EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of December
9, 2003, by and among StemCells, Inc., a Delaware corporation, with headquarters
located at 0000 Xxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 (the "COMPANY"), and
the investors listed on the Schedule of Buyers attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and each Buyer desire to enter into this
transaction to purchase the securities set forth herein pursuant to a currently
effective shelf registration statement on Form S-3, as amended (Registration
Number 333-83992) (the "REGISTRATION STATEMENT"), which Registration Statement
has been declared effective in accordance with the Securities Act of 1933, as
amended (the "1933 ACT"), by the United States Securities and Exchange
Commission (the "SEC").
B. Each Buyer wishes to purchase, and the Company wishes to sell,
upon the terms and conditions stated in this Agreement, that aggregate principal
amount of shares of the Company's Common Stock, par value $0.01 per share (the
"COMMON STOCK") set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers (which aggregate amount for all Buyers together shall be
5,000,000 shares and shall collectively be referred to herein as the "COMMON
SHARES").
C. The Common Shares are referred to herein as the "SECURITIES".
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES.
(a) Purchase of Common Shares.
Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 5(a) and 6(a) below, the Company shall issue
and sell to each Buyer, and each Buyer severally, but not jointly, agrees to
purchase from the Company on the Closing Date (as defined below), the number of
Common Shares as is set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers (the "CLOSING").
(b) Purchase Price. The purchase price for each Buyer
(the "PURCHASE PRICE") of the Common Shares to be purchased by each such Buyer
at Closing shall be equal to $1.90 for each Common Share being purchased by such
Buyer at the Closing.
(c) Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m., New York City Time, on the date hereof
after notification of satisfaction (or waiver) of the conditions to the Closing
set forth in Sections 5(a) and 6(a) below (or such later date as is mutually
agreed to by the Company and each Buyer).
(d) Form of Payment. On the Closing Date, (i) each Buyer
shall pay its Purchase Price to the Company for the Common Shares to be issued
and sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions, and (ii) the
Company shall cause the Company's transfer agent (the "TRANSFER AGENT") pursuant
to the Depository Trust Company ("DTC") Fast Automated Securities Transfer
Program, to credit such aggregate number of Common Shares that such Buyer is
purchasing as is set forth opposite such Buyer's name in column (3) of the
Schedule of Buyers to the Buyer's or its designee's balance account with DTC
through its Deposit Withdrawal Agent Commission system.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
as of the date hereof and as of the Closing Date that:
(a) Validity; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with its respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(b) Residency. Such Buyer is a resident of that country
or state specified below its address on the Schedule of Buyers.
(c) Organization. Such Buyer duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization, and has the requisite power and authorization to execute and
deliver this Agreement and to consummate the transaction contemplated hereby.
(d) No Conflicts. The execution, delivery and performance
of this Agreement by such Buyer and the consummation by such Buyer of the
transactions contemplated hereby will not (i) result in a violation of the
constituent documents of such Buyer or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which such Buyer is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree applicable to such Buyer or by which any
property or asset of such Buyer is bound or affected, except in the case of
clauses (ii) and (iii), for such breaches or defaults as would not be reasonably
expected to have a material adverse effect on such Buyer's ability to consummate
the transactions contemplated hereby.
(e) No Other Representations and Warranties. Each Buyer
acknowledges that, except for the representations and warranties contained in
the Transaction Documents, the Seller is not making any other express or implied
representation or warranty on its behalf.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as is set forth in the SEC Documents (as defined below)
or the Disclosure Schedules, the Company represents and warrants to each of the
Buyers as of the date hereof and as of the Closing Date that:
(a) Organization and Qualification. Each of the Company
and its Subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated,
and have the requisite corporate power and authorization to own their properties
and to carry on their business as now being conducted. Each of the Company and
each Subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Agreement, "MATERIAL
ADVERSE EFFECT" means any material adverse effect on the business, properties,
assets, operations, results of operations, or financial condition of the Company
and its Subsidiaries, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below). For purposes of
this Agreement, "SUBSIDIARY" means any entity in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest. The
Company has no Subsidiaries other than StemCells California, Inc., a California
corporation.
(b) Authorization; Enforcement; Validity. The Company has
the requisite corporate power and authority to enter into and perform its
obligations under this Agreement and each of the other agreements entered into
or to be entered into on the Closing Date by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the
"TRANSACTION DOCUMENTS") and, to issue the Securities in accordance with the
terms hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Common Shares have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders. This Agreement and the other Transaction
Documents of even date herewith have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except (i) as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies, or (ii) as any rights to indemnity or
contribution hereunder may be limited by federal and state securities laws and
public policy consideration.
(c) Issuance of Securities. The Common Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be free
from all taxes, liens and charges with respect to the issue thereof. The
issuance by the Company of the Securities has been registered under the 1933 Act
and all of the Securities are freely transferable and tradable by the Buyers
without restriction (other than restrictions that may be applicable to a
particular Buyer by virtue of the nature of such Buyer). The Common Shares are
being issued pursuant to the
Registration Statement. The Registration Statement is effective and available
for the issuance of the Securities thereunder and the Company has not received
any notice that the SEC has issued or intends to issue a stop-order with respect
to the Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened in writing to do so. The "Plan of
Distribution" section under the Registration Statement permits the sale of the
Securities hereunder. Upon receipt of the Securities, the Buyers will have good
and marketable title to such Securities and such Securities will be freely
tradable on The Nasdaq SmallCap Market (the "PRINCIPAL MARKET").
(d) No Conflicts. Assuming the accuracy of all
representations made by the Buyers herein, the execution, delivery and
performance of the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Common Shares) will not (i) result in a
violation of the certificate of incorporation, any certificate of designations,
preferences and rights of any outstanding series of preferred stock or Bylaws of
the Company or any Subsidiary or (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any Subsidiary is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the Principal
Market applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected, except in the case
of clauses (ii) and (iii), for such breaches or defaults as would not be
reasonably expected to have a Material Adverse Effect.
(e) Consents. The Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court, governmental agency or any regulatory or self-regulatory agency or any
other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each case in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the Closing Date other than (i) the application(s) to the Principal Market for
the listing of the Common Shares for trading thereon in the time and manner
required thereby, and applicable Blue Sky filings, (b) such as have already been
obtained, and (c) compliance with Rule 4310(c)(17) of the National Association
of Securities Dealers, Inc. The Company and each Subsidiary are unaware of any
facts or circumstances that might prevent the Company from obtaining or
effecting any of the foregoing. Except (i) for the facts that the Common Stock
has previously traded below $1.00 and the Company's shareholders equity is (as
of the date hereof) less than $2.5 million and (ii) as disclosed on Schedule
3(e), the Company is not in violation of the listing requirements of the
Principal Market and has no knowledge of any facts that would reasonably lead to
delisting or suspension of the Common Stock in the foreseeable future.
(f) Acknowledgment Regarding Buyer's Purchase of
Securities. The Company acknowledges and agrees that each Buyer is acting solely
in the capacity of arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated
hereby and thereby. The Company further acknowledges that no Buyer is acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.
(g) Placement Agent's Fees. The Company shall be
responsible for the payment of any placement agent's fees, financial advisory
fees, or brokers' commissions (other than for persons engaged by any Buyer or
its investment advisor, or at the direction of any of them) relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney's fees and out-of-pocket expenses) arising in
connection with any such claim.
(h) No Securities Law Violations. None of the Company,
its Subsidiaries, any of their affiliates, and any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
the issuance of the Securities to be in violation of the 1933 Act or cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated. None of the Company, its Subsidiaries, their affiliates and any
Person acting on their behalf will take any action or steps referred to in the
preceding sentence that would cause the issuance of any of the Securities to be
in violation of the 1933 Act or cause the offering of the Securities to be
integrated with other offerings as set forth herein.
(i) Application of Takeover Protections; Rights
Agreement. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Certificate of
Incorporation (as defined in Section 3(q)) or the laws of the state of its
incorporation which is or could become applicable to any Buyer as a result of
the transactions contemplated by this Agreement, including, without limitation,
the Company's issuance of the Securities and any Buyer's ownership of the
Securities.
(j) SEC Documents; Financial Statements. Since December
31, 2001, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof or prior to the date of the Closing, including the Registration
Statement and any prospectus pursuant thereto, and all exhibits included therein
and financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC DOCUMENTS"). The
Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of the SEC Documents not available on the XXXXX
system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, 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 the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company and each Subsidiary as
of the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). After giving effect to the 8-K Filing (as defined
below), no other information provided by or on behalf of the Company to the
Buyers which is not included in 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 therein, in the light of the circumstance under which they
are or were made, not misleading.
(k) Absence of Certain Changes. Except as disclosed in
Schedule 3(l), since December 31, 2002, there has been no material adverse
change and no material adverse development in the business, properties,
operations, financial condition, or results of operations of the Company or any
Subsidiary. Since December 31, 2002, the Company has not (i) declared or paid
any dividends (other than in connection with the Company's 3% Cumulative
Convertible Preferred Stock), (ii) sold any assets, individually or in the
aggregate, in excess of $100,000 outside of the ordinary course of business or
(iii) had capital expenditures, individually or in the aggregate, in excess of
$500,000. The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do so.
The Company, after giving effect to the transactions contemplated hereby to
occur at each Closing, will not be Insolvent (as defined below). For purposes of
this Section 3(k), "INSOLVENT" means (i) the present fair saleable value of the
Company's assets is less than the amount required to pay the Company's total
indebtedness, contingent or otherwise, (ii) the Company is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
(l) No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or any
Subsidiary or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly
announced.
(m) Conduct of Business; Regulatory Permits. Neither the
Company nor any Subsidiary is in violation of any term of or in default under
its Certificate of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or Bylaws
or their organizational charter or bylaws, respectively. Neither the Company nor
any Subsidiary is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any Subsidiary,
except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth in Section 3(e)
hereof (including Schedule 3(e)) and without limiting the generality of the
foregoing, the Company is not in violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or
circumstances that would reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future. Except as set
forth in Section 3(e) hereof (including Schedule 3(e)), since December 23, 2002,
(i) the Common Stock has been designated for quotation or listed on the
Principal Market, (ii) trading in the Common Stock has not been suspended by the
SEC or the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and its
Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, except where the failure to possess such
certificates, authorizations or permits would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of its certificate, authorization or permit.
(n) Foreign Corrupt Practices. Neither the Company, nor
any Subsidiary, nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any Subsidiary has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
(o) Transactions With Affiliates. Except as set forth in
the Company's Annual Report on Form 10-K for the year ended December 31, 2002,
none of the officers, directors or employees of the Company is presently a party
to any transaction with the Company or any Subsidiary (other than for ordinary
course services as employees, officers or 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 such officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.
(p) Equity Capitalization. Except for subsequent
issuances of common stock upon exercise or conversion of common stock
equivalents set forth in the Company's most
recent periodic report filed with the SEC, the capitalization of the Company is
as set forth in the Company's most recent periodic report and most recent
current report on Form 8-K filed with the SEC. Except as set forth in the SEC
Documents (i) no shares of the Company's capital stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company or any Subsidiary,
or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional shares of capital
stock of the Company or any Subsidiary or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any Subsidiary; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness (as defined
in Section 3(q)) of the Company or any Subsidiary or by which the Company or any
Subsidiary is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company; (v) there are no agreements or
arrangements under which the Company or any Subsidiary is obligated to register
the sale of their securities under the 1933 Act; (vi) there are no outstanding
securities or instruments of the Company or any Subsidiary which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or any Subsidiary; (vii) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; (viii) the Company
does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement; and (ix) the Company and its
Subsidiaries have no liabilities or obligations required to be disclosed in the
SEC Documents (as defined herein) but not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company's or any
Subsidiary's respective businesses and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect. The Company has furnished to
the Buyer true, correct and complete copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "CERTIFICATE
OF INCORPORATION"), and the Company's Bylaws, as amended and as in effect on the
date hereof (the "BYLAWS"), and the terms of all securities convertible into, or
exercisable or exchangeable for, Common Stock and the material rights of the
holders thereof in respect thereto.
(q) Indebtedness and Other Contracts. Except as disclosed
in the SEC Documents, neither the Company nor any Subsidiary (i) has any
material outstanding Indebtedness (as defined below), (ii) is a party to any
contract, agreement or instrument, the violation of which, or default under
which, by the other party(ies) to such contract, agreement or instrument would
result in a Material Adverse Effect, (iii) is in violation of any term of or in
default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. The SEC Documents set forth each of
the Company's "material contracts," as such term is used in Item 601 of
Regulation S-K promulgated by the SEC. For purposes of this Agreement: (x)
"INDEBTEDNESS" of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations issued,
undertaken or assumed as the deferred purchase price of property or services
(other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, change,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; (y) "CONTINGENT OBLIGATION" means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; and
(z) "PERSON" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
(r) Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by the Principal Market, any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the
Company, the Common Stock or any Subsidiary or any of the Company's or any
Subsidiary's officers or directors in their capacities as such.
(s) Insurance. The Company and 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 Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
(t) Employee Relations. (i) Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement or employs any
member of a union. The Company
and its Subsidiaries believe that their relations with their employees are good.
No executive officer of the Company (as defined in Rule 501(f) of the 0000 Xxx)
has notified the Company that such officer intends to leave the Company or
otherwise terminate such officer's employment with the Company. No executive
officer of the Company, to the knowledge of the Company, is, or is now expected
to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any Subsidiary to any liability with respect to any of
the foregoing matters.
(ii) The Company and its Subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(u) Title. The Company and its Subsidiaries have good and
marketable title to all 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, encumbrances and defects or such as 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 its Subsidiaries. Neither the Company nor any
Subsidiary owns any real property. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and 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 its Subsidiaries.
(v) Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights
("INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their respective
businesses as now conducted. Except as set forth in Schedule 3(v), none of the
Company's issued patents that are assigned to it or any Intellectual Property
Rights that are material to the business of the Company have expired or
terminated, or are expected to expire or terminate within three years from the
date of this Agreement. The Company does not have any knowledge of any
infringement by the Company or any Subsidiary of Intellectual Property Rights of
others except where such infringement would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. There is no claim,
action or proceeding being made or brought, or to the knowledge of the Company,
being threatened, against the Company or any Subsidiary regarding its
Intellectual Property Rights which could have a Material Adverse Effect. The
Company is unaware of any facts or circumstances which might give rise to any of
the foregoing infringements or claims, actions or proceedings. The Company and
its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.
(w) Environmental Laws. The Company and its Subsidiaries
(i) are in compliance with any and all Environmental Laws (as hereinafter
defined), (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 permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means all federal, state,
local or foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, "HAZARDOUS MATERIALS") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(x) Subsidiary Rights. The Company has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of each Subsidiary as
owned by the Company.
(y) Tax Status. The Company and each Subsidiary (i) 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, (ii) 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 (iii) has set aside
on its books provision 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
reasonable basis for any such claim.
(z) Internal Accounting Controls. The Company and each
Subsidiary 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
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference. In
addition, the Company has established and maintains disclosure controls and
procedures as defined in Rule 13a-14 under the 1934 Act and in compliance with
Rule 13a-15 under the 1934 Act.
(aa) Disclosure. Except for the existence and terms of
this Agreement and the transactions contemplated hereby, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of
the Buyers or their respective agents or counsel with any information that
constitutes or might constitute material, nonpublic information. The Borrower
understands and confirms that each of the Buyers will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Buyers
regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on behalf of the
Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any Subsidiary or either of its or their
respective business, properties, prospects, operations or financial conditions,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's reports filed under the
Exchange Act of 1934, as amended, are being incorporated into an effective
registration statement filed by the Company under the 1933 Act). The Company
acknowledges and agrees that no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 2.
(bb) Xxxxxxxx-Xxxxx Act. The Company is in compliance with
any and all applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are
effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof, except where such noncompliance would not have a Material Adverse
Effect.
(cc) FDA Compliance. The Company and its Subsidiaries, and
the manufacture, marketing and sales of the Company's products, complies with
any and all applicable requirements of the Federal Food, Drug and Cosmetic Act,
21 U.S.C. Section 301, et seq., any rules and regulations of the Food and Drug
Administration promugulated thereunder, and any similar laws outside of the
United States to which the company is subject, except where such noncompliance
would not have a Material Adverse Effect.
4. COVENANTS.
(a) Reasonable Best Efforts. Each party shall use its
reasonable best efforts timely to satisfy each of the conditions to be satisfied
by it as provided in Sections 5 and 6 of this Agreement.
(b) Prospectus Supplement and Blue Sky. On or before the
Closing the Company shall deliver, and as soon as practicable after the Closing
the Company shall file, a prospectus supplement to the Registration Statement
with respect to the Securities as required under and in conformity with the 1933
Act. If required, the Company, on or before the Closing Date, shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Buyers at the
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
qualification), and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or "Blue Sky" laws of the states of the United States
following the Closing Date.
(c) Reporting Status. Until the date on which the Buyers
shall have sold all the Common Shares (the "REPORTING PERIOD"), the Company
shall timely file all reports required
to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination.
(d) Use of Proceeds. The Company will use the proceeds
from the sale of the Securities for working capital, general corporate and other
purposes.
(e) Listing. The Company shall promptly secure the
listing of the Common Shares upon each national securities exchange and
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all the
Common Shares from time to time issuable under the terms of the Transaction
Documents. The Company shall use its best efforts to maintain the Common Stock's
authorization for quotation on the Principal Market. Neither the Company nor any
Subsidiary shall take any action which would be reasonably expected to result in
the delisting or suspension of the Common Stock on the Principal Market and
shall comply, in all material respect, with the rules and regulations of the
Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(e).
(f) Fees. The Company shall reimburse the Buyers in the
aggregate $10,000 for the Buyers reasonable expenses incurred in connection with
the preparation, execution and performance of this Agreement and the
transactions contemplated hereunder. The Company shall be responsible for the
payment of any placement agent's fees or broker's commissions relating to or
arising out of the transactions contemplated hereby. Except as otherwise set
forth in this Agreement, each party to this Agreement shall bear its own
expenses in connection with the sale of the Securities to the Buyers.
(g) Disclosure of Transactions and Other Material
Information. On or before 8:30 a.m., New York City Time, on the first trading
day following the date hereof, issue a press release reasonably acceptable to
the Buyers disclosing all material terms of the transactions contemplated
hereby. On or before 5:00 p.m., New York City Time, on the first business day
following the execution and delivery of this Agreement, the Company shall file a
Current Report on Form 8-K describing the terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act, and attaching
the material Transaction Documents (including, without limitation, this
Agreement) as exhibits to such filing (including all attachments, the "8-K
FILING"). From and after the filing of the 8-K Filing with the SEC, no Buyer
shall be in possession of any material, nonpublic information received from the
Company, any Subsidiary or any of its respective officers, directors, employees
or agents, that is not disclosed in the 8-K Filing. The Company shall not, and
shall cause each Subsidiary and each of its respective officers, directors,
employees and agents, not to, provide any Buyer with any material nonpublic
information regarding the Company or any Subsidiary from and after the filing of
the 8-K Filing with the SEC (x) without the express written consent of such
Buyer and (y) unless such Buyer shall have executed a customary and reasonable
written agreement regarding the confidentiality of such information. In the
event of a breach of the foregoing covenant by the Company, any Subsidiary, or
its each of respective officers, directors, employees and agents, in addition to
any other remedy provided herein or in the Transaction Documents, a Buyer shall
have the right to demand that the Company make a public disclosure,
and if the Company fails to do so within two Business Days the Buyer may make a
public disclosure, in the form of a press release, public advertisement or
otherwise, of such material nonpublic information without the prior approval by
the Company, each Subsidiary, or each of its respective officers, directors,
employees or agents. (As used herein, "BUSINESS DAY" means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.) No Buyer shall have any
liability to the Company, any Subsidiary, or any of its or their respective
officers, directors, employees, shareholders or agents for any such disclosure
unless such Buyer acts with gross negligence or willful misconduct. Subject to
the foregoing, neither the Company nor any Buyer shall issue any press releases
or any other public statements with respect to the transactions contemplated
hereby without the prior written consent of the Company, in the case of such a
press release or public statement by any Buyer, or the Buyers, in the case of
such a press release or public statement by the Company, such consent not to be
unreasonably withheld or delayed; provided, however, that the Company shall be
entitled, without the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing (1) and contemporaneously therewith or (2) in
connection with the Company's periodic reports filed with the Commission and
(ii) as is required by applicable law and regulations, including the applicable
rules and regulations of the Principal Market (provided that in the case of
clause (i) each Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release).
(h) Additional Issuances of Securities. From the date
hereof until March 15, 2004, the Company covenants and agrees that the Company
will not, directly or indirectly, sell, grant any option to purchase, or
otherwise dispose of (or announce any sale, grant or any option to purchase or
other disposition of), whether pursuant to the Registration Statement or
otherwise, any of its or its Subsidiaries' equity or equity equivalent
securities, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for Common Stock
or any rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities or any stock or securities convertible into or
exercisable or exchangeable for Common Stock. The foregoing restrictions shall
not apply (1) in connection with any employee benefit plan 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 or director for
services provided to the Company or any of its Subsidiaries, or pursuant to the
exercise of any securities of the Company issued thereunder; (2) upon conversion
of any options or convertible securities that are outstanding on the day
immediately preceding the Closing Date, provided, that the terms of such options
or convertible securities are not amended, modified or changed on or after the
Closing Date; or (3) to transactions involving a strategic alliance, acquisition
of stock or assets, merger, collaboration, joint venture, partnership or other
similar arrangement of the Company with another corporation, partnership or
other business entity (A) which is engaged in a business similar, complementary
or related to the business of the Company or (B) pursuant to which the Company
issues securities with the primary purpose to directly or indirectly acquire,
license or otherwise become entitled to use technology relevant to or useful in
the Company's business.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
(a) Closing Date. The obligation of the Company hereunder
to issue and sell the Common Shares to each Buyer at the Closing is subject to
the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company.
(ii) Such Buyer shall have delivered to the
Company the Purchase Price (less, the amounts withheld pursuant to Section 4(f))
for the Common Shares being purchased by such Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company.
(iii) The representations and warranties of such
Buyer shall be true and correct in all material respects (except for
representations and warranties that are qualified by materiality, which shall be
true and correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed, satisfied and
complied in all material respects (except for covenants, agreements and
conditions that are qualified by materiality, which shall be complied with in
all respects) with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such Buyer at or prior
to the Closing Date. The Company shall have received a certificate, executed by
an authorized officer of each Buyer, dated as of the Closing Date, to the
foregoing effect in the form attached hereto as Exhibit A.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
(a) Closing Date. The obligation of each Buyer hereunder
to purchase the Common Shares at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for each Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion by providing the Company with prior
written notice thereof:
(i) The Company shall have executed and
delivered to such Buyer each of the Transaction Documents.
(ii) Such Buyer shall have received the opinion
of Ropes & Xxxx LLP, the Company's counsel, dated as of the Closing Date, in
form, scope and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit B attached hereto.
(iii) The Company shall have delivered to such
Buyer a certificate evidencing the incorporation and good standing of the
Company in its state of incorporation issued by the Secretary of State of such
state of incorporation as of a date within 10 days of the Closing Date.
(iv) The Company shall have delivered to such
Buyer a certificate evidencing the Company's qualification as a foreign
corporation and good standing issued by the Secretary of State of the State of
California as of a date within 10 days of the Closing Date.
(v) The Company shall have delivered to such
Buyer a certified copy of the Certificate of Incorporation as certified by the
Secretary of State of the State of Delaware within 10 days of the Closing Date.
(vi) The Company shall have delivered to such
Buyer a certificate, executed by the Secretary of the Company and dated as of
the Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company's Board of Directors in a form reasonably acceptable to
such Buyer (the "RESOLUTIONS"), (ii) the Certificate of Incorporation and (iii)
the Bylaws, each as in effect at the Closing, in the form attached hereto as
Exhibit C.
(vii) The representations and warranties of the
Company shall be true and correct in all material respects (except for
representations and warranties that are qualified by materiality, which shall be
true and correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects (except for covenants, agreements and
conditions that are qualified by materiality, which shall be complied with in
all respects) with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form attached hereto as Exhibit D.
(viii) The Company shall have delivered to such
Buyer a letter from the Company's transfer agent certifying the number of shares
of Common Stock outstanding as of a date within five days of the Closing Date.
(ix) The Company shall have obtained all
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Common Shares, including, without limitation, the
expiration or waiver of the 15-day period set forth in Rule 4310(c)(17) of the
National Association of Securities Dealers, Inc.
(x) The Registration Statement shall be
effective and available for the issuance and sale of the Securities hereunder
and the Company shall have delivered to the Buyer the prospectus required
thereunder.
(xi) The Company shall have delivered to such
Buyer such other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
7. TERMINATION. In the event that the Closing shall not have
occurred with respect to a Buyer on the Closing Date due to the Company's or
such Buyer's failure to satisfy the conditions set forth in Sections 5 and 6
above (and the nonbreaching party's failure to waive
such unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to this Section
7, the Company shall remain obligated to reimburse the Buyers for the expenses
described in Section 4(f) above.
8. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. Each party hereby irrevocably submits to the non-exclusive
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 brought
in an inconvenient forum or that the venue of 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.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts. This Agreement may be executed in two
or more identical counterparts, all of which 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; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the holders of Common Shares
representing at least a majority of the amount of the Common Shares, or, if
prior to the Closing Date, the Buyers listed on the Schedule of Buyers as being
obligated to purchase at least a majority of the amount of the Common Shares. No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Common Shares then outstanding. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration also is offered to
all of the parties to the Transaction Documents or holders of Common Shares, as
the case may be. The Company has not, directly or indirectly, made any
agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents.
(f) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with an overnight courier service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
StemCells, Inc.
0000 Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx XxXxxxx
with a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
If to the Transfer Agent:
EquiServe Trust Company, L.P.
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers, or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.
(g) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Common Shares. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the holders of Common Shares representing
at least a majority of the number of the Common Shares. A Buyer may assign some
or all of its rights hereunder without the consent of the Company, in which
event such assignee shall be deemed to be a Buyer hereunder with respect to such
assigned rights.
(h) 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.
(i) Survival. Unless this Agreement is terminated under
Section 7, the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4 and 8 shall survive the Closing. Each Buyer shall be responsible only
for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Indemnification. (i) In consideration of each Buyer's
execution and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless each Buyer and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this
Agreement) (collectively, the "INDEMNITEES") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee to the extent
resulting from or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in 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 the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, or (iii) the status of such Buyer or holder of the Securities
as an investor in the Company. 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 each of the Indemnified
Liabilities which is permissible under applicable law.
(ii) Promptly after receipt by an Indemnitee
under this Section 8(k) of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving an
Indemnified Liability, such Indemnitee shall, if an Indemnified Liability in
respect thereof is to be made against any indemnifying party under this Section
8(k), deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnitee;
provided, however, that an Indemnitee shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion
of the Indemnitee, the representation by such counsel of the Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other party represented by such
counsel in such proceeding. Legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority of the Purchased Shares. The Indemnitee shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or Indemnified Liabilities by the indemnifying party and shall furnish to
the indemnifying party all information reasonably available to the Indemnitee
that relates to such action or Indemnified Liabilities. The indemnifying party
shall keep the Indemnitee fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement or
other compromise which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in
respect to such Indemnified Liabilities or litigation. Following indemnification
as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnitee with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnitee under this Section 8(k), except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
(iii) The indemnification required by this Section
8(k) shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or Indemnified
Liabilities are incurred.
(iv) The indemnity agreements contained herein
shall be in addition to (i) any cause of action or similar right of the
Indemnitee against the indemnifying party or others, and (ii) any liabilities
the indemnifying party may be subject to pursuant to the law.
(l) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
(m) Remedies. Each Buyer and each holder of the
Securities shall have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
Furthermore, the Company recognizes that in the event that it fails to perform,
observe, or discharge any or all of its obligations under this Agreement, any
remedy at law may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to seek temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and without posting a bond or other security.
(n) Payment Set Aside. To the extent that the Company
makes a payment or payments to the Buyers hereunder or pursuant to any of the
other Transaction Documents or the Buyers 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 to be 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.
(o) Independent Nature of Buyers' Obligations and Rights.
The obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any
other Buyer, and no Buyer shall be responsible in any way for the performance of
the obligations of any other Buyer under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by
any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Buyers are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Buyer confirms that it has independently
participated in the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitations,
the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an
additional party in any proceeding for such purpose.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
STEMCELLS, INC. THE RIVERVIEW GROUP LLC
By:________________________________ By:______________________
Name: Name:
Title: Chief Executive Officer Title:
SCHEDULE OF BUYERS
(1) (2) (3) (4)
NUMBER OF
COMMON LEGAL REPRESENTATIVE'S
BUYER ADDRESS AND FACSIMILE NUMBER SHARES ADDRESS AND FACSIMILE NUMBER
---------------------------------------------------------------------------------------------------
THE RIVERVIEW GROUP 000 Xxxxx Xxxxxx, 0xx xxxxx 5,000,000 Xxxxxxx Xxxx & Xxxxx LLP
LLC Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxx Xxxxxx
Attention: Xxxxxx Xxxxxxxx Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Attn: Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Residence: Delaware Telephone: (000) 000-0000
EXHIBITS
Exhibit A Form of Buyer Certificate
Exhibit B Form of Company Counsel Opinion
Exhibit C Form of Secretary's Certificate
Exhibit D Form of Officer's Certificate
SCHEDULES
Schedule 3(e) Consents
Schedule 3(l) Absence of Certain Changes
Schedule 3(w) Intellectual Property
