___________________, ____.
HYBRIDON, INC.
By:__________________________
Name:
Title:
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CERTIFICATE OF SIGNATORY
(To be completed if Notes are
being subscribed for by an entity)
I, ___________________, am the ________________ (the
"Entity"). I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement, dated as of , and
to purchase and hold the Notes, and certify further that the Subscription
Agreement has been duly and validly executed on behalf of the Entity and
constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ____ day of
_________________, ____.
______________________________
(Signature)
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