GLOBAL PHARMACEUTICAL CORPORATION
SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
AGREEMENT, dated the 12th day of November, 1998, by and among GLOBAL
PHARMACEUTICAL CORPORATION, a Delaware corporation (the "Company"), and each of
the entities severally listed on the Schedule of Purchasers attached hereto
(collectively, the "Purchasers" and individually, a "Purchaser").
WHEREAS, the Company desires to issue and sell, and the Purchasers
desire to purchase, certain securities of the Company.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and conditions herein contained, the parties hereto agree as follows:
SECTION 1
Authorization and Sale of the Shares
1.1 Authorization of the Shares. The Company has, or before
the Closing (as hereinafter defined) will have, authorized the sale and issuance
of up to 9,000 shares of its Series C Convertible Preferred Stock, par value
$.01 per share (the "Preferred Stock"), having the rights, restrictions,
privileges and preferences set forth in the Certificate of the Designations,
Powers, Preferences and Rights of the Series C Convertible Preferred Stock (Par
Value $.01 Per Share) to the Amended and Restated Certificate of Incorporation
of the Company (the "Certificate of Designations") attached to this Agreement as
Exhibit A. The 9,000 shares of Preferred Stock being sold to the Purchasers
hereunder are referred to herein collectively as the "Shares" and individually
as a "Share." As used herein, at and as of the Closing, the term Certificate of
Incorporation shall include the Amended and Restated Certificate of
Incorporation, as amended to date (including any previously filed certificates
of designation, as amended), and the Certificate of Designations.
1.2 Sale of the Shares. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties and agreements
contained herein, the Company will issue and sell to each of the Purchasers,
severally and not jointly, and each of the Purchasers will purchase from the
Company at the Closing, the number of shares of Preferred Stock set forth
opposite such Purchaser's name on the Schedule of Purchasers attached hereto
(the "Schedule of Purchasers") under the column labeled "Shares of Series C
Preferred Stock," at the aggregate purchase price set forth opposite such
Purchaser's name on the Schedule of Purchasers under the column heading "Total
Investment."
SECTION 2
Closing Date
2.1 Closing Date. The closing of the purchase and sale of the
Shares hereunder (the "Closing") shall be held immediately following the
execution and delivery of this Agreement on November 12, 1998 (the "Closing
Date") at a time and place determined pursuant to Section 2.3 hereof.
2.2 Delivery. At the Closing, the Company shall deliver to
each Purchaser certificates in such denominations and registered in such names
as set forth in the Schedule of Purchasers attached hereto, representing the
number of shares of Preferred Stock to be purchased by such Purchaser from the
Company, against payment at the Closing, by certified or bank check, or wire
transfer, of the amount set forth opposite such Purchaser's name in the column
labeled "Total Investment" on the Schedule of Purchasers.
2.3 Place of Closing. The Closing (including the delivery to
the Purchasers by the Company of the certificates evidencing all Shares being
purchased and the place of payment to the Company (except in the case of a wire
transfer) by the Purchasers of the purchase price therefor) shall take place at
10 a.m., New York time, at the offices of Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other time and place as shall be
mutually agreed upon by the parties.
SECTION 3
Representations and Warranties of
the Company
Except as set forth in the "Schedule of Exceptions" delivered
to each Purchaser prior to the execution hereof and attached hereto, the Company
hereby represents and warrants to each Purchaser that, as of the date hereof:
3.1 Organization and Standing; Articles and By-Laws. The
Company is a corporation duly organized and validly existing and in good
standing under the laws of its state of organization and is qualified to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect upon the business,
operations or prospects of the Company. The Company has the requisite corporate
power to own the properties owned by it and to conduct business as now being
conducted by it and possesses all governmental and other permits, licenses and
other authorizations to own its properties as now owned and to conduct its
business as now conducted.
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3.2 Corporate Power. The Company has all requisite corporate
power to enter into this Agreement, and has and will have at the Closing Date
all requisite corporate power to sell the Shares and to carry out and perform
its obligations under the terms of this Agreement.
3.3 Authorization. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated herein, and for the authorization,
issuance and delivery of the Shares has been taken or will be taken prior to the
Closing, including, without limitation, the filing of the Certificate of
Designations. This Agreement is a valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally and to general
equitable principles. The execution, delivery and performance by the Company of
this Agreement and compliance herewith and the issuance and sale of the Shares
and the issuance of Common Stock issuable upon conversion of the Shares will not
(a) result in any violation of and will not conflict with, or result in a breach
of any of the terms of, or constitute a default under, the Company's Certificate
of Incorporation or By-Laws, as amended, any mortgage, indenture, agreement,
instrument, judgment, decree, order, rule or regulation or other restriction to
which the Company is a party or by which it is bound or any provision of state
or Federal law to which the Company is subject, or (b) result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company pursuant to any such term, or (c) result in the
suspension, revocation, impairment, forfeiture or non-renewal of any permit,
license, authorization or approval applicable to the Company's operations or any
of its assets or properties. The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable; will be free of any liens or encumbrances; and will have the
rights, privileges and preferences as set forth in the Certificate of
Designations. The shares of Common Stock issuable upon conversion of the Shares
have been duly and validly reserved and are not subject to any preemptive rights
or rights of first refusal and, upon issuance, will be validly issued, fully
paid and nonassessable.
3.4 Capitalization. Immediately prior to the Closing, the
Company's authorized capital stock will consist of (a) 10,000,000 shares of
common stock, par value $.01 per share ("Common Stock"), of which (i) 4,510,597
shares will be issued and outstanding immediately prior to the Closing, (ii)
750,000 shares have been set aside for issuance to employees, consultants,
independent contractors or directors pursuant to option or incentive plans or
agreements, and (iii) a sufficient number of shares have been set aside for
issuance upon conversion of the presently outstanding shares of the
Corporation's Series A Convertible Preferred Stock, $.01 par value (the "Series
A Stock"), Series B Convertible Preferred Stock, $.01 par value (the "Series B
Stock"), and Preferred Stock to be issued hereunder, and (b) 2,000,000 shares of
preferred stock (of which 60,000 shares have been designated "Series A
Convertible Preferred Stock," 50,000 shares have been designated "Series B
Convertible Preferred Stock" and 9,000 shares have been designated "Series C
Convertible Preferred Stock") 57,445 shares of which will be issued and
outstanding prior to the
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Closing. Except as set forth or otherwise reflected in an SEC Report (as
hereinafter defined) or any previously filed certificate of designations to the
Amended and Restated Certificate of Incorporation of the Company, at the time of
the Closing, there will be no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding on the
Company for the purchase or acquisition of any shares of its capital stock.
3.5 SEC Reports. The Company has filed all required forms,
reports and documents with the Securities and Exchange Commission (the "SEC")
since December 19, 1995 (collectively, the "SEC Reports" and, individually, an
"SEC Report"), all of which SEC Reports have complied in all material respects
with all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
3.6 Absence of Certain Changes. Except as set forth or
otherwise reflected in an SEC Report, since June 30, 1998, the Company has
conducted its business only in the ordinary and usual course and there has not
occurred (i) any material adverse change in the business, financial condition,
operations, results of operations or prospects of the Company or (ii) any change
by the Company in accounting principles or methods, except insofar as may be
required by a change in generally accepted accounting principles.
3.7 Outstanding Debt. Except as set forth in the SEC Reports,
the Company has no outstanding indebtedness for borrowed money and is not a
guarantor or otherwise contingently liable for any indebtedness for borrowed
money (including, without limitation, liability by way of agreement, contingent
or otherwise, to purchase, provide funds for payment, supply funds or otherwise
invest in any debtor or otherwise to insure any creditor against loss), except
indebtedness for borrowed money incurred not in excess of $25,000 in the
aggregate. There exists no default under the provisions of any instrument
evidencing any such indebtedness or otherwise or of any agreement relating
thereto, including, without limitation, those included or referred to in the SEC
Reports or Schedule of Exceptions.
3.8 Litigation. There is neither pending nor, to the Company's
knowledge and belief, threatened any action, suit, proceeding or claim, or any
basis therefor or threat thereof, whether or not purportedly on behalf of the
Company, to which the Company is or may be named as a party or to which its
property is or may be subject or to the Company's knowledge, after due inquiry,
to which any director or officer of the Company (in his or her capacity as such)
is subject, and in which an unfavorable outcome, ruling or finding in any such
matter or for all such matters taken as a whole might reasonably have a material
adverse effect on the condition, financial or otherwise, prospects, operations
or results of operations of the Company.
3.9 Consents. Subject in part to the truth and accuracy of the
Purchasers' representations set forth in this Agreement, no consent, approval,
qualification, order or authorization of, or filing with, any governmental
authority, including the Secretary of State of the
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State of Delaware, is required in connection with the Company's valid execution,
delivery or performance of this Agreement, or the offer, sale or issuance of the
Shares by the Company, the conversion of the Shares, the issuance of Common
Stock upon conversion of the Shares or the consummation of any other transaction
contemplated on the part of the Company hereby, except for such filings as shall
have been made prior to the Closing.
3.10 Issuance Taxes. All taxes imposed by law in connection
with the issuance, sale and delivery of the Shares shall have been fully paid,
and all laws imposing such taxes shall have been fully complied with in all
material respects prior to the Closing Date.
3.11 Offering. Subject in part to the truth and accuracy of
the Purchasers' representations set forth in this Agreement, the offer, sale and
issuance of the Shares, the conversion of the Shares and the issuance of Common
Stock upon conversion of the Shares, all as contemplated by this Agreement, are
exempt from the registration requirements of the Securities Act and from the
registration or qualification requirements of the laws of any applicable State
(except for filings under such state securities laws as shall have been made
prior to the Closing), and neither the Company nor anyone acting on its behalf
will take any action hereafter that would cause the loss of such exemption.
3.12 Compliance with Other Instruments. The Company is not in
violation of any term of its Certificate of Incorporation or By-Laws, as
amended. The Company is not in violation of any term of any mortgage, indenture,
contract, agreement, instrument, judgment, decree, order, statute, rule or
regulation applicable to the Company or to which the Company is a party or is
subject, the violation of which would have a material adverse effect on the
condition, financial or otherwise, operations, results of operations or
prospects of the Company.
3.13 Compliance with Law. The Company is in all material
respects in compliance with all applicable laws, rules, regulations and court or
administrative orders and processes (including, without limitation, any that
relate to consumer protection, health and safety, products and services,
anti-competitive practices, ERISA, equal opportunity, improper payments and
environmental regulation), except where the failure to so comply would not have
a material adverse effect on the condition, financial or otherwise, operations,
results of operations or prospects of the Company. The Company and, to the best
of the Company's knowledge, its directors, officers and employees have not
received any notice from any governmental authority, and to the best of the
Company's knowledge none is threatened, alleging that the Company has violated,
or not complied with, any of the above.
3.14 Absence of Undisclosed Liabilities. Except as disclosed
in the financial statements (the "Financial Statements") included in the SEC
Reports, or as incurred in the ordinary course of business subsequent to June
30, 1998, as of the date hereof (i) the Company has no material liability of any
nature (matured or unmatured, fixed or contingent) that was not provided for or
disclosed in the Financial Statements, and (ii) to the best knowledge of the
Company, all
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liability reserves established by the Company and set forth in the Financial
Statements were adequate in all material respects for the purposes indicated
therein.
3.15 Disclosure. The Company's Form 10-KSB for the fiscal year
ended December 31, 1996 and Form 10-QSB for the fiscal quarter ended June 30,
1998 do not contain any untrue statement of a material fact and do not omit to
state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which they were made.
3.16 Strategic Alliances. Following the Closing Date, the
Company will continue to explore appropriate strategic alliances to enhance
shareholder values.
SECTION 4
Representations and Warranties of Purchasers
Each Purchaser, severally and not jointly, represents and
warrants with respect to such Purchaser to the Company as follows:
4.1 Experience; Accredited Investor Status. (a) Such Purchaser
is experienced in evaluating and investing in development stage companies such
as the Company. Such Purchaser has such knowledge and experience in financing
and business matters that such Purchaser is capable of evaluating the merits and
risks of an investment in the Shares and of making an informed decision, and has
the capacity to protect such Purchaser's own interest in connection with the
transactions contemplated herein.
(b) Such Purchaser is an "accredited investor,"
as such term is defined in Rule 501(a) promulgated under the Securities Act
4.2 Investment. Such Purchaser is acquiring the Shares for
investment for such Purchaser's own account and not with the view to, or for
resale in connection with, any distribution thereof. Such Purchaser understands
that the Shares are being issued to such Purchaser, and the shares of Common
Stock issuable upon conversion of the Shares are to be issued to such Purchaser,
(i) without registration under the Securities Act by reason of a specified
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of such Purchaser's investment
intent as expressed herein, and (ii) without qualification under applicable
state securities laws.
4.3 Rule 144. Such Purchaser acknowledges that the Shares and
the shares of Common Stock issuable upon conversion of the Shares must be held
indefinitely unless they are subsequently registered under the Securities Act
and qualified under applicable state securities laws
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or exemptions from such registration and qualification are available. Such
Purchaser is familiar with Rule 144 promulgated under the Securities Act and
understands the resale limitations imposed thereby.
4.4 Access to Data. Such Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with its
management and has had the opportunity to review the Company's books, records
and facilities.
4.5 Restrictions on Transfers. Such Purchaser understands and
agrees as follows:
(a) The certificates evidencing the Preferred Stock (and, to
the extent not otherwise registered, the Common Stock issuable upon conversion
thereof), and each certificate issued in transfer of the foregoing, will bear
the following legends (or substantially similar legends):
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT SUCH REGISTRATION AND QUALIFICATION OR THE
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS"; and
(ii) any legend required by applicable state securities
laws.
(b) Such Purchaser will not offer, sell, transfer or otherwise
dispose of any of the Preferred Stock, or any Common Stock issuable upon
conversion thereof, unless (i) an effective registration under the Securities
Act (and an effective qualification under applicable state securities laws, or
exemption therefrom) covers the disposition of such securities, or (ii) such
Purchaser has delivered to the Company an opinion of counsel, reasonably
satisfactory to the Company, that such offer, sale, transfer or other
disposition will not require registration of such securities under the
Securities Act or qualification under any applicable state securities laws.
4.6 Authorization. All corporate or partnership action, as the
case may be, on the part of such Purchaser, and its directors and stockholders
or partners, as applicable, necessary for the authorization, execution, delivery
and performance by such Purchaser of this Agreement and the consummation of the
transactions contemplated herein, has been taken or will be taken prior to the
Closing. This Agreement is a valid and binding obligation of such Purchaser,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting enforcement of creditors' rights
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generally and to general equitable principles. The execution, delivery and
performance by such Purchaser of this Agreement and compliance herewith will not
result in any violation of and will not conflict with, or result in a breach of
any of the terms of, or constitute a default under, such Purchaser's Certificate
of Incorporation or By-Laws or Agreement of Limited Partnership, as applicable.
4.7 Principal Place of Business; Place of Negotiations. Such
Purchaser's principal place of business is at the location set forth on the
Schedule of Purchasers. This Agreement was negotiated only in the state of New
York. The Company's offer of Shares to such Purchaser, and such Purchaser's
acceptance of the Company's offer, occurred in the State of New York, unless
otherwise indicated under such Purchaser's name in the Schedule of Exceptions.
SECTION 5
Conditions to Closing of Purchasers
The obligation of each Purchaser to purchase the Shares to be
purchased at the Closing is subject to the fulfillment to such Purchaser's
reasonable satisfaction on or prior to the Closing Date of each of the following
conditions:
5.1 Representations and Warranties Correct. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.
5.2 Performance. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company on
or prior to the Closing Date shall have been performed or complied with in all
material respects.
5.3 Completion of Due Diligence. The Purchasers or their
representatives shall have completed or waived their due diligence investigation
including but not limited to discussions with the Company's management
concerning the Company's business, management and financial affairs and
inspection of the Company's books, records and facilities.
5.4 Opinion of Company's Counsel. The Purchasers shall have
received from Fulbright & Xxxxxxxx L.L.P., counsel to the Company, an opinion
addressed to the Purchasers, dated the Closing Date, in substantially the form
attached as Exhibit B hereto.
5.5 Legal Investment. At the time of the Closing, the purchase
of the Shares to be purchased by the Purchasers hereunder shall be legally
permitted by all laws and regulations to which the Purchasers and the Company
are subject.
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5.6 Compliance Certificate(s). The Company shall have
delivered to the Purchasers a certificate or certificates of the President of
the Company dated the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 5.1 and 5.2 of this Agreement.
5.7 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to the Purchasers and their counsel.
5.8 Securities Law Compliance. All such actions and steps
necessary to assure compliance with applicable Federal and state securities
laws, including all authorizations, approvals or permits, if any, of any
governmental authority or regulatory body in any states where the Shares are
being sold that are required in connection with the lawful issuance and sale of
the Shares pursuant to this Agreement, the conversion of the Shares into Common
Stock and the issuance of such Common Stock upon such conversion shall have been
duly obtained and shall be effective on and as of the Closing.
5.9 Certificate of Designations. The Certificate of
Designations shall have been filed with the Secretary of State of the State of
Delaware as provided by Delaware law; neither the Certificate of Incorporation
nor Certificate of Designations shall have been amended since such filing,
except as contemplated by Section 5.10 below.
5.10 Amendment of Series A and Series B Preferred Certificates
of Designations. The Certificate of Amendment to Certificate of the
Designations, Powers, Preferences and Rights of the Series A Stock and Series B
Stock, attached to this Agreement as Exhibit C, shall have been filed with the
Secretary of State of Delaware as provided by Delaware Law.
5.11 Warrant. The Purchasers shall have received from the
Company, Warrants to purchase an aggregate of 225,000 shares of Common Stock, in
substantially the form attached as Exhibit D hereto.
5.12 Budget. The Purchaser shall have approved the proposed
research and development budget for 1999 submitted by the Company, and a report
prepared by management reflecting various cost cutting measures instituted and
to be instituted by the Company and profitability goals.
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SECTION 6
Conditions to Closing of Company
The Company's obligation to sell the Shares to be purchased at
the Closing is subject to the fulfillment to its satisfaction on or prior to the
Closing Date of each of the following conditions:
6.1 Representations. The representations made by each of the
Purchasers pursuant to Section 4 hereof shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on the Closing Date.
6.2 Legal Investment. At the time of the Closing, the
conditions set forth in Sections 5.8, 5.9 and 5.10 shall have occurred and the
purchase of the Shares to be purchased by the Purchasers hereunder shall be
legally permitted by all laws and regulations to which the Purchasers and the
Company are subject.
SECTION 7
Registration of Securities
7.1 Certain Definitions. As used in this Section 7, the
following terms shall have the following respective meanings:
"Registrable Securities" shall mean, collectively, the shares
of Common Stock issuable upon conversion of the Shares and upon any stock split,
stock dividend, recapitalization or similar event relating thereto.
The terms "register," "registered and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with Sections 7.2 and 7.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall
be paid in any event by the Company).
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"Selling Expenses" shall mean all underwriting discounts and
selling commissions, if any, applicable to the sale of securities and all fees
and disbursements of counsel for any Holder (as hereinafter defined).
"Holder" shall mean any holder of Registrable Securities which
have not been sold to the public.
7.2 Mandatory Registration. The Company shall use its best
efforts to prepare and file with the SEC a registration statement (the
"Registration Statement") for the registration under the Securities Act of all
of the Registrable Securities within 90 days after the Closing Date. The Company
shall use its best efforts to cause such Registration Statement to become
effective as soon as practicable, and to remain effective and current until the
earlier of (i) the redemption by the Company of all the Preferred Stock and (ii)
the sale of all the Registrable Securities (the "Effective Period"); but in no
event later than the earlier to occur of (i) one year after the conversion of
all Shares of Preferred Stock or (ii) December 31, 2001. If the registration of
all of the Registrable Securities is delayed beyond the 90th day after the
Closing for up to 30 additional days (a "30 Day Delay"), then the base price for
computing the Conversion Price (as defined in the Certificate of Designations)
shall be reduced from $2.00 per share to $1.80 per share; and if the
registration of all of such Registrable Securities is delayed beyond the 90th
day after the Closing for up to between 31 and 60 additional days (a "60 Day
Delay"), then such base price shall be reduced from $1.80 per share to $1.60 per
share.
Notwithstanding the foregoing, the Company shall not be
required to keep the Registration Statement effective and the Holders shall not
effect any public sale or distribution of Registrable Securities during (i) the
periods that in the good faith judgment of the Board of Directors of the
Company, disclosure of certain confidential information otherwise required to be
disclosed in the Registration Statement would be detrimental to the Company (a
"Detrimental Period") or (ii) the 10 days prior to the date the Company proposes
to make a public announcement of its quarterly or annual earnings (a "Release
Date"), provided that the Company shall furnish each of the Holders, (i) in the
case of a Detrimental Period, with a certificate signed by the President or
Chairman to such effect and (ii) in the case of an Earnings Period, with a
notice of the proposed Release Date, given not less than 10 days prior to such
Release Date; and provided further that in no event shall the number of days
included in such Detrimental Periods, in the aggregate, exceed 90 in any
twelve-month period.
7.3 Expenses of Registration. The Company shall bear all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Agreement. All Selling Expenses
shall be borne by the Holders pro rata on the basis of the number of their
shares so registered, or, in the case of fees and disbursements of counsel, in
such proportions and amounts as the Holders shall mutually agree.
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7.4 Registration Procedures. The Company will keep each Holder
advised in writing as to the initiation of the registration and as to the
completion thereof. At its expense, as long as the Company is required to use
its best efforts to keep the Registration Statement effective pursuant to
Section 7.2 hereof, the Company will:
(a) Prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with Section 7.2
hereof and with the provisions of the Securities Act with respect to the
disposition of securities covered by such Registration Statement;
(b) Furnish such number of prospectuses and other
documents incident thereto, including any amendments of or supplements to the
prospectus, as a Holder from time to time may reasonably request;
(c) Notify each seller of Registrable Securities
covered by the Registration Statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(d) Cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed, as set forth in Section 7.9 hereof;
(e) Make available for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to the Registration Statement, and any attorney or accountant retained
by any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers and directors to supply all information reasonably requested by any
such seller, underwriter, attorney or accountant in connection with such
Registration Statement: provided, however, that such seller, underwriter,
attorney or accountant shall agree to hold in confidence and trust all
information so provided;
(f) Furnish to each selling Holder upon request a
copy of all documents filed with and all correspondence from or to the SEC in
connection with any such offering other than non-substantive cover letters and
the like;
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(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders, an earnings statement covering a period of at least twelve
months beginning after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act. Such statement may be provided to the Company's security holders
through the first annual report mailed to such security holders which includes
financial statements for the appropriate period; provided, however, that if any
Shares are converted into Common Stock prior to the date such earnings statement
is made generally available to the Company's security holders, the Company shall
make such statement generally available as soon as practicable; and
(h) Use its best efforts to register or qualify the
Registrable Securities under the securities or blue sky laws of each
jurisdiction as any Holder shall reasonably request, to keep such registration
or qualification in effect for so long as the Registration Statement remains in
effect, and do any and all other acts or things which may be necessary or
advisable to enable such Holder to consummate the public sale or other
disposition in such jurisdictions of the Registrable Securities: provided,
however, that the Company shall not be required to consent to general service of
process in any jurisdiction where it is not then qualified or subject itself to
the payment of any taxes or the jurisdiction of any taxing authority where the
Company would not otherwise be subject.
7.5 Indemnification. (a) To the extent permitted by applicable
law, the Company will indemnify each Holder, each of their respective officers,
directors and partners, and each person controlling such Holder, and each
underwriter, if any, and each person who controls any underwriter, against all
claims, losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any registration, qualification or
compliance required pursuant to this Section 7, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of the Securities Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each such Holder, each of their respective officers,
directors and partners, and each person controlling such Holder, each such
underwriter, if any, and each person who controls any such underwriter, for any
legal and any other expenses as are reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company by any person to be indemnified hereunder and stated to be specifically
for use therein.
(b) To the extent permitted by applicable law, each
Holder will, if securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and each underwriter, if
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any, of the Company's securities covered by such other Registration Statement,
and each person who controls the Company or such underwriter within the meaning
of the Securities Act and the rules and regulations thereunder, each other
Holder, and each of their officers, directors and partners, and each person
controlling such other Holder, against all claims, losses, damages and
liabilities (or actions, proceedings or settlements in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any registration, qualification, or compliance required pursuant to
this Section 7, or based on any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and such other
Holders, directors, officers, partners, underwriters, if any, or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein: provided,
however, that the obligations of any such Holder hereunder shall be limited to
an amount equal to the proceeds to such Holder of securities sold under such
registration statement, prospectus, offering circular or other document as
contemplated herein.
(c) Each party entitled to indemnification under this
Section 7.5 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense; and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
7.5 unless such failure to notify shall be materially prejudicial to the
Indemnifying Party's ability to defend such action. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party (which consent shall not be unreasonably withheld),
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom. No
Indemnified Party shall, except with the consent of each Indemnifying Party
(which consent shall not be unreasonably withheld), consent to entry of any
judgment or enter into any settlement.
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7.6 Information by Holder. Each Holder of Registrable
Securities shall furnish to the Company such information regarding such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement. If requested by the Company, the Holder will
specifically state that such information is to be used in a prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any registration, qualification or
compliance required pursuant to this Section 7.
7.7 Limitations on Registration of Issues of Securities. From
and after the date of this Agreement until the Registration Statement has been
declared effective, the Company shall not enter into any agreement with any
holder or prospective holder of any securities of the Company giving such holder
or prospective holder a right to require the Company to register securities
owned by such holder.
7.8 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
shall until the tenth anniversary of the Closing Date agree to:
(a) Use its best efforts to make and keep public information
available as those terms are understood and defined in Rule 144 under the
Securities Act at all times after the Closing Date;
(b) Use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities,
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act and such other reports and documents so
filed as the Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing the Holder to sell any such securities without
registration.
7.9 NASDAQ Listing. Prior to the registration of all of the
Registrable Securities pursuant to this Section 7, (i) all applications, filings
and documents necessary to list on the NASDAQ Small Cap Market (the "NASDAQ")
the Registrable Securities shall have been filed and, where applicable,
approved, and (ii) all such Registrable Securities shall have been listed (or
approved for listing subject to issuance) on the NASDAQ.
7.10 Additional NASDAQ Listing. Upon the happening of any
event pursuant to which additional shares of Common Stock not otherwise included
in the Registrable Securities shall become issuable upon conversion of the
Preferred Stock, the Company will file all applications, filings and documents
necessary to list, and will use its best efforts to cause the listing of all
such
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additional shares of Common Stock on the NASDAQ (or such other national
securities exchange on which the Common Stock is then being traded). Such
additional shares of Common Stock shall, upon their listing, be classified as
and included in the term "Registrable Securities" for all purposes of this
Agreement.
SECTION 8
Miscellaneous
8.1 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of New York.
8.2 Survival. The representations and warranties made herein
shall survive the Closing Date for a period of two years, except in the case of
representations and warranties relating to broker's fees which shall survive for
the applicable statute of limitations and all such representations and
warranties and all covenants and agreements made herein shall be deemed to be
material and to have been relied upon by the parties hereto, notwithstanding any
investigation heretofore or hereafter made by them, or on their respective
behalf. Each of the covenants and agreements contained herein shall survive
indefinitely, unless otherwise expressly provided herein. No claim for recovery
of indemnifiable damages may be asserted based upon a representation or warranty
after it has been extinguished; provided, that any specific claim asserted
within the applicable period shall not thereafter be barred.
8.3 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto; provided, however, the Company may not assign its rights
hereunder; and provided, further, that the Company shall be under no obligation
to disclose to any non-Purchaser transferee (other than a transferee who or
which is an "affiliate" of such transferring Purchaser, as such term is defined
in Rule 12b-2 of the Exchange Act) any confidential information otherwise
required to be disclosed by the Company hereunder.
8.4 Entire Agreement; Amendment. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the Company and those Purchasers holding in the
aggregate not less than a majority of the outstanding Shares held by the
Purchasers.
8.5 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given: (a) on the date of delivery, if delivered to the persons
identified below; (b) seven calendar days after mailing, if
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mailed, with proper postage, by certified or registered first-class mail,
postage prepaid, return receipt requested, addressed (i) if to a Purchaser, at
the address set forth for such Purchaser on the Schedule of Purchasers attached
hereto or at such other address as such Purchaser shall have furnished to the
Company in writing, or (ii) if to any other holder of Shares or any Common Stock
issued upon conversion of Shares at such address as such holder shall have
furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder thereof
who has so furnished an address to the Company, or (iii) if to the Company, at
Xxxxxx & Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxxxx, XX 00000, Attention: Chief Executive
Officer, or at such other address as the Company shall have furnished to the
Purchasers and each such other holder in writing, with a copy to Fulbright &
Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X.
Xxxxxxxx, Esq.; (c) on the date of receipt if sent by telecopy, and confirmed in
writing in the manner set forth in (b) on or before the next day after the
sending of the telecopy; or (d) one business day after delivery to a nationally
recognized overnight courier service marked for overnight delivery in the manner
set forth in (b). Notwithstanding the foregoing, notices of conversion must be
sent by holders of Shares pursuant to the methods set forth in both (c) and (d)
above, with such notices of conversion to be deemed first given at the earlier
time that delivery under each such method may be deemed given.
8.6 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Shares, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
8.7 Separability. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
8.8 Broker's Fees. (a) The Company (i) represents and warrants
that the Company has not retained a finder or broker in connection with the
transactions contemplated by this Agreement and (ii) hereby agrees to indemnify
and to hold the Purchasers harmless of and from any liability for commission or
compensation in the nature of an agent's fee to any broker or other person or
firm incurred in connection with the transactions contemplated hereby (and the
costs and expenses of defending against such liability or asserted liability)
arising from any act by the Company or any of its employees or representatives.
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(b) Each of the Purchasers, severally and not
jointly, (i) represents and warrants that it has retained no finder or broker in
connection with the transactions contemplated by this Agreement and (ii) hereby
agrees to indemnify and to hold the Company and the other Purchasers harmless
from any liability for any commission or compensation in the nature of an
agent's fee to any broker or other person or firm incurred in connection with
the transactions contemplated hereby (and the costs and expenses of defending
against such liability or asserted liability) arising from any act by such
Purchaser or any of its employees or representatives.
8.9 Expenses. Each of the Company and the Purchasers shall
bear its own expenses and legal fees incurred on its behalf with respect to this
Agreement and the transactions contemplated hereby.
8.10 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date above written.
GLOBAL PHARMACEUTICAL
CORPORATION, a Delaware corporation
By: /s/ Xxx Xxxxxxxxxx
-------------------------------------
Title: President & CEO
PURCHASER:
SMALL CAP VALUE PORTFOLIO
(Of Bear Xxxxxxx & Co.,
Inc.)
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Title:
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SCHEDULE OF PURCHASERS
Name of Shares of Series C Total
Purchaser Preferred Stock Investment
--------- ------------------ ----------
Small Cap Value Portfolio 9,000 $900,000
(Of Bear Xxxxxxx & Co., Inc.)
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