Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
by and among
HEMISPHERX BIOPHARMA, INC.
and
THE INVESTORS LISTED HEREIN
Dated as of
January 26, 2004
TABLE OF CONTENTS
Page
1 PURCHASE AND SALE OF DEBENTURES AND WARRANTS..............................2
2 BUYER'S REPRESENTATIONS AND WARRANTIES....................................2
3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................6
4 COVENANTS................................................................14
6 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL...........................26
7 CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE........................27
8 INDEMNIFICATION..........................................................28
9 MISCELLANEOUS............................................................29
Schedule 3(a) - Subsidiaries
Schedule 3(c) - Capitalization
Schedule 3(e) - Conflicts
Schedule 3(l) - Title
Schedule 3(n) - Insurance
Schedule 3(r) - Transactions with Affiliates
Schedule 4(u) - Consideration pursuant to Interferon Agreements
Schedule 4(v) - Certain Accounts
EXHIBITS
Exhibit A - Form of Debentures
Exhibit B-1 - Form of Warrant A
Exhibit B-2 - Form of Warrant B
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Letter of Credit
Exhibit E - Form of Account Control Agreement
Exhibit F - Form of Security Agreement
Exhibit G-1 - Interferon Inventory and License Agreement
Exhibit G-2 - Interferon Asset Agreement
Exhibit H - Form of Irrevocable Transfer Agent Instructions
Exhibit I - Form of Legal Opinion
Exhibit J - Form of Current Report on 8-K
Exhibit K - Form of Additional Investment Rights
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of January 26,
2004, by and among Hemispherx Biopharma, Inc., a Delaware corporation, with
headquarters located at One Penn Center, 0000 XXX Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 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 the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act").
B. The Company has authorized the issuance of $6,000,000 principal amount
of its 6% Senior Secured Convertible Debentures due January 31, 2006
(collectively, the "Debentures"), which shall be convertible into shares of the
Company's common stock, par value $0.001 per share (the "Common Stock") (as
converted, the "Conversion Shares"), in accordance with the terms of the
Debentures.
C. The Buyers severally wish to purchase, upon the terms and conditions
stated in this Agreement, (i) the Debentures in the aggregate principal amount
of $4,000,000 on the Closing Date (as defined below), such Debentures to be in
the form attached hereto as Exhibit A, in the respective amounts set forth
opposite each Buyer's name on the Schedule of Buyers for the purchase price
opposite such Buyer's name on the Schedule of Buyers, (ii) a right to acquire up
to an additional aggregate of $2,000,000 of the Debentures (the "Additional
Investment Rights""), such Additional Investment Rights to be in the form
attached hereto as Exhibit K, (iii) shares of Common Stock set forth opposite
such Buyer's name under the heading "Number of Common Shares" on the Schedule of
Buyers (which shall collectively be referred to herein as the "Common Shares" )
and (iv) two series of warrants (the "Warrants") to purchase shares of Common
Stock (as exercised collectively, the "Warrant Shares"), such Warrants to be
substantially in the form attached hereto as Exhibit B-1 and Exhibit B-2, in the
respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers.
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit C (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide the Buyers with
the benefit of certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws, on the
terms and subject to the conditions set forth therein.
E. The location of defined terms in this Agreement is set forth on the
Index of Terms attached hereto.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE.
a. Purchase of Debentures, Additional Investment Rights, Common
Shares and Warrants. Subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6 and 7 below, the Company shall issue and sell to each
Buyer, and each Buyer severally agrees to purchase from the Company, the
respective principal amount of Debentures, the Additional Investment Rights, the
Common Shares, and the related Warrants, for the purchase price set forth
opposite such Buyer's name on the Schedule of Buyers (the "Closing").
b. The Closing. The date and time of the Closing (the "Closing
Date") shall be 10:00 a.m., New York City time, on the date hereof (or such
later date as is mutually agreed to by the Company and the applicable Buyer or
Buyers) subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7. The Closing shall occur on the Closing Date at the offices of
Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. "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.
c. Delivery and Payment. (i) On the Closing Date, the Company shall
deliver to each Buyer (i) Debentures (in the denominations as such Buyer shall
reasonably request) representing the principal amount of Debentures which such
Buyer is purchasing hereunder at the Closing, (ii) the Additional Investment
Rights which such Buyer is purchasing hereunder at the Closing,(iii) the Common
Shares that such Buyer is purchasing hereunder and (iv) warrants representing
the related Warrants, in each case duly executed on behalf of the Company and
registered in the name of such Buyer.
(ii) On the Closing Date, each Buyer shall set aside in a separate
segregated account (the "Segregated Account") an amount equal to the sum of (x)
such Buyer's total purchase price for such Buyer's portion of Debentures,
Additional Investment Rights, Common Shares and Warrants such Buyer is then
purchasing as set forth on the Schedule of Buyers (such "Buyer's Purchase
Price") and (y) such Buyer's aggregate exercise price for the Additional
Investment Right issued to such Buyer as set forth on the Schedule of Buyer's
opposite such Buyer's name under the heading "AIR Exercise Price".
(iii) Payment of such Buyer's Purchase Price shall be made by wire
transfer of immediately available funds from such Buyer's Segregated Account in
accordance with the Company's written wire instructions, less any amount
withheld at the Closing for expenses pursuant to Section 4(k) in the following
manner: On the Closing Date, each Buyer shall pay the amount set forth opposite
such Buyer's name on the Schedule of Buyers under the heading "Payment Amount."
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
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a. Investment Purpose. Such Buyer (i) is acquiring the Debentures,
the Additional Investment Rights, the Common Shares and the Warrants, (ii) upon
conversion of the Debentures owned by it or acquired by it pursuant to the
exercise of the Additional Investment Rights, will acquire the Conversion Shares
then issuable, (iii) upon issuance, will acquire the Interest Shares and
Repayment Shares, if any (each as defined in the Debentures), and shares issued
in connection with a Company Conversion, if any (as defined in the Debentures),
(iv) upon exercise of the Additional Investment Rights, will acquire the
Debentures issued thereunder, and (v) upon exercise of the Warrants held by it,
will acquire the Warrant Shares issuable upon exercise thereof (the Debentures,
the Conversion Shares, the Interest Shares, the Repayment Shares, the shares
issued in connection with a Company Conversion, the Additional Investment
Rights, the Common Shares, the Warrants and the Warrant Shares collectively are
referred to herein as the "Securities") for its own account for investment only
and not with a view towards, or for resale in connection with, the public sale
or distribution thereof, except pursuant to sales registered or exempted under
the 1933 Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time,
provided further, however, that such disposition shall be in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D under the
1933 Act and was not organized for the specific purpose of acquiring the
Securities.
c. Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein and in the
applicable Debenture, Additional Investment Right or Warrant in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
d. Information. Such Buyer (i) has been furnished with or has had
full access to all of the information that it considers necessary or appropriate
to make an informed investment decision with respect to the Debentures, the
Additional Investment Rights, the Common Shares, the Warrants, the Conversion
Shares and the Warrant Shares and that it has requested from the Company, (ii)
has had an opportunity to discuss with management of the Company the business
and financial affairs of the Company and to obtain information (to the extent
the Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to it or to
which it had access, (iii) can bear the economic risk of a total loss of its
investment in the Debentures, the Additional Investment Rights, the Common
Shares and the Warrants and (iv) has such knowledge and experience in business
and financial matters so as to enable it to understand the risks of and form an
investment decision with respect to its investment in the Debentures, the
Additional Investment Rights, the Common Shares, the Warrants, the Conversion
Shares and the Warrant Shares and to protect its interest in connection with
such investment. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
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representatives shall modify, amend or affect such Buyer's right to rely on the
Company's representations and warranties contained in this Agreement.
e. No Governmental Review. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, or (B) such Buyer shall have delivered to
the Company an opinion of counsel in a form reasonably satisfactory to the
Company, to the effect that such Securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from such
registration, (ii) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144") may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder. The
Securities may be pledged in connection with a bona fide margin account or other
loan secured by the Securities and such pledge of Securities shall not be deemed
to be a transfer, sale or assignment of the Securities and no Investor effecting
a pledge of Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Transaction Document, including, without limitation, this Section
2(f); provided that in order to make any sale, transfer or assignment of
Securities, such Investor and its pledgee makes such disposition in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act.
g. Legends. Such Buyer understands that the Debentures, the
Additional Investment Rights, the Common Shares and the Warrants, except as set
forth below, shall bear a restrictive legend in substantially the following
forms (and a stop-transfer order may be placed against transfer of such
Debentures, Additional Investment Rights, Common Shares and Warrants):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
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AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
Such Buyer further understands that until such time as the
Conversion Shares, the Interest Shares, the Repayment Shares and the Warrant
Shares have been sold pursuant to the registration statement contemplated by the
Registration Rights Agreement, the stock certificates representing the
Conversion Shares, the Interest Shares, the Repayment Shares and the Warrant
Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY
NOT BE OFFERED OR TRANSFERRED BY SALE, ASSIGNMENT, PLEDGE OR
OTHERWISE UNLESS (I) A REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE ACT IS IN EFFECT OR (II) THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, WHICH IS SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT. THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
The legends set forth above shall be removed and the Company shall issue the
relevant securities without such legend to the holder of the Securities upon
which it is stamped, if, (i) such Securities are registered for resale under the
1933 Act and are transferred or sold pursuant to such registration or (ii) in
connection with a sale transaction, such holder provides the Company with an
opinion of counsel, reasonably satisfactory to the Company, to the effect that a
public sale, assignment or transfer of the Securities may be made without
registration under the 1933 Act.
h. Authorization; Enforcement; Validity. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of such Buyer and are valid and binding agreements of
such Buyer enforceable against such Buyer in accordance with their terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and
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other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country or state
specified in its address on the Schedule of Buyers.
j. No Conflicts The execution and performance of this Agreement and
the Registration Rights Agreement do not conflict with any agreement to which
such Buyer is a party or is bound thereby, any court order or judgment addressed
to such Buyer, or the constituent documents of such Buyer.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that as of the
date hereof, except as expressly set forth on the Schedule of Exceptions
attached hereto:
a. Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns 30% or more of the capital stock or
other equity or similar interests or owns capital stock or holds an equity or
similar interest which ownership entitles the Company to elect 30% or more of
the board of directors or similar governing body of such entity) are
corporations, partnerships or limited liability companies duly organized and
validly existing in good standing (to the extent such concepts are applicable)
under the laws of the jurisdiction in which they are incorporated or organized,
and have the requisite corporate, limited liability company or partnership power
and authorization to own their properties and to carry on their business as now
being conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation, partnership or limited liability company to do business and
is in good standing (to the extent such concepts are applicable) 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, prospects or condition (financial or otherwise) 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). A complete list
of Subsidiaries is set forth on Schedule 3(a).
b. Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Debentures, the Additional Investment
Rights, the Warrants, the Registration Rights Agreement, the Irrevocable
Transfer Agent Instructions, the Security Agreement, the Collateral Agency
Agreement, dated as of the date hereof, among the Buyers and acknowledged by the
Company, the Account Control Agreement, the Mortgages, each deposit account
control agreement and security account control agreement entered into among, or
amended among, the Company, the Agent (as defined) and the depositary bank named
therein (collectively, the "Bank Agreements") and each of the other agreements
entered into by the parties hereto in connection with the
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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 it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Debentures, the reservation
for issuance and the issuance of the Conversion Shares issuable upon conversion
thereof, the reservation for issuance and the issuance of Interest Shares and
Repayment Shares in accordance with the terms of the Debentures, the issuance of
the Additional Investment Rights, the reservation for issuance and the issuance
of the Debentures issuable upon exercise thereof, the issuance of the Common
Shares, the issuance of the Warrants and the reservation for issuance and the
issuance of the Warrant Shares issuable upon exercise of the Warrants, have been
duly authorized by the Company's Board of Directors and no further consent or
authorization is required of the Company's Board of Directors or stockholders
(except to the extent that stockholder approval may be required pursuant to the
rules of the AMEX for the issuance of a number of Conversion Shares, Interest
Shares, Repayment Shares and Warrant Shares greater in the aggregate than 19.99%
of the number of shares of Common Stock outstanding immediately prior to the
Closing Date (the "19.99% Rule")). The Transaction Documents executed on the
date hereof have been and the other Transaction Documents when executed by the
Company in accordance with their terms will be duly executed and delivered by
the Company and constitute and will constitute the valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except 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 creditors'
rights and remedies.
c. Capitalization. As of January 26, 2004, the authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock, of which as
of such date, 39,594,762] shares are issued and outstanding and 19,039,032
shares are reserved for issuance pursuant to the Company's stock option purchase
plans (including pursuant to options outstanding as of such date as well as
options granted thereafter), outstanding stock warrants and convertible
debentures. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c) or in the SEC Documents, (A) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights (arising
under Delaware law, the Company's Certificate of Incorporation or By-laws or any
agreement or instrument to which the Company is a party) or any liens or
encumbrances granted or created by the Company; (B) 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, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries (other than any such options, warrants,
scrip, rights, calls, commitments, securities, understandings and arrangement
outstanding under plans disclosed in the SEC Documents); (C) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (D) there are no amounts
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outstanding under, and there will be no amounts due upon termination of, any
credit agreement or credit facility; (E) there are no financing statements
securing obligations in any amounts greater than $100,000, singly, or $250,000
in the aggregate, filed in connection with the Company or any of its
Subsidiaries; (F) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement);
(G) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (H) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this Agreement; (I)
the Company does not have any stock appreciation rights or "phantom" stock plans
or agreements or any similar plan or agreement; (J) to the Company's knowledge,
(i) no current or former officer or director who individually owns 1% or more of
the Company's outstanding capital stock or (ii) other beneficial owner of 5% or
more of the Company's outstanding capital stock, has pledged shares of the
Company's capital stock in connection with a margin account or other loan
secured by such capital stock; and (K) 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 its Subsidiaries' respective
businesses and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
The Company has made available to each Buyer that has requested it true and
correct 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 By-laws, as amended and as in effect on the date hereof (the
"By-laws"), 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 except for stock options granted under any benefit plan or stock
option plan of the Company approved by the Board of Directors of the Company.
d. Issuance of Securities. The Securities are duly authorized and,
upon issuance in accordance with the terms of the applicable Transaction
Documents, shall be (i) validly issued, fully paid and non-assessable and (ii)
free from all taxes, liens and charges with respect to the issuance thereof
(other than any such taxes, liens and charges created by any Buyer or assignee
or transferee), and, except as set forth in Schedule 3(c), shall not be subject
to pre-emptive rights or other similar rights of shareholders of the Company. As
of the Closing, at least 4,662,322 shares of Common Stock (subject to adjustment
pursuant to the Company's covenant set forth in Section 4(f) below) will have
been duly authorized and reserved for issuance upon conversion of the
Debentures, exercise of the Warrants and the issuance of the Interest Shares and
the Repayment Shares issuable over the full term of the Debentures (assuming the
Company paid the maximum amount of interest permitted to be paid in Interest
Shares over the full term of the Debentures). Upon conversion or issuance in
accordance with the Debentures or the Warrants, as applicable, the Conversion
Shares, the Interest Shares, the Repayment Shares and the Warrant Shares, as the
case may be, will be validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof (other than any
such taxes, liens and charges created by any Buyer or any assignee or
transferee), with the holders being entitled to all rights accorded to a holder
of Common Stock. Based, in part, on reliance on the
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representations and warranties of each of the Buyers in the Transaction
Documents, the issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
e. No Conflicts. 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
reservation for issuance and issuance of the Debentures issuable upon exercise
of the Additional Investment Rights and the Conversion Shares, the Interest
Shares, the Repayment Shares and the Warrant Shares) will not (i) result in a
violation of the Certificate of Incorporation or the By-laws; (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 of its Subsidiaries is a party (except
for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect); 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 (as defined below)) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, By-laws or their organizational charter or
by-laws, respectively. Neither the Company nor any of its Subsidiaries is in
violation of any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except where
such violations and defaults would not result, either individually or in the
aggregate, in a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
Except as specifically contemplated by this Agreement, as required under the
1933 Act, as required by Blue Sky filings or as required by the 19.99% Rule, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents. Except as disclosed in Schedule 3(e), 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 date hereof. The Company and its Subsidiaries are currently unaware of any
facts or circumstances which might give rise to any of the foregoing events set
forth in this paragraph. The Company is not in violation of the listing
requirements of the Principal Market, and has no actual knowledge of any facts
which would reasonably lead to delisting or suspension of the Common Stock by
the Principal Market in the foreseeable future. Notwithstanding anything herein
to the contrary, the Company's listing application with respect to shares of
Common Stock underlying the March Securities, June Securities, July Securities
and October Securities have been filed with the Principal Market but have not
been finally approved by the Principal Market. The Company believes, but cannot
assure, that such listing applications will be finally approved by the Principal
Market.
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f. SEC Documents; Financial Statements. Since January 1, 2001, other
than a Form 8-K/A with respect to the transactions contemplated by the
Interferon Asset Agreement, the Company has 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 Securities Exchange Act of 1934, as amended
(the "1934 Act") (all of the foregoing filed prior to or on the date hereof 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"). As of the date of filing of such SEC Documents, each such SEC
Document, as it may have been subsequently amended by filings made by the
Company with the SEC prior to the date hereof, complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Document. None of the SEC
Documents, as of the date filed and as they may have been subsequently amended
by filings made by the Company with the SEC prior to the date hereof, 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 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 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). The Company is not aware of any fact or circumstance that would
result or reasonably be likely to result in the Company receiving a "going
concern" opinion or qualification from its independent auditor's with respect to
the Company's financial position for the year ended December 31, 2002. To the
best of the Company's knowledge, no other written information provided by or on
behalf of the Company to the Buyers which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(d), 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
circumstances under which they are or were made, not misleading. Neither the
Company nor any of its Subsidiaries nor any of their officers, directors,
employees or agents have provided the Buyers with any material, nonpublic
information. As of the date hereof, other than the need to file updated
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002, the Company meets the requirements for use of Form S-1
for registration of the resale of Registrable Securities (as defined in the
Registration Rights Agreement) and does not have any knowledge or reason to
believe that it does not meet such requirements or any actual knowledge of any
fact which would reasonably result in its not meeting such requirements. As of
the date hereof, the Company does not meet the requirements for use of Form S-3
for registration of the resale of Registrable Securities. The Company is not
required to file and will not be required to file any agreement, note, lease,
mortgage, deed or other instrument entered into prior to the date hereof and to
which the Company is a party or by which the Company is bound which has not been
previously filed as an exhibit to its reports filed with the SEC under the 1934
Act. Except for the issuance of the
10
Debentures and the Warrants contemplated by this Agreement and the transactions
contemplated therein, no event, liability, development or circumstance has
occurred or exists, or is currently contemplated to occur, with respect to the
Company or its Subsidiaries or their respective business, properties, operations
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws and which has not been publicly disclosed.
g. Absence of Certain Changes. Except as disclosed in the SEC
Documents available on the XXXXX system, there has been no change or development
that has had or could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect. The Company has not taken any steps,
and does not currently expect to take any steps, to seek protection pursuant to
any bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. Except as disclosed in the SEC Documents
available on the XXXXX system, since December 31, 2000, (i) the Company has not
declared or paid any dividends, and (ii) as of the date hereof, has not sold any
assets, individually or in the aggregate, in excess of $100,000 outside of the
ordinary course of business or had capital expenditures, individually or in the
aggregate, in excess of $200,000.
h. Absence of Litigation. Except as disclosed in the section titled
"Legal Proceedings" in (i) the Company's Annual Report on Form 10-K for the year
ended December 31, 2002 or (ii) any of the Company's SEC Documents filed since
the filing of such Form 10-K, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened in writing against the Company or any of
the Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such, that would
reasonably be expected to result in judgments against the Company or any of its
Subsidiaries in an amount, individually or in the aggregate, in excess of
$250,000.
i. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security to persons other than the Buyers, under circumstances that
would cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of (a) the 1933 Act in a manner that would
result in a violation of the 1933 Act or (b) 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 in a manner that would violate such provisions,
nor will the Company or any of its Subsidiaries take any action or steps that
would cause the offering of the Securities to be integrated with other offerings
in a manner that would violate such Act or provisions.
j. Employment Matters; ERISA Matters. (i) Neither the Company nor
any of its Subsidiaries is involved in any material union labor dispute nor, to
the knowledge of the Company or any of its Subsidiaries, is any such dispute
threatened. None of the Company's or its Subsidiaries' U.S. employees is a
member of a union which relates to such employee's relationship with the
Company. Neither the Company nor any of its Subsidiaries is a party to a
11
collective bargaining agreement. No executive officer (as defined in Rule 501(f)
of the 0000 Xxx) has notified the Company in writing that such officer intends
to leave the Company or otherwise terminate such officer's employment with the
Company.
(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.
k. Intellectual Property Rights. The Company and its Subsidiaries
own or possess adequate rights or licenses to use (i) all trademarks, trade
names, trade dress, service marks, service xxxx registrations, service names,
patents, patent rights, copyrights, inventions, technology licenses, approvals,
governmental authorizations, trade secrets, and other intellectual property
rights (collectively, "Intellectual Property") necessary to conduct their
respective businesses as now conducted and as currently contemplated to be
conducted other than businesses that the Company has not as of the date hereof
launched, except where the failure to own, possess or protect such rights would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect. None of the Company's or its Subsidiaries'
Intellectual Property rights have expired or terminated, or are expected to
expire or terminate within two years from the date of this Agreement, except
where such expiration or termination would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. Except
as would not reasonably be expected to result in a Material Adverse Effect, the
Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of Intellectual Property rights of others, or of
any development of similar or identical trade secrets or technical information
by others and except as would not reasonably be expected to result in a Material
Adverse Effect, there is no claim, action or proceeding being made by or brought
against, or to the knowledge of the Company, currently threatened in writing by
or against, the Company or its Subsidiaries regarding the Intellectual Property
rights of or the use of any Intellectual Property by the Company or its
Subsidiaries or any third party. The Company and its Subsidiaries have taken all
reasonable security measures to protect the secrecy, confidentiality and value
of all of their Intellectual Property.
l. Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries taken as a whole, in each case free and clear of all liens,
encumbrances and defects except such as (i) constitute purchase money security
interests, (ii) are described in Schedule 3(l) or (iii) such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
any of its Subsidiaries. Any real property and facilities held under lease by
the Company and any of 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
facilities by the Company and its Subsidiaries.
m. Environmental Laws. The Company and its Subsidiaries (A) are in
compliance with any and all Environmental Laws, (B) have received all permits,
licenses or
12
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses, and (C) are in compliance with all terms and
conditions of any such permit, license or approval, except in each case where
the failure of the Company and its Subsidiaries would not, either individually
or in the aggregate, reasonably be expected to result in 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.
n. Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Except as set forth on Schedule 3(n), neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied for and
neither the Company nor any such 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.
o. Regulatory Permits. Except for Permits (as defined below) the
absence of which would not, either individually or in the aggregate, result in a
Material Adverse Effect, 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 as currently conducted (the "Permits"), and neither the Company nor
any such Subsidiary has received any written notice of proceedings relating to
the revocation or modification of any such Permit.
p. No Materially Adverse Contracts, Etc. Neither the Company nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is currently expected in the future to
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is a party to any contract or agreement which in the judgment of the Company's
officers has or is currently expected to have a Material Adverse Effect.
q. Tax Status. Except as could not reasonably be expected to have a
Material Adverse Effect, the Company and each of its Subsidiaries (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 due with respect to the
periods covered by such returns, reports and declarations, except those being
contested in good faith and for which the Company has made appropriate reserves
on its books, and (iii) has paid or set aside on its books provisions reasonably
adequate for the
13
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations (referred to in clause (i) above) apply. There
are no unpaid taxes that are individually or in the aggregate material in amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.
r. Transactions With Affiliates. Except as set forth on Schedule
3(r) and in the SEC Documents, and other than the grant of stock options
described on Schedule 3(c), none of the officers, directors, employees of the
Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than in connection with the provision of services as
employees, officers and directors, payment of ordinary course business expenses
for employees, and other expenditures on behalf of employees in an aggregate
amount for all employees not in excess of $500,000), 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.
s. Application of Takeover Protections. 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, the laws of the
state of its incorporation or the laws of any other state which is or could
become applicable to the Buyers as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyers' ownership of the Securities.
t. Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company or any Subsidiary used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
4. COVENANTS.
a. Best Efforts. Each party shall use its reasonable best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary in order to obtain an
14
exemption for, or to qualify the Securities for, sale to the Buyers at each of
the Closings 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 each of the Closing Dates (to the extent such action
is required by applicable law). 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 each
Closing Date.
c. Reporting Status. Other than pursuant to a Change of Control (as
defined in the Debentures), until the earlier of (i) the date which is one year
after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Conversion Shares, the
Interest Shares, the Repayment Shares and the Warrant Shares without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto)
and (ii) the date on which (A) the Investors shall have sold all the Conversion
Shares, the Interest Shares, the Repayment Shares and the Warrant Shares and (B)
none of the Debentures or Warrants is outstanding (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 Debentures and the Warrants for general corporate purposes.
e. Financial Information. The Company agrees to send the following
to each Investor during the Reporting Period: (i) within ten (10) days after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments thereto filed
pursuant to the 1933 Act, provided that if any such report is filed with the SEC
through XXXXX and is available to the Buyers via XXXXX then no such deliveries
shall be required; (ii) using its reasonable efforts, on the same day as the
release thereof, facsimile copies of all press releases issued by the Company
relating to the Company's quarterly operating results and (iii) copies of any
notices and other information made available or given to the stockholders of the
Company generally, contemporaneously with the making available or giving thereof
to the stockholders.
f. Reservation of Shares. Prior to the date on which payments have
been made pursuant to Section 25 of the Debentures in an amount equal to the
entire Outstanding Principal Amount (as defined in the Debentures), together
with accrued and unpaid interest on all Debentures outstanding the Company shall
take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 135% of the number of shares of Common Stock
needed to provide for the issuance of the Conversion Shares upon conversion of
all of the Debentures, the Warrant Shares upon exercise of all of the Warrants
(without regard to any limitations on conversions or exercise) and the maximum
number of Interest Shares issuable over the full term of the Debentures
(assuming the Company paid the maximum amount of interest permitted to be paid
in Interest Shares over the full term of the Debentures), and after such time
100% of the number of shares of Common Stock needed to provide for the issuance
of
15
the Conversion Shares upon conversion of all of the Debentures and of the
Warrant Shares upon exercise of all of the Warrants (without regard to any
limitations on conversions or exercise).
g. Listing. The Company timely shall satisfy the condition set forth
in clause (2) of Section 7(a)(ii) and also shall promptly secure the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) 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 Registrable Securities from
time to time issuable under the terms of the Transaction Documents. So long as
any Securities are outstanding, the Company shall maintain the Common Stock's
authorization for quotation on listing on The New York Stock Exchange, Inc. (the
"NYSE"), the American Stock Exchange, Inc. ("AMEX") or The Nasdaq Stock Market,
Inc. ("NASDAQ") (as applicable, the "Principal Market"). The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 4(g). Notwithstanding the foregoing or any other provision herein to the
contrary, certain of the Registrable Securities (the "Unlisted Securities") may
not be able to be listed unless and until either (a) in the determination of the
Principal Market, the Unlisted Securities would not be aggregated by the
Principal Market with Previously-Issued Securities in a manner that violates the
19.99% Rule or (b) the issuance of the Unlisted Securities is approved by the
Company's stockholders. The Company shall secure the listing of the Unlisted
Securities 10 days following the earlier to occur of (i) the six-month
anniversary of the date hereof and (ii) such time as the stockholder approval
referred to in the foregoing sentence is obtained.
h. Filing of Form 8-K. At or before 8:30 a.m., New York City time,
on the Business Day following the Closing Date, the Company shall file a Current
Report on Form 8-K with the SEC describing the terms of the transactions
contemplated by the Transaction Documents and including as exhibits to such
Current Report on Form 8-K this Agreement, the form of Debenture, the form of
Additional Investment Rights, the form of Warrants and the Registration Rights
Agreement in the form required by the 1934 Act (with such exhibits, a "Form
8-K")). From and after the initial filing of the Form 8-K with the SEC, unless
required pursuant to Section 3(h) of the Registration Rights Agreement, no Buyer
shall be in possession of any material, nonpublic information received from the
Company or any of its officers, directors, employees or agents, that is not
disclosed in the Form 8-K. Unless required pursuant to Section 3(h) of the
Registration Rights Agreement, the Company shall not, and shall cause each of
its officers, directors, employees and agents, not to, provide any Buyer with
any material nonpublic information regarding the Company from and after the
filing of the Form 8-K with the SEC without the express written consent of such
Buyer. In the event of a breach of the foregoing covenant by the Company or any
of its or its 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 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 or any of its officers, directors, employees or
agents. No Buyer shall have any liability to the Company or any of its officers,
directors, employees, stockholders or agents for any such disclosure. 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, other than as set forth in Section 9(j) hereof.
16
i. Proxy Statement. If the Company determines, in connection with
its application for the listing fo additional shares with the Principal Market,
that in connection with the issuance of the Securities, Stockholder Approval is
required by the Principal Market in connection with the 19.99% Rule, the Company
shall provide each stockholder entitled to vote at the next meeting of
stockholders of the Company, which meeting shall occur on or before June 30,
2004 (however, the Company shall use its best efforts to cause such meeting to
occur on or before May 30, 2004), a proxy statement, which has
been previously reviewed by the Buyers and a counsel of their choice, soliciting
each such stockholder's affirmative vote at such stockholder meeting for
approval of the Company's issuance of all of the Securities as described in the
Transaction Documents in accordance with applicable law and the rules and
regulations of the Principal Market (such affirmative approval being referred to
herein as the "Stockholder Approval"), and the Company shall use its reasonable
best efforts to solicit its stockholders' approval of such issuance of the
Securities and to cause the Board of Directors of the Company to recommend to
the stockholders that they approve such proposal.
j. Pledge of Securities. The Company acknowledges and agrees that
the Securities may be pledged in compliance with applicable securities laws by
an Investor in connection with a bona fide margin agreement or other loan
secured by the Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document, including, without limitation,
Section 2(f) of this Agreement; provided that in order to make any sale,
transfer or assignment of Securities, such Investor and its pledgee makes such
disposition in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. The Company hereby agrees to execute and deliver
such reasonable documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by an
Investor.
k. Expenses. Subject to Section 9(l) below, at the Closing, the
Company shall reimburse the Buyers for the Buyers' reasonable, documented fees
and expenses (including legal expenses both in connection with this Agreement
and with prior registration statements filed by the Company) incurred in
connection with the consummation of the transactions contemplated by this
Agreement, up to a maximum of $30,000 (in addition to any other expense amounts
previously paid to the Buyers), which reasonable, documented amount shall be
withheld by the Buyers from its purchase price to be paid at the Closing. In
addition, Portside Growth & Opportunity Fund shall withhold from the amounts set
forth opposite its name on the Schedule of Buyers $280,000 from the Payment
Amount and up to $140,000 (based on the amount of the Additional Investment
Right that is exercised, if any) set forth opposite such Buyer's name on the
Schedule of Buyers under the heading "AIR Exercise Price", in each case to pay
the fees of the placement agent engaged by the Company in connection with the
transactions contemplated hereby.
l. Additional Debentures. For so long as any Buyer beneficially owns
any Debentures, the Company shall not issue any other securities that would
cause a breach or default under the Debentures.
17
m. Tax Matters.
(i) [Reserved.]
(ii) The Company shall be permitted to withhold from any
amounts payable to a Buyer, a Debenture holder, a Warrant holder or
a holder of Common Stock any taxes required by law to be withheld
from such amount. If the Company shall be required to withhold or
deduct any tax, levy or other governmental charge, excluding (A) net
income taxes, franchise taxes, or taxes imposed on or measured by
net income (or overall gross receipts, to the extent such tax is
imposed in lieu of a tax on net income by a jurisdiction that does
not impose any tax based on or measured by net income) on any Buyer
or Debenture holder by the jurisdiction in which such Buyer or
Debenture holder is organized or any other jurisdiction in which
such Buyer or Debenture holder would be subject to tax without
regard to the transactions contemplated hereby, and (B) U.S. Federal
withholding taxes (unless such U.S. Federal withholding taxes would
not be imposed but for a change in or amendment to the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury
Regulations or any other administrative authority thereunder or any
tax treaty or the release or promulgation of any judicial decision
relating thereto, in each case, on or after the later of (x) the
date of this Agreement or (y) the date such Debenture holder becomes
a party hereto (each, a "Change in Law")) (all such non-excluded
taxes, levies or other governmental charges, "Taxes") from any
payment of interest, or any accrual of original issue discount (if
applicable), for U.S. Federal income tax purposes made hereunder or
under any Debenture to or for the benefit of any Buyer or any
Debenture holder, then (A) the amount payable shall be increased by
the amount necessary so that after making all required deductions
and withholdings (including deductions and withholdings with respect
to additional amounts payable under this Section 4(m)) such Buyer or
such Debenture holder shall receive an amount equal to the amount it
would have received if no such deduction or withholding of Taxes had
been required, (B) the Company shall make such deduction or
withholding and (C) the Company shall pay the full amount deducted
to the appropriate governmental authority in accordance with
applicable law. If any Buyer or any Debenture holder is organized
under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (each a "Non-U.S.
Debenture Holder"), it shall deliver to the Company two copies of
either (A) U.S. Internal Revenue Service Form W-8BEN (claiming
complete exemption from U.S. Federal withholding tax under an income
tax treaty), or any successor form; (B) U.S. Internal Revenue
Service Form W-8ECI (claiming complete exemption from U.S. Federal
withholding tax because the income is effectively connected with a
U.S. trade or business), or any successor form; (C) in the case of a
Non-U.S. Debenture Holder claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code, with
respect to payments of "portfolio interest," U.S. Internal Revenue
Service Form W-8BEN (certifying as to beneficial ownership), or any
successor form, and a certificate in form and substance reasonably
acceptable to the Company representing that such Non-U.S. Debenture
Holder is not a "bank" for purposes of Section 881(c) of the Code,
is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Company and is not a "controlled
foreign corporation" related to the Company (within the meaning of
Section 864(d)(4) of the Code); or (D) other applicable
18
form, certificate or document prescribed by the U.S. Internal
Revenue Service certifying as to such Non-U.S. Debenture Holder's
entitlement to a complete exemption from U.S. Federal withholding
tax, as applicable, in all cases such forms and other documents
being properly completed and duly executed by such Non-U.S.
Debenture Holder claiming complete exemption from U.S. Federal
withholding tax on payments of interest (or of original issue
discount, if applicable) for U.S. Federal income tax purposes by the
Company under the Debentures. Each Buyer, each Warrant holder and
each holder of common stock that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the
District of Columbia (each a "Non-U.S. Equity Holder") also shall
deliver to the Company, to the extent legally able to do so, with
respect to payments of dividends for U.S. Federal income tax
purposes by the Company, if applicable, two copies of either (A)
U.S. Internal Revenue Service Form W-8BEN (claiming a reduction of
U.S. Federal withholding tax under an applicable income tax treaty,
if any), or any successor form, (B) U.S. Internal Revenue Service
Form W-8ECI (claiming complete exemption from U.S. Federal
withholding tax because the income is effectively connected with a
U.S. trade or business), or any successor form, or (C) other
applicable form, certificate or document prescribed by the U.S.
Internal Revenue Service certifying as to such Non-U.S. Equity
Holder's entitlement to an exemption from, or a reduction of, U.S.
Federal withholding tax on payments of dividends for U.S. Federal
income tax purposes by the Company, as applicable, in all cases such
forms and other documents being properly completed and duly executed
by such Non-U.S. Equity Holder. In addition, each Buyer, each
Debenture holder, each Warrant holder, and each holder of Common
Stock that is not otherwise exempt from "back-up withholding" shall
deliver to the Company two properly completed and duly executed
copies of either (A) U.S. Internal Revenue Service Form W-8BEN, or
any successor form, (B) U.S. Internal Revenue Service Form W-8ECI,
or any successor form, (C) U.S. Internal Revenue Service Form W-9,
or any successor form, or (D) other applicable form, certificate or
document prescribed by the U.S. Internal Revenue Service, as
applicable, in each case indicating that such Buyer, Debenture
holder, Warrant holder, or holder of Common Stock is not subject to
"back-up withholding" for U.S. Federal income tax purposes. The
forms and other documents required to be delivered pursuant to this
Section 4(m)(ii) shall be delivered (A) on or prior to the Closing
Date and (B) from time to time thereafter if within ten (10)
Business Days after receipt of a written request therefor by the
Company. In addition, each Buyer, each Debenture holder, each
Warrant holder and each holder of Common Stock shall promptly notify
the Company at any time it determines that it is no longer in a
position to provide any previously delivered (or requested) form,
document or certificate to the Company, including as a result in
whole or in part from a Change in Law; provided, however, that the
failure to provide such notice shall not affect any Buyer's or
Debenture holder's right to any additional amounts hereunder.
(iii) Notwithstanding anything to the contrary in Section
4(m)(ii) above, the Company shall not be required to pay any
additional amount to any Buyer or any Debenture holder pursuant to
the preceding paragraph to the extent the Tax in respect of which
such additional amount would otherwise be payable would not have
been imposed but for the failure of such Buyer or Debenture holder
to comply with its obligations under such paragraph; provided,
however, that the failure to provide the applicable form, document
or certificate pursuant to the preceding paragraph as provided
19
in the notice required by the preceding paragraph resulting in whole
or in part from a Change in Law shall not affect such Buyer's or
Debenture holder's right to any additional amounts hereunder.
n. Violations of Law. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
o. Corporate Existence. So long as a Buyer beneficially owns any
Securities, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company's assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company's
assets, where the surviving or successor entity in such transaction (i) assumes
the Company's obligations hereunder and under the Transaction Documents and (ii)
such surviving or successor entity or its parent into whose stock the Debentures
and Warrants will be convertible or exercisable is a publicly traded corporation
whose common stock is listed for trading on or quoted on AMEX, NYSE or NASDAQ.
p. Short Positions. Each Buyer agrees that on any Business Day prior
to the time such Buyer no longer holds any Debentures, such Buyer shall not
maintain a Net Short Position. For purposes hereof, "Net Short Position" shall
mean that the aggregate number of shares of Common Stock held in a short
position by such Buyer exceeds the sum of (1) the number of Common Shares and
the number of Conversion Shares, Warrant Shares and Interest Shares then
issuable (without regard to any limitations on conversions or exercise) to such
Buyer, (2) the number of conversion shares, warrant shares and interest shares
then issuable (without regard to any limitations on conversions or exercise) to
such Buyer in connection with the securities issued to such Buyer pursuant to
the Securities Purchase Agreement, dated as of March 12, 2003, between the
Company and such Buyer (the "March Securities"), (3) the number of warrant
shares then issuable (without regard to any limitations on exercise) to such
Buyer pursuant to that certain Warrant To Purchase Common Stock issued by the
Company to such Buyer on June 25, 2003 (the "June Securities"), (4) the number
of conversion shares, warrant shares and interest shares then issuable (without
regard to any limitations on conversions or exercise) to such Buyer in
connection with the securities issued to such Buyer pursuant to the Securities
Purchase Agreement, dated as of July 10, 2003, between the Company and such
Buyer (the "July Securities"), and (5) the number of conversion shares, warrant
shares and interest shares then issuable (without regard to any limitations on
conversions or exercise) to such Buyer in connection with the securities issued
to such Buyer pursuant to the Securities Purchase Agreement, dated as of October
29, 2003, between the Company and such Buyer (the "October Securities" and,
together with the March Securities, the June Securities and the July Securities,
the "Previously-Issued Securities").
q. Letter of Credit. Pursuant to this subsection, the Company shall
cause to be issued and delivered to Portside Growth & Opportunity Fund, as
collateral agent for the Buyers (in such capacity, together with any successor
in such capacity, the "Agent"), four (4) irrevocable standby letters of credit
in the stated amount of $250,000 each ($1,000,000 in the aggregate),
substantially in the form of Exhibit D hereto and otherwise reasonably
satisfactory to the Buyers (together with any letter of credit issued in
exchange therefor or in replacement
20
thereof, each a "Letter of Credit"), naming the Agent as beneficiary and issued
by a bank with a Minimum Rating and otherwise acceptable to the Agent in its
reasonable discretion; provided, however, that prior identical letters of credit
(as amended) in the stated amount of $1,000,000 in the aggregate issued to the
Agent may be used instead subject to such further amendments as the Agent may
reasonably require (including, without limitation, with respect to the extension
of the expiry date). As used herein, "Minimum Rating" shall mean one of the two
highest long-term debt ratings, without regard to qualification by symbols, such
as "+" and "-", or by numerical notations, such as "1", "2" and "3" (or if no
long-term debt rating is available, one of the two highest long-term deposit
ratings) obtainable from either Standard & Poor's Ratings Services ("S&P") or
Xxxxx'x Investors Service, Inc. ("Moody's") (or if at any time neither S&P nor
Moody's shall issue such ratings, then from another nationally recognized rating
service). The Buyers agree to pay at the Closing for all reasonable and
customary fees in connection with the Letter of Credit provided, that such fees
do not exceed $20,000. Each Letter of Credit shall be delivered within seven (7)
days following the Closing. The Company shall have the right, at any time and
from time to time, to cause to be issued and delivered to the Agent a
replacement for any Letter of Credit previously issued and delivered, provided,
that such replacement is substantially in the form of the Letter of Credit being
exchanged or replaced therefor and is otherwise acceptable to the Agent in its
sole discretion. Upon delivery of a replacement Letter of Credit, the Agent
shall immediately deliver the original Letter of Credit being exchanged
therefor. The Letters of Credit shall not be drawn upon by the Buyers unless the
obligations of the Company pursuant to the Transaction Documents are not
otherwise satisfied pursuant to the terms of the Transaction Documents.
r. Cash Collateral Account. Simultaneously with the Closing
hereunder, the Company shall establish with a bank acceptable to the Agent (the
"Cash Collateral Bank") a deposit account (together with all monies on deposit
in such deposit account and all certificates and instruments, if any,
representing or evidencing such deposit account, the "Cash Collateral Account"),
and shall cause the Cash Collateral Bank to enter into an Account Control
Agreement with the Agent, substantially in the form of Exhibit E (as amended
from time to time, the "Account Control Agreement"); provided, however, that
prior account control agreements (as amended) entered into by the Company for
the benefit of the Agent may be used instead subject to such further amendments
as the Agent may reasonably require. The Cash Collateral Account shall at all
times be under the dominion and control of the Agent. The Company shall deliver
to the Agent (for the benefit of the Buyers) any opinion that the Agent may
reasonably request in connection with the Account Control Agreement.
s. Perfected First Security Interest- Personal Property. The Company
shall execute and deliver to the Agent the Security Agreement at Closing,
substantially in the form of Exhibit F hereto (as amended and/or restated from
time to time, the "Security Agreement"), pursuant to which the Company shall
grant to the Agent, for the benefit of the Buyers, a perfected, first priority
security interest in all of its now owned and hereafter acquired personal
property other than intellectual property (the "Personal Property Collateral");
provided, however, that a prior security agreement (as amended) entered into by
the Company for the benefit of the Agent may be used instead subject to such
further amendments as the Agent may reasonably require. The Company shall also
shall take such other action and execute, acknowledge and deliver such other
agreements, instruments or other documents as the Agent may require from time to
time in order (i) to carry out more effectively the purposes of the
21
Security Agreement, (ii) to subject to valid and perfected first priority liens
any of the Personal Property Collateral, (iii) to establish and maintain the
validity and effectiveness of the Security Agreement or such other agreements,
instruments or other documents and the validity, perfection and priority of the
liens intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer and confirm unto each of the Agent and the Buyers the rights
now or hereafter intended to be granted to it under the Security Agreement
(including, without limitation, by (w) executing any amendment to the Security
Agreement as may be reasonably requested by the Buyers, (x) by causing insurance
certificates satisfactory to the Buyers naming the Buyers as "loss payee" or
"additional insured" on all of the Company's property and liability insurance to
be issued, (y) by using its reasonable commercial efforts to obtain landlord
waivers reasonably satisfactory to the Buyers in connection with the Company's
leasehold premises where Personal Property Collateral is located and (z) by
cooperating with the Buyers to finalize and execute a perfection certificate to
include, among other things, information relating to the acquisition of certain
Interferon assets.). In furtherance of the foregoing, to the maximum extent
permitted by applicable law, the Company (i) authorizes the Agent to execute any
such agreements, instruments or other documents in the Company's name and to
file such agreements, instruments or other documents in any appropriate filing
office, (ii) authorizes the Agent to file any financing statement required
hereunder or under the Security Agreement, and any continuation statement or
amendment with respect thereto, in any appropriate filing office without the
signature of the Company, and (iii) ratifies the filing of any financing
statement, and any continuation statement or amendment with respect thereto,
filed without the signature of the Company prior to the date hereof.
t. Perfected First Security Interest - Real Property. Within 90 days
of the Closing Date, the Company shall:
(i) execute and deliver to the Agent a mortgage, deed of trust
or deed to secure debt for each real property location (the
"Properties") acquired by the Company from the Interferon Sciences,
Inc. (the "Seller"), each in recordable form and containing such
terms, covenants and provisions and in all other respects reasonably
acceptable to the Agent in its sole discretion (as amended from time
to time, each a "Mortgage" and collectively, the "Mortgages"),
pursuant to which the Company shall grant to the Agent, for the
benefit of the Buyers, a perfected first priority security interest
and mortgage lien in the Properties and all improvements located
thereon (the "Real Property Collateral"; together with the Personal
Property Collateral, collectively, the "Collateral");
(ii) furnish to the Agent the following, each in form and
substance reasonably satisfactory to the Agent:
(A) evidence of the recording of each Mortgage referred
to in clause (i) above in such office or offices as may be
necessary or, in the reasonable opinion of the Agent,
desirable to create and perfect a valid and enforceable first
priority lien on the property purported to be covered thereby
or to otherwise protect the rights of the Agent and the Buyers
thereunder;
22
(B) an ALTA form of mortgage loan title insurance
policy, in form and substance reasonably satisfactory to the
Agent, issued by or on behalf of a title insurance company
reasonably satisfactory to the Agent, insuring the mortgage
lien created by each Mortgage for an amount not less than
$1,500,000, subject only to such exceptions to title as the
Agent may reasonably accept and approve and with such
endorsements and affirmative insurance as the Agent may
reasonably require, and otherwise on terms satisfactory to the
Agent (a "Title Insurance Policy");
(C) an ALTA survey of each Property, certified to the
Agent and to the issuer of the applicable Title Insurance
Policy by a licensed land surveyor reasonably satisfactory to
the Agent (a "Survey");
(D) a satisfactory ASTM 1527-00 Phase I Environmental
Site Assessment ("Phase I ESA") for each Property (and, if
reasonably requested by the Agent based upon the results of
such Phase I ESA, an ASTM 1527-00 Phase II Environmental Site
Assessment ("Phase II ESA") for such Property), each in form
and substance and by an independent firm satisfactory to the
Agent;
(E) an opinion of counsel for the Company as to such
matters regarding each Mortgage (including the due
authorization, execution and delivery of the Mortgage, the
validity and enforceability of the Mortgage and its compliance
with the law of the jurisdiction in which the relevant
Property is located) as the Agent may reasonably require; and
(F) such other instruments and documents, including
estoppel certificates, permits, licenses, approvals, violation
reports, plans and engineering studies, regarding each such
Property as the Agent may require; and
(iii) take such other action and execute, acknowledge and deliver
such other agreements, instruments or other documents as the Agent may
reasonably require from time to time in order to (A) carry out more
effectively the purposes of each Mortgage, (B) subject to valid and
perfected first priority liens any of the Real Property Collateral, (C)
establish and maintain the validity and effectiveness of each Mortgage or
such other agreements, instruments or other documents and the validity,
perfection and priority of the liens intended to be created thereby, and
(D) better assure, convey, grant, assign, transfer and confirm unto each
of the Agent and the Buyers the rights intended to be granted to it under
each Mortgage. In furtherance of the foregoing, to the maximum extent
permitted by applicable law, the Company (x) authorizes the Agent to
execute any such agreements, instruments or other documents in the
Company's name and to file or record such agreements, instruments or other
documents in any appropriate filing or recording office, (y) authorizes
the Agent to file any financing statement required hereunder or under any
Mortgage, and any
23
continuation statement or amendment with respect thereto, in any
appropriate filing office without the signature of the Company, and (z)
ratifies the filing of any financing statement, and any continuation
statement or amendment with respect thereto, filed without the signature
of the Company prior to the date hereof.
u. Acquisition of Interferon Sciences, Inc. The Company shall
acquire certain assets of the Seller pursuant to certain valid and binding
purchase and sale agreements, executed copies (together with all exhibits and
schedules thereto) of which are attached hereto as Exhibit G-1 (the "Interferon
Inventory and License Agreement") and Exhibit G-2 (the "Interferon Asset
Agreement" and together with the Interferon Inventory and License Agreement, the
"Interferon Agreements"), within ninety (90) days of the Closing. The Company
shall not make or permit to be made any amendment or modification to either
Interferon Agreement or the transactions contemplated thereby without Buyers'
prior written consent. All of the consideration (including, without limitation,
all shares of Common Stock (whether issued or issuable to Seller or otherwise as
set forth in the Interferon Agreements), the satisfaction of certain
obligations, royalties, fees for employees and for services, the assumption of
payables) to be paid by the Company in connection with the Interferon Agreements
is as set forth on Schedule 4(u) hereof.
v. Certain Accounts. The Company represents and warrants to each
Buyer that Schedule 4(v) hereto sets forth a full and complete list of every
bank and other financial institution at which the Company presently has an
account (each, an "Existing Account"). The Company represents and warrants to
each Buyer that (1) the Company has deposited or otherwise transferred any and
all funds, including (without any limitation) those funds released from any
Existing Account that does not become a Permitted Account (as defined) pursuant
hereto, to the First Union National Bank Account Nos. 20000009652305,
2100043128724 and/or 4166-9926 (the "First Union Accounts"), and (2) the Company
has caused each Existing Account denoted with an asterisk on Schedule 4(v) to be
a Permitted Account, and the Company shall use its best commercial efforts to
obtain the signature of each depository institution reasonably requested by any
Buyer to sign a Bank Agreement in connection with such Existing Account becoming
a Permitted Account and shall deliver to the Agent (for the benefit of the
Buyers) any opinion that the Agent may reasonably request in connection with the
applicable Bank Agreement. In addition, the Company shall take the following
actions with respect to the Existing Accounts:
(i) The Company shall immediately deposit any funds released from
time to time from the First Union/Wachovia Investments Account No.
4167-7452 into an account for which the Agent has executed a Bank
Agreement reasonably satisfactory to the Buyers (any such account being a
"Permitted Account");
(ii) The Company shall not deposit or otherwise transfer any funds
into any foreign account without the prior written consent of the Buyers;
provided, however, that the Company may make such deposits or transfers to
such foreign accounts in connection with ordinary course business expenses
to the extent that the aggregate balance in all such foreign accounts does
not exceed $25,000; and
(iii) The Company shall not deposit or otherwise transfer any funds
to any account that is not a Permitted Account; provided, however, that
the Company may make such deposits or transfers to an Existing Account
that is not a
24
Permitted Account to the extent that the balance in any such Existing
Account does not exceed $5,000.
Immediately upon the occurrence of a default or Event of Default or event
that with notice or lapse of time would constitute a Default or Event of
default, the company agrees that the Agent under the Account Control Agreement
or any Bank Agreement shall be authorized to send one or more "notices of
exclusive control" (as defined in the Account Control Agreement or relevant Bank
Agreement) (or an analogous notice described in the Account Control Agreement or
relevant Bank Agreement) to the depositary bank(s) party thereto prohibiting
such bank(s) from accepting any further instructions from the Company in
connection with any property held in any account therein.
w. Certain Amendments. The Company and each Buyer hereby agree that
the warrants issued to the Buyers in connection with the March Securities, the
June Securities, the July Securities and the October Securities shall not be
exercisable until July 26, 2004, and the respective "Expiration Date" (as
defined in each such respective warrant) is hereby extended until the six-month
anniversary of the initial Expiration Date set forth therein. The Company and
each Buyer hereby further agree that the Warrant Exercise Price (as defined in
each such respective warrant) for the warrants issued in connection with the
March Securities, shall in no event be less than $1.45, for the warrants issued
in connection with the June Securities, shall in no event be less than $2.43,
for the warrants issued in connection with the July Securities, shall in no
event be less than $2.14, and for the warrants issued in connection with the
October Securities, shall in no event be less than $2.19. On the Business Day
following the Closing Date, the Company shall prepare and file with the SEC such
amendments or supplements to the Company's Registration Statement on Form S-1
(File No. 333-108645), which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, relating to the amendment of the exercise period
described herein.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer
agents, and any subsequent transfer agent, to issue certificates or credit
shares to the applicable balance accounts at DTC, registered in the name of each
Buyer or its respective nominee(s), for the Conversion Shares and Warrant Shares
in such amounts as specified from time to time by each Buyer to the Company upon
conversion of the Debentures or exercise of the Warrants, as applicable and in
accordance with their respective terms (the "Irrevocable Transfer Agent
Instructions"), a form of which is attached as Exhibit H hereto. Prior to
transfer or sale pursuant to a registration statement or Rule 144 under the 1933
Act of the Conversion Shares and the Warrant Shares, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction inconsistent with the Irrevocable Transfer
Agent Instructions referred to in this Section 5 and stop transfer instructions
to give effect to Section 2(f) hereof (in the case of the Conversion Shares, the
Warrant Shares the Interest Shares and the Repayment Shares, prior to
registration of the Conversion Shares and the Warrant Shares under the 0000 Xxx)
will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement, the Debentures, the Warrants and the
Registration Rights Agreement. If a Buyer provides the Company with an opinion
of counsel, in generally
25
acceptable form, to the effect that a public sale, assignment or transfer of
Securities may be made without registration under the 1933 Act or that the
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold, the Company shall permit the transfer, and, in the case of the
Conversion Shares, the Warrant Shares, the Interest Shares and the Repayment
Shares, promptly instruct its transfer agent to issue one or more certificates,
or credit shares to one or more balance accounts at DTC, in such name and in
such denominations as specified by such Buyer and without any restrictive
legend. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyers by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5, that the Buyers shall
be entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. The obligation of the Company to issue and sell the Debentures,
the Additional Investment Rights, the Common Shares and the Warrants 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 any amounts withheld pursuant to Section 4(k))
for the Debentures, the Additional Investment Rights, the Common
Shares and the Warrants 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 to the extent
that any of such representations and warranties is already qualified
as to materiality in Section 2 above, in which case such
representations and warranties shall be true and correct without
further qualification) 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 (which shall be true
and correct as of such date)), and such Buyer shall have performed,
satisfied and complied with in all material respects the covenants,
agreements and conditions required by the Transaction Documents to
be performed, satisfied or complied with by such Buyer at or prior
to the Closing Date.
26
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. The obligation of each Buyer hereunder to purchase the Debentures
being purchased at the Closing, the Additional Investment Rights, the Common
Shares and the Warrants from the Company 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 each of the Transaction
Documents and delivered the same to such Buyer.
(ii) (1) Except to the extent set forth in the proviso in the
penultimate sentence in Section 4(g) above, the Common Stock (x)
shall be designated for quotation or listed on the Principal Market
and (y) shall not have been suspended by the SEC or the Principal
Market from trading on the Principal Market nor shall suspension by
the SEC or the Principal Market have been threatened either (A) in
writing by the SEC or the Principal Market or (B) by falling below
the minimum listing maintenance requirements of the Principal
Market; and (2) the Company shall promptly file a new listing
application and use its best efforts to cause the Conversion Shares
issuable upon conversion of the Debentures (without regard to any
limitations on conversions), the Warrant Shares issuable upon
exercise of the Warrants (without regard to any limitations on
exercises) to be listed (subject to official notice of issuance) on
the Principal Market and the maximum number of Interest Shares and
Repayment Shares issuable over the full term of the Debentures
(assuming the Company paid the maximum amount of interest permitted
to be paid in Interest Shares over the full term of the Debentures)
to be approved for listing on the Principal Market not later than 10
days following the Closing Date.
(iii) The representations and warranties of the Company shall
be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified
as to materiality in Section 3 above, in which case such
representations and warranties shall be true and correct without
further qualification) 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 (which shall be true
and correct as of such date)) and the Company shall have performed,
satisfied and complied with in all material respects 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.
(iv) The Company shall have delivered to such Buyer the
opinion of Xxxxxx X. Xxxxxxxxx, Esq. counsel to the Company, dated
as of the Closing Date, in the form of Exhibit I attached hereto.
(v) The Company shall have executed and delivered to such
Buyer the Debentures, the Additional Investment Rights, the Common
Shares and the
27
Warrants (in such denominations as such Buyer shall reasonably
request) being purchased by such Buyer at the Closing.
(vi) As of the Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Debentures, the exercise
of the Warrants, and the payment of interest in the form of Interest
Shares (assuming the Company paid the maximum amount of interest
permitted to be paid in Interest Shares over the full term of the
Debentures) 4,662,322 shares of its Common Stock.
(vii) The Company shall have delivered the Irrevocable
Transfer Agent Instructions, in the form of Exhibit H attached
hereto, to the Company's transfer agent.
(viii) The Company shall have delivered to such Buyer a
secretary's certificate, dated as of the Closing Date, certifying as
to (A) adoption of the form of resolutions of the Board of Directors
of the Company consistent with Section 3(b) above (the
"Resolutions"), (B) the Certificate of Incorporation and (C) the
By-laws, each as in effect at the Closing.
(ix) The Company shall have made all filings under all
applicable federal and state securities laws necessary to consummate
the issuance of the Securities pursuant to this Agreement in
compliance with such laws.
(x) The Bank Agreement(s) relating to the First Union Accounts
(the "First Union Bank Agreements") shall have been executed and
delivered to the Agent (for the benefit of the Buyers); provided,
however, that a prior bank agreement entered into by First Union and
the Company for the benefit of the Agent may be used instead subject
to such amendments as the Agent may reasonably require.
(xi) The Company shall have deposited in the Cash Collateral
Account not less than $1,300,000 in the aggregate (inclusive of
funds already on deposit in such account).
8. INDEMNIFICATION. 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, each holder of Debentures and Warrants and each affiliate of any Buyer
holding 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, but
excluding amounts covered by Section 4(m)(ii) hereof (the "Indemnified
Liabilities"), incurred by any Indemnitee as
28
a result of or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in the Transaction
Documents or (b) any breach of any covenant, agreement or obligation of the
Company contained in the Transaction Documents, (c) the exercise or enforcement
of any of the rights of the Buyers under the Pledge and Security Agreement or
the foreclosure, sale, liquidation or other disposition of, or realization upon,
the Collateral including, without limitation, the transfer of the Collateral to
the Buyers, or (d) any cause of action, suit or claim brought or made against
such Indemnitee (other than a cause of action, suit or claim which is (x)
brought or made by the Company and (y) is not a shareholder derivative suit) 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, such holder of
Debentures and Warrants and any such affiliate of any Buyer holding 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. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 8 shall be the same as those set forth in
Sections 6(a) and (d) of the Registration Rights Agreement, including, without
limitation, those procedures with respect to the settlement of claims and the
Company's rights to assume the defense of claims.
9. 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 jurisdiction) that would cause the application of
the laws of any jurisdiction 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 HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
29
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 each Buyer, 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 or waived other than by an instrument in writing signed
by the Company and the holders of at least 60% of the outstanding principal
amount of the Debentures or Conversion Shares, as applicable. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Debentures 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 the Conversion
Shares, as the case may be.
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 (1) Business Day after deposit
with a nationally recognized overnight delivery 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:
Hemispherx Biopharma, Inc.
One Penn Center
0000 XXX Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
30
Attention: Chief Executive Officer
With copies to:
Xxxxxx X. Xxxxxxxxx, Esq.
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Transfer Agent:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a Buyer, to it at the 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 at 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 a nationally recognized overnight
delivery service shall be rebuttal evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery 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 Securities; provided, however, that such
successor or assignee shall deliver the forms specified in Section 4(m)(ii) as
if it were a "Buyer." The Company shall not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the holders of at
least 60% of the outstanding principal amount of the Debentures, including by
merger or consolidation. A Buyer may assign some or all of its rights and
obligations hereunder without the consent of the Company; provided, however,
that the transferee has agreed in writing to be bound by the applicable
provisions of this Agreement and provided, further, that such assignment shall
be in connection with a transfer of all or a portion of the Debentures and
Warrants held by such Buyer and subject to the terms and conditions of the
Warrants and Debentures, as applicable. Any such assignment shall only be
effective upon the Company's receipt of written notice thereof. Any Buyer shall
be entitled to pledge the Securities in connection with a bona fide margin
account or other loan secured by the Securities and the pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Investor effecting a pledge of Securities shall be required to
provide the
31
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document, including, without
limitation, Section 2(f) of this Agreement; provided that in order to make any
sale, transfer or assignment of Securities, such Investor and its pledgee makes
such disposition in accordance with or pursuant to a registration statement or
an exemption under the 1933 Act.
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 9(l),
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, 5 and 9,
and the indemnification provisions set forth in Section 8, shall survive until
such time as no Debentures remain outstanding. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Publicity. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to (i) file
a Form 8-K, substantially in the form attached hereto as Exhibit J, after the
Closing, (ii) make any press release or other public disclosure of information
that previously has been publicly disclosed (other than pursuant to a breach of
this paragraph), and (iii) make any press release or other public disclosure
with respect to such transactions in the form as is required by applicable law
and regulations.
k. 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.
l. Termination. In the event that the Closing shall not have
occurred with respect to a Buyer on or before five (5) Business Days from the
date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 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 9(l), the Company shall remain obligated to reimburse any
nonbreaching Buyer for the expenses described in Section 4(k) above.
m. Placement Agent. The Company acknowledges that it has engaged one
or more placement agents in connection with the sale of the Debentures, the
Additional Investment Rights, the Common Shares and the Warrants and that the
total amount of compensation of each such agent has been disclosed in writing to
each Buyer. Other than fees paid by Buyers, the Company shall be responsible for
the payment of any placement agent's fees,
32
financial advisory fees, or brokers' commissions (other than for persons engaged
by any Buyer or its investment advisor) 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.
n. 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.
o. 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 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. The Company also
acknowledges that the Buyers can keep as security for the Company's obligations
under the Securities all funds advanced by the Company as defeasance payments
under the March Securities and under the July Securities.
p. Payment Set Aside. To the extent that the Company makes a payment
or payments to any Buyer 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.
33
q. Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Buyer under any of the Transaction Documents 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 of the Transaction Documents. Nothing contained herein or in any other
Agreement, 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 transactions
contemplated hereby and the other Transaction Documents with the advice of its
own counsel and advisors. Each Buyer shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Document, 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]
34
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
HEMISPHERX BIOPHARMA, INC.
By: ____________________
Name:
Title:
BUYERS:
PORTSIDE GROWTH & OPPORTUNITY FUND
By: _______________________________________
Name: ____________________________________
Title: ____________________________________
XXXXXXXX, L.P.
By: _______________________________________
Name: ____________________________________
Title: ____________________________________
SCHEDULE OF BUYERS
Debentures and Warrants:
Aggregate
Purchase
Price of
Principal Debentures,
Amount AIRs, Common Number of
Investor Address of Shares and Common Number of Payment AIR Exercise
Investor Name and Facsimile Number Debentures Warrants Shares Warrants Amount Price
------------- -------------------- ---------- -------- ------ -------- ------ -----
Portside c/o Ramius Capital Group, L.L.C. $2,000,000 $2,000,000 79,051.5 395,257 $2,000,000 $1,000,000
Growth & 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxx Xxx Xxxx, XX 00000
Fund Attention: Xxxxxxx Xxxxx
Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Residence: Cayman Islands
Xxxxxxxx L.P. c/o Xxxxxx Xxxxxx, LP $2,000,000 $2,000,000 79,051.5 395,257 $2,000,000 $1,000,000
. 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Xxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Residence: Cayman Islands
Investor's
Representatives'
Address
Investor Name and Facsimile Number
------------- --------------------
Portside Xxxxxxx Xxxx & Xxxxx LLP
Growth & 000 Xxxxx Xxxxxx
Xxxxxxxxxxx Xxx Xxxx, XX 00000
Fund Attn: Xxxxxxx Xxxxx,
Esq.
Telephone: (212)
756-2000
Facsimile: (212)
593-5955
Xxxxxxxx X.X. Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx
Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X.
Xxxxx, Esq.
Telephone: (212)
373-3000
Facsimile: (212)
757-3990
INDEX OF DEFINED TERMS
19.99% Rule....................................................................7
1933 Act.......................................................................1
1934 Act.......................................................................9
Account Control Agreement.....................................................21
Additional Investment Rights...................................................1
Agent.........................................................................20
Agreement......................................................................1
AMEX..........................................................................16
Business Day...................................................................2
Buyer..........................................................................1
Buyer's Purchase Price.........................................................2
Bylaws.........................................................................8
Cash Collateral Account.......................................................21
Cash Collateral Bank..........................................................21
Certificate of Incorporation...................................................8
Change in Law.................................................................18
Closing........................................................................2
Closing Date...................................................................2
Code..........................................................................18
Collateral....................................................................22
Common Shares..................................................................1
Common Stock...................................................................1
Company........................................................................1
Conversion Shares..............................................................1
Debentures.....................................................................1
Environmental Laws............................................................12
Form 8-K......................................................................16
Hazardous Materials...........................................................13
Indemnified Liabilities.......................................................28
Indemnitees...................................................................28
Intellectual Property.........................................................12
Interferon Agreements.........................................................24
Interferon Asset Agreement....................................................24
Interferon Inventory and License Agreement....................................23
Irrevocable Transfer Agent Instructions.......................................25
Letter of Credit..............................................................20
Material Adverse Effect........................................................6
Minimum Rating................................................................20
Moody's.......................................................................21
Mortgage......................................................................22
Mortgages.....................................................................22
NASDAQ........................................................................16
Non-U.S. Debenture Holder.....................................................18
Non-U.S. Equity Holder........................................................19
NYSE..........................................................................16
Permits.......................................................................13
Personal Property Collateral..................................................21
Phase I ESA...................................................................23
Phase II ESA..................................................................23
Principal Market..............................................................16
Properties....................................................................22
Real Property Collateral......................................................22
Registration Rights Agreement..................................................1
Regulation D...................................................................1
Reporting Period..............................................................15
Resolutions...................................................................28
S&P...........................................................................21
SEC............................................................................1
SEC Documents.................................................................10
Securities.....................................................................3
Security Agreement............................................................21
Segregated Account.............................................................2
Seller........................................................................22
Stockholder Approval..........................................................17
Stockholder Meeting Deadline..................................................16
Subsidiaries...................................................................6
Survey........................................................................23
Taxes.........................................................................18
Title Insurance Policy........................................................23
Transaction Documents..........................................................6
Warrant Shares.................................................................1
Warrants.......................................................................1
