SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of July
25, 2000, by and among LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC., a Delaware
corporation (the "Company"), and each of the purchasers set forth on the
execution page hereof (individually, a "Purchaser" and collectively, the
"Purchasers").
WHEREAS:
A. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions 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 "Securities Act");
B. The Company desires to sell, and the Purchasers desire to
purchase, upon the terms and conditions stated in this Agreement, (i)
convertible notes of the Company in the aggregate principal amount of
Thirty-Five Million Dollars ($35,000,000), in the form attached hereto as
Exhibit A (the "Notes"), convertible into shares of the Company's common stock,
par value $.001 per share (the "Common Stock"), and (ii) warrants (the
"Warrants"), in the form attached hereto as Exhibit B, to acquire 5,000,800
shares of Common Stock in the aggregate. The shares of Common Stock issuable
upon conversion of or otherwise pursuant to the Notes are referred to herein as
the "Conversion Shares" and the shares of Common Stock issuable upon exercise of
or otherwise pursuant to the Warrants are referred to herein as the "Warrant
Shares." The Notes, the Warrants, the Conversion Shares and the Warrant Shares
are collectively referred to herein as the "Securities."
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws;
D. All references herein to monetary denominations shall refer to
lawful money of the United States of America.
NOW, THEREFORE, the Company and the Purchaser, intending to be
legally bound, hereby agree as follows:
1. PURCHASE AND SALE OF DEBENTURES AND WARRANTS
a. Purchase of Notes and Warrants. On the Closing Date (as defined
below) subject to the satisfaction (or waiver) of the conditions set forth in
Section 6 and Section 7 below, the Company shall issue and sell to each
Purchaser, and each Purchaser severally agrees to purchase from the Company,
such Notes and the Warrants for the purchase price as is set forth on such
Purchaser's
execution page hereof (the "Purchase Price"). Each Purchaser's obligation to
purchase its Notes and Warrants hereunder is distinct and separate from each
other Purchaser's obligation to purchase its Notes and Warrants, and no
Purchaser shall be required to purchase hereunder more than the number of its
Notes and Warrants set forth on such Purchaser's execution page hereto
notwithstanding any failure by any other Purchaser to purchase its Notes and
Warrants hereunder nor shall any Purchaser have any liability by reason of any
such failure by any other Purchaser.
b. Form of Payment. On the Closing Date, each Purchaser shall pay
such Purchaser's Purchase Price for the Notes and Warrants being purchased by
such Purchaser at the Closing by wire transfer to the Company, in accordance
with the Company's written wiring instructions, against delivery of the duly
executed Notes and Warrants being purchased by such Purchaser, and the Company
shall deliver such Notes and Warrants against delivery of such Purchase Price.
c. Closing Date. Subject to the satisfaction (or waiver) of the
relevant conditions thereto set forth in Section 6 and Section 7 below, the date
and time of the issuance and sale of the Notes and the Warrants pursuant to this
Agreement (the "Closing") shall be 12:00 noon Eastern Time on July 26, 2000
(subject to a two (2) business day grace period at any party's option, but in no
event later than July 28, 2000), or such other time as may be mutually agreed
upon by the Company and the Purchasers (the "Closing Date"). The Closing shall
occur at the offices of Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
2. PURCHASERS' REPRESENTATIONS AND WARRANTIES
Each Purchaser severally, but not jointly, represents and warrants
to the Company as follows:
a. Purchase for Own Account, Etc. Such Purchaser is purchasing the
Securities for such Purchaser's own account and not with a present view toward
the public sale or distribution thereof, except pursuant to sales that are
exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act. Such Purchaser understands that such
Purchaser must bear the economic risk of this investment indefinitely, unless
the Securities are registered pursuant to the Securities Act and any applicable
state securities or blue sky laws or an exemption from such registration is
available, and that the Company has no present intention of registering any such
Securities other than as contemplated by the Registration Rights Agreement.
Notwithstanding anything in this Section 2(a) to the contrary, by making the
representations herein, such Purchaser does not agree to hold the Securities for
any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
b. Accredited Investor and Interested Stockholder Status. Such
Purchaser is an "Accredited Investor" as that term is defined in Rule 501(a) of
Regulation D. As of the date hereof, such Purchaser is not an "interested
stockholder" of the Company as such term is defined in Section 203(c)(5) of the
Delaware General Corporation Law.
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c. Reliance on Exemptions. Such Purchaser understands that the
Securities are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and the Quebec Securities Act and that the Company is
relying upon the truth and accuracy of, and such Purchaser's compliance with,
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the availability of
such exemptions and the eligibility of such Purchaser to acquire the Securities.
d. Information. Such Purchaser has been furnished all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been specifically
requested by such Purchaser. Such Purchaser has been afforded the opportunity to
ask questions of the Company and has received what such Purchaser believes to be
satisfactory answers to any such inquiries. Neither such inquiries nor any other
due diligence investigation conducted by such Purchaser or any of its
representatives shall modify, amend or affect such Purchaser's right to rely on
the Company's representations and warranties contained in Section 3 below. Such
Purchaser understands that such Purchaser's investment in the Securities
involves a high degree of risk.
e. Governmental Review. Such Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Resale. Such Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws
or the Quebec Securities Act, and may not be transferred unless (a) subsequently
registered thereunder, or (b) such Purchaser shall have delivered to the Company
an opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Securities to be sold or transferred may be sold or transferred under an
exemption from such registration, or (c) sold under Rule 144 promulgated under
the Securities Act (or a successor rule) ("Rule 144"), or (d) sold or
transferred to an affiliate of such Purchaser who is an Accredited Investor; and
(ii) neither the Company nor any other person is under any obligation to
register such Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder (in each
case, other than pursuant to the Registration Rights Agreement).
g. Legends. Such Purchaser understands that the Notes and the
Warrants and, until such time as the Conversion Shares and Warrant Shares have
been registered under the Securities Act (including registration pursuant to
Rule 416 thereunder) as contemplated by the Registration Rights Agreement or
otherwise may be sold by such Purchaser under Rule 144, the certificates for the
Conversion Shares and Warrant Shares may bear a restrictive legend in
substantially the following form:
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The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state of the United States. The securities
represented hereby may not be offered or sold in the absence of an
effective registration statement for the securities under applicable
securities laws unless offered, sold or transferred under an
available exemption from the registration requirements of those
laws.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Security upon which
it is stamped, if, unless otherwise required by state securities laws, (a) the
sale of such Security is registered under the Securities Act (including
registration pursuant to Rule 416 thereunder), or (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale
or transfer of such Security may be made without registration under the
Securities Act or (c) such holder provides the Company with reasonable
assurances that such Security can be sold under Rule 144. Such Purchaser agrees
to sell all Securities, including those represented by a certificate(s) from
which the legend has been removed, pursuant to an effective registration
statement or under an exemption from the registration requirements of the
Securities Act. In the event the above legend is removed from any Security and
thereafter the effectiveness of a registration statement covering such Security
is suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities laws, then upon reasonable advance notice to
such Purchaser the Company may require that the above legend be placed on any
such Security and such Purchaser shall cooperate in the prompt replacement of
such legend.
h. Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of such Purchaser and are valid and binding agreements of such
Purchaser enforceable in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to the
enforcement of creditors' rights and remedies or by other equitable principles
of general application.
i. Residency. Such Purchaser is a resident of the jurisdiction set
forth under such Purchaser's name on the execution page hereto executed by such
Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser as follows:
a. Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature
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of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. For purposes of this
Agreement, "Material Adverse Effect" shall mean any material adverse effect on
(i) the Securities, (ii) the ability of the Company to perform its obligations
hereunder and under the Notes, the Warrants or the Registration Rights Agreement
or (iii) the business, operations, properties, prospects or financial condition
of the Company and its subsidiaries, taken as a whole.
b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Notes, the Warrants and the Registration Rights Agreement,
to issue and sell the Notes and Warrants in accordance with the terms hereof, to
issue the Conversion Shares upon conversion of the Notes in accordance with the
terms thereof and to issue the Warrant Shares upon exercise of the Warrants in
accordance with the terms thereof; (ii) the execution, delivery and performance
of this Agreement, the Notes, the Warrants and the Registration Rights Agreement
by the Company and the consummation by it of the transactions contemplated
hereby and thereby (including, without limitation, the issuance of the Notes and
the Warrants, and the issuance and reservation for issuance of the Conversion
Shares and the Warrant Shares) have been duly authorized by the Company's Board
of Directors and, subject only to the approval of the Company's stockholders at
the meeting of stockholders referred to in Section 4(m) hereof, no further
consent or authorization of the Company, its Board of Directors or its
stockholders is required; and (iii) this Agreement constitutes, and, upon
execution and delivery by the Company of the Registration Rights Agreement, the
Notes and the Warrants, such agreements will constitute, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to the enforcement of creditors' rights and remedies or by other
equitable principles of general application.
c. Stockholder Authorization. Neither the execution, delivery or
performance by the Company of its obligations under this Agreement, the Notes,
the Warrants or the Registration Rights Agreement nor the consummation by it of
the transactions contemplated hereby or thereby (including, without limitation,
the issuance of the Notes or Warrants or the issuance or reservation for
issuance of the Conversion Shares or Warrant Shares) require any consent or
authorization of the Company's stockholders, including but not limited to
consent under Rule 4460(i) promulgated by the National Association of Securities
Dealers, Inc. (the "NASD") or any similar rule, subject only, with respect to
the creation and issuance of the Notes and the Warrants, the issuance of the
Conversion Shares upon the conversion of the Notes and the issuance of the
Warrant Shares upon exercise of the Warrants, to the approval of the Company's
stockholders as required by applicable law, rule or regulation (including Rule
4460(i) promulgated by the NASD).
d. Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance pursuant to securities (other than the Notes and the Warrants)
exercisable for, or convertible into or exchangeable for any shares of capital
stock and the
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number of shares to be reserved for issuance upon conversion of the Notes and
exercise of the Warrants is set forth on Schedule 3(d). All of such outstanding
shares of capital stock have been, or upon issuance will be, validly issued,
fully paid and nonassessable. Except as disclosed on Schedule 3(d), no shares of
capital stock of the Company (including the Conversion Shares and the Warrant
Shares) are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances. Except for the
Securities and as disclosed in Schedule 3(d), as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its subsidiaries, 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,
nor are any such issuances or arrangements contemplated and (ii) there are no
agreements or arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of its or their securities under the
Securities Act (except the Registration Rights Agreement and the Registration
Rights Agreement, dated June 21, 1999 between the Company and Molex
Incorporated). Except as set forth on Schedule 3(d), there are no securities or
instruments containing antidilution or similar provisions that will be triggered
by the issuance of the Securities in accordance with the terms of this
Agreement, the Notes or the Warrants. The Company has furnished to such
Purchaser true and correct copies of the Company's Amended and Restated
Certificate of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's Amended and Restated By-laws as in effect on the
date hereof (the "By-laws"), and all other instruments and agreements governing
securities convertible into or exercisable or exchangeable for capital stock of
the Company.
e. Issuance of Shares. The Conversion Shares and Warrant Shares are
duly authorized and reserved for issuance, and, upon conversion of the Notes and
exercise of the Warrants in accordance with the terms thereof, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and, except as disclosed on Schedule 3(d), will not be subject
to preemptive rights, rights of first refusal or other similar rights of
stockholders of the Company and will not impose personal liability upon the
holder thereof.
f. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Notes and the Warrants by the
Company, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance, as applicable, of the Notes, the Warrants, the Conversion Shares
and the Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation or By-laws or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including U.S. federal and state
securities laws and regulations) 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 (except, with respect to clause (ii), for such
conflicts, defaults, terminations,
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amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect) and as
disclosed on Schedule 3(f). Neither the Company nor any of its subsidiaries is
in violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any of its subsidiaries is
in default (and no event has occurred which, with notice or lapse of time or
both, would put the Company or any of its subsidiaries in default) under, nor
has there occurred any event giving others (with notice or lapse of time or
both) any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for actual or possible violations, defaults or
rights as would not, individually or in the aggregate, have a Material Adverse
Effect. The respective businesses of the Company and its subsidiaries are not
being conducted, and shall not be conducted so long as any Purchaser owns any of
the Securities, in violation of any law, ordinance or regulation of any
governmental entity, except for actual or possible violations, if any, the
sanctions for which, either singly or in the aggregate, would not have a
Material Adverse Effect. Except as disclosed on Schedule 3(f) or as specifically
contemplated by this Agreement and as required under the Securities Act and any
applicable state securities laws, the Company is not required to obtain any
consent, approval, authorization or order of, or make any filing or registration
with, any court or governmental agency, any regulatory or self regulatory agency
or other third party in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Registration Rights Agreement, the Notes
or the Warrants, in each case in accordance with the terms hereof or thereof.
The Company is not in violation of the listing requirements of the Nasdaq
National Market ("NASDAQ") and does not reasonably anticipate that the Common
Stock will be delisted by NASDAQ for the foreseeable future.
g. SEC Documents, Financial Statements. Since January 4, 2000, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (all of the foregoing filed prior to the date hereof, and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to herein as the
"SEC Documents"). The Company has delivered to each Purchaser true and complete
copies of the SEC Documents, except for the exhibits and schedules thereto and
the documents incorporated therein. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents is, or has
been, required to be amended under applicable law nor are any such amendments
presently contemplated. As of their respective dates, the financial statements
of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, during the periods involved (except
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(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 not include footnotes or may be condensed or summary statements) and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to immaterial year-end
audit adjustments). Except as set forth in the financial statements of the
Company included in the SEC Documents filed prior to the date hereof, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of such
financial statements and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial statements,
which liabilities and obligations referred to in clauses (i) and (ii),
individually or in the aggregate, if reflected in such financial statements,
would not have a Material Adverse Effect.
h. Absence of Certain Changes. Since December 31, 1999, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations or
prospects of the Company, except as disclosed in the SEC Documents filed prior
to the date hereof.
i. Absence of Litigation. Except as disclosed in the SEC Documents
filed prior to the date hereof or on Schedule 3(i), there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body including, without
limitation, the SEC or NASDAQ, pending or, to the knowledge of the Company or
any of its subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective directors or officers in their
capacities as such which could have a Material Adverse Effect. There are no
facts which, if known by a potential claimant or governmental authority, could
give rise to a claim or proceeding which, if asserted or conducted with results
unfavorable to the Company or any of its subsidiaries, could have a Material
Adverse Effect.
j. Intellectual Property. Each of the Company and its subsidiaries
owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, inventions, discoveries, processes, scientific,
technical, engineering and marketing data, object and source codes, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for the conduct of
its business as now being conducted. To the best knowledge of the Company,
neither the Company nor any subsidiary of the Company infringes or is in
conflict with any right of any other person with respect to any Intangibles
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect. Except as
disclosed on Schedule 3(j), neither the Company nor any of its subsidiaries has
received written notice of any pending conflict with or infringement upon such
third party Intangibles. Neither the Company nor any of its subsidiaries has
entered into any consent, indemnification, forbearance to xxx or settlement
agreements with respect to the validity of the
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Company's or its subsidiaries' ownership or right to use its Intangibles and, to
the best knowledge of the Company, there is no reasonable basis for any such
claim to be successful. The Intangibles are valid and enforceable and no
registration relating thereto has lapsed, expired or been abandoned or canceled
or is the subject of cancellation or other adversarial proceedings, and all
applications therefor are pending and in good standing. The Company and its
subsidiaries have complied, in all material respects, with their respective
contractual obligations relating to the protection of the Intangibles used
pursuant to licenses. To the best knowledge of the Company, no person is
infringing on or violating the Intangibles owned or used by the Company of its
subsidiaries.
k. 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, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses; 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 the Corruption of Foreign
Public Officials Act of Canada; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
l. Disclosure. All information relating to or concerning the Company
set forth in this Agreement or provided to any Purchaser pursuant to Section
2(d) hereof and otherwise in connection with the transactions contemplated
hereby is true and correct in all material respects (or, in the case of
information provided to any Purchaser, was true and correct in all material
respects when so provided) and the Company has not omitted to state any material
fact necessary in order to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, prospects, operations
or financial conditions, which has not been publicly disclosed but, under
applicable law, rule or regulation, would be required to be disclosed by the
Company in a registration statement filed on the date hereof by the Company
under the Securities Act with respect to a primary issuance of the Company's
securities.
m. Acknowledgment Regarding the Purchasers' Purchase of the
Securities. The Company acknowledges and agrees that none of the Purchasers is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement or the transactions contemplated
hereby, and the relationship between the Company and each Purchaser is "arms
length" and that any statement made by any Purchaser or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to such Purchaser's purchase of Securities and has not been relied upon by the
Company, its officers or directors in any way. The Company further represents to
each Purchaser that the Company's decision to enter into this Agreement has been
based solely on an independent evaluation by the Company and its
representatives.
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n. Form SB-2 and S-1 Eligibility. The Company is currently eligible
to register the resale of its Common Stock on a registration statement on Form
SB-2 or S-1 under the Securities Act. There exist no facts or circumstances
known to the Company that would prohibit or delay the preparation and filing of
a registration statement on Form SB-2 or S-1 with respect to the Registrable
Securities (as defined in the Registration Rights Agreement), except that the
Company will be required to include audited financial statements as of and for
the year ended June 30, 2000 with such registration statement.
o. No General Solicitation. Neither the Company nor any person
participating on the Company's behalf in the transactions contemplated hereby
has conducted any "general solicitation," as such term is defined in Regulation
D, with respect to any of the Securities being offered hereby.
p. 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 under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior offering of securities of the
Company for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, Rule 4460(i) of the NASD or
any similar rule.
q. No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by any Purchaser relating to this Agreement or the transactions
contemplated hereby, with the exception of commissions, fees or payments owed to
Xxxxxxx Xxxxx & Co. relating to this Agreement or the transactions contemplated
hereby, which shall be paid by the Company.
r. Acknowledgment Regarding Securities. The Company's executive
officers have studied and fully understand the nature of the Securities being
sold hereunder. The Company acknowledges that its obligation to issue Conversion
Shares upon conversion of the Notes in accordance with the terms of the Notes is
absolute and unconditional, regardless of the dilution that such issuance may
have on the ownership interests of other stockholders. Taking the foregoing into
account, the Company's Board of Directors has determined in its good faith
business judgment that the issuance of the Notes and the Warrants hereunder and
the consummation of the other transactions contemplated hereby are in the best
interests of the Company and its stockholders.
s. Tax Status. Except as set forth in the SEC Documents filed prior
to the date hereof, the Company and each of its subsidiaries has made or filed
all U.S. federal, state and local income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for
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periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim. The Company has not executed a waiver with respect to
any statute of limitations relating to the assessment or collection of any
federal, state or local tax. None of the Company's tax returns has been or is
being audited by any taxing authority.
t. 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, in each case free and clear of all liens, encumbrances and
defects except 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 its subsidiaries. Any real property and facilities
held under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such property and buildings by the Company and its subsidiaries.
u. Insurance. The Company has in force fire, casualty, product
liability and other insurance policies, with extended coverage, sufficient in
amount to allow it to replace any of its material properties or assets which
might be damaged or destroyed or sufficient to cover liabilities to which the
Company may reasonably become subject, and such types and amounts of other
insurance with respect to its business and properties, on both a per occurrence
and an aggregate basis, as are customarily carried by persons engaged in the
same or similar business as the Company. To the best knowledge of the Company,
no default or event has occurred that could give rise to a default under any
such policy.
v. Environmental Matters. There is no environmental litigation or
other environmental proceeding pending or threatened by any governmental
regulatory authority or others with respect to the current or any former
business of the Company or of any partnership or joint venture currently or at
any time affiliated with the Company. No state of facts exists as to
environmental matters or Hazardous Substances (as defined below) that involves
the reasonable likelihood of a material capital expenditure by the Company or
that may otherwise have a Material Adverse Effect. No Hazardous Substances have
been treated, stored or disposed of, or otherwise deposited, in or on the
properties owned or leased by the Company or by any partnership or joint venture
currently or at any time affiliated with the Company in violation of any
applicable environmental laws. The environmental compliance programs of the
Company comply in all respects with all environmental laws, whether federal,
state or local, currently in effect. As used herein, "Hazardous Substances"
means any substance, waste, contaminant, pollutant or material that has been
determined by any governmental authority to be capable of posing a risk of
injury to health, safety, property or the environment.
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4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 6 and Section 7 of this
Agreement.
b. Form D; Blue Sky Laws; Current Report. The Company shall file a
Form D with respect to the Securities as required under Regulation D and provide
a copy thereof to each Purchaser promptly after such filing. The Company shall
take such action as the Company shall reasonably determine is necessary to
qualify the Securities for sale to each Purchaser pursuant to this Agreement
under applicable securities or "blue sky" laws of the states of the United
States or obtain exemption therefrom, and shall provide evidence of any such
action so taken to each Purchaser. Within two trading days after the Closing
Date, the Company agrees to file a Form 8-K concerning this Agreement and the
transactions contemplated hereby, which Form 8-K shall attach this Agreement and
its Exhibits as exhibits to such Form 8-K.
c. Reporting Status. So long as any Purchaser beneficially owns any
of the Securities, the Company shall timely file all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination. From and after such time as the Company meets the
"registrant eligibility" requirements set forth in the general instructions to
Form S-3 or any successor form, the Company will use its best efforts to
continue to meet such requirements.
d. Use of Proceeds. The Company shall use the proceeds from the sale
of the Notes and the Warrants as set forth on Schedule 4(d).
e. Expenses. The Company shall pay to Heights Capital Management,
Inc. ("Heights") at the Closing, reimbursement for the expenses reasonably
incurred by Heights and its affiliates and advisors in connection with the
negotiation, preparation, execution and delivery of this Agreement and the other
agreements to be executed in connection herewith, including, without limitation,
Heights' and its affiliates' and advisors' reasonable due diligence and
attorneys' fees and expenses (the "Expenses"); provided, however, Capital
Ventures International ("CVI") shall be permitted to deduct all Expenses
(subject to such maximum amount) from the Purchase Price payable by CVI
hereunder. In addition, from time to time thereafter, upon Heights' written
request, the Company shall pay to Heights such additional Expenses, if any, not
covered by such payment, in each case to the extent reasonably incurred by
Heights or its affiliates or agents in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other agreements
to be executed in connection herewith. Notwithstanding the foregoing, the
Company shall not be obligated to reimburse Heights for more than $50,000
pursuant to this Section 4(e).
f. Financial Information. The Company shall send the following
reports to each Purchaser until such Purchaser transfers, assigns or sells all
of its Securities: (i) within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-K, its Quarterly Reports on
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Form 10-Q, its proxy statements and any Current Reports on Form 8-K; and (ii)
within one (1) day after release, copies of all press releases (other than trade
releases) issued by the Company or any of its subsidiaries.
g. Listing. The Company shall promptly secure the listing of the
Conversion Shares and Warrant Shares upon each national securities exchange or
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
Conversion Shares from time to time issuable upon conversion of the Notes and
all Warrant Shares from time to time issuable upon exercise of the Warrants. The
Company will take all action necessary to continue the listing and trading of
its Common Stock on the NASDAQ, the New York Stock Exchange ("NYSE") or the
American Stock Exchange ("AMEX"), as the case may be, and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the NASD and such exchanges, as applicable. In the event the
Common Stock is not eligible to be traded on any of the NASDAQ, NYSE or AMEX and
the Common Stock is not eligible for listing on any such exchange or system, the
Company shall use its best efforts to cause the Common Stock to be eligible for
trading on the over-the-counter bulletin board at the earliest practicable date
and remain eligible for trading while any Conversion Shares and Warrant Shares
are outstanding. The Company shall not reduce the number of shares reserved for
issuance upon conversion of the Notes and the full exercise of the Warrants
(except as a result of any such conversion or exercise) without the written
consent of the Purchaser. The Company shall promptly provide to the holders of
the Notes copies of any notices it receives regarding the continued eligibility
of the Common Stock for trading in the over-the-counter market or, if
applicable, any securities exchange (including the NASDAQ) on which securities
of the same class or series issued by the Company are then listed or quoted, if
any.
h. Corporate Existence. Except as provided in the immediately
succeeding sentence and for transactions that would permit the Company to
require conversion of the Notes in accordance with Article III.C thereof, so
long as the Purchaser beneficially owns any Securities, the Company shall
maintain its corporate existence. The Company may merge, consolidate or sell all
or substantially all of its assets, provided that any surviving or successor
entity in such transaction (i) assumes the Company's obligations hereunder and
under the Notes and the Warrants (except as otherwise provided therein) and the
agreements and instruments entered into in connection herewith whether or not
the Company would have had a sufficient number of shares of Common Stock
authorized and available for issuance in order to effect the conversion of all
Notes and the exercise in full of all Warrants outstanding as of the date of
such transaction and (ii) is a publicly traded corporation whose common stock is
listed for trading on the NASDAQ, NYSE or AMEX. Notwithstanding the foregoing,
the Company covenants and agrees that it will not engage in any merger,
consolidation or sale of all or substantially all of its assets at any time
prior to the effectiveness of the registration statement required to be filed
pursuant to Section 2(a) of the Registration Rights Agreement without (A)
providing each Purchaser with written notice of such transaction at least sixty
(60) days prior to the consummation of the transaction and (B) obtaining
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the written consent of the Purchasers holding a majority-in-interest of the then
outstanding principal amount of the Notes on or before such consummation.
i. No Integrated Offerings. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause this offering of Securities to be integrated with any
other offering of securities by the Company for purposes of any stockholder
approval provision applicable to the Company or its securities.
j. Redemptions and Dividends. So long as any Purchaser beneficially
owns any Notes, the Company shall not, without first obtaining the written
approval of such Purchaser, repurchase, redeem, or declare or pay any cash
dividend or distribution on, any shares of capital stock of the Company;
provided, however, if there are three or more Purchasers, then only the written
approval of Purchasers holding a majority-in-interest of the then outstanding
principal amount of the Notes shall be required.
k. Trading Restrictions. No Purchaser shall be permitted to sell,
transfer or otherwise dispose of, during any 45 trading day period, more than
4.99% of the least number of shares of Common Stock issued and outstanding
during such 45 trading day period (other than dispositions to the Company).
l. Additional Equity Capital; Right of First Offer. The Company
agrees that during the period beginning on the date hereof and ending on the
date which is 180 days following the Closing Date (the "Lock-Up Period"), the
Company will not, without the prior written consent of each Purchaser, contract
with any party to obtain additional financing in which any equity or
equity-linked securities are issued (including any debt financing with an equity
component) ("Future Offerings"). In addition, the Company will not conduct any
Future Offering during the 180 days following the expiration of the Lock-Up
Period, unless it shall have first delivered to each Purchaser, at least ten
business days prior to the closing of such Future Offering, written notice
describing the proposed Future Offering, including the terms and conditions
thereof, and providing each Purchaser and its affiliates an option during the
ten business day period following delivery of such notice to purchase all of the
securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this and
the immediately preceding sentence are collectively referred to as the "Capital
Raising Limitations"); provided, however, that in the event more than one
Purchaser desires to purchase such securities, the interested Purchasers may
allocate such Future Offering among themselves by agreement among such
Purchasers or, in the event such Purchasers cannot reach an agreement in such
period, such Future Offering shall be allocated among them on a pro rata basis
equal to the percentage each such Purchaser's Purchase Price bears to the sum of
the Purchase Prices of such interested Purchasers. The Capital Raising
Limitations shall not apply to any transaction involving issuances of securities
as consideration in a merger, consolidation or acquisition of assets, or in
connection with any strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company. The Capital
Raising Limitations also shall not apply to (i) the
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issuance of securities pursuant to a firm commitment public offering, (ii) the
issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof or
(iii) the grant of additional options or warrants, or the issuance of additional
securities, under any duly authorized Company stock option or restricted stock
plan for the benefit of the Company's employees or directors.
m. Stockholders' Meeting. The Company shall call a meeting of its
stockholders to be held as promptly as practicable and in any event no later
than November 30, 2000 for the purpose of voting upon and approving this
Agreement, the Notes, Warrants and the Registration Rights Agreement, the
authorization and issuance of the Notes and the Warrants, and the issuance of
the Conversion Shares upon conversion of or otherwise pursuant to the Notes and
the Warrant Shares upon exercise of or otherwise pursuant to the Warrants. The
Company shall, through its Board of Directors, recommend to its stockholders
approval of such matters. The Company shall use its best efforts to solicit from
its stockholders proxies in favor of such matters sufficient to comply with all
relevant legal requirements, including, without limitation, Rule 4460(i)
promulgated by the NASD, and shall vote such proxies, as well as the irrevocable
proxies contemplated by Section 5(h), in favor of such matters.
n. Information. The Company will furnish to each Purchaser, so long
as it holds any Notes or Warrants, and to each other institutional holder of any
Notes or Warrants, in duplicate:
(i) concurrently with the filing with the SEC of its annual
reports and quarterly reports on Form 10-K and Form 10-Q, respectively, a
certificate of the President, a Vice President or a senior financial officer of
the Company stating that, based upon such examination or investigation and
review of this Agreement as in the opinion of the signer is necessary to enable
the signer to express an informed opinion with respect thereto, neither the
Company nor any of its subsidiaries is or has during such period been in default
in the performance or observance of any of the terms, covenants or conditions
hereof, or, if the Company or any of its subsidiaries shall be or shall have
been in default, specifying all such defaults, and the nature and period of
existence thereof, and what action the Company or such subsidiary has taken, is
taking or proposes to take with respect thereto;
(ii) promptly after the receipt thereof by the Company, and in
any event within 15 days after such receipt, copies of any reports as to
material inadequacies in accounting controls (including reports as to the
absence of any such inadequacies) submitted to the Company by independent
accountants in connection with any audit of the Company or of any subsidiary
made by such accountants;
(iii) promptly after a responsible officer of the Company shall
become aware of the existence of a default under any of the Notes or any Event
of Default (as defined in the Notes), a certificate of the President, a Vice
President or a senior financial officer of the Company specifying the nature and
period of existence thereof and what action the Company or any of its
subsidiaries, as the case may be, is taking or proposes to take with respect
thereto; and
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(iv) the information the Company must deliver to any holder or to
any prospective transferee of a Note in order to permit the sale or other
transfer of such Note pursuant to Rule 144A of the SEC or any similar rule then
in effect.
The Company will keep at its principal executive office a true
copy of this Agreement (as at the time in effect), and cause the same to be
available for inspection at such office during normal business hours by any
holder of a Note or any prospective transferee of a Note designated by a holder
thereof.
o. Inspection of Properties and Books. So long as any of the
Purchasers or any other institutional investor shall hold Notes, such Purchaser
or other holder and their respective representatives and agents (collectively,
the "Inspectors") shall have the right, at any Purchaser's or such holder's
expense, to visit and inspect any of the properties of the Company and of its
subsidiaries, to examine the books of account and records of the Company and of
its subsidiaries, to make or be provided with copies and extracts therefrom, to
discuss the affairs, finances and accounts of the Company and of its
subsidiaries with, and to be advised as to the same by, its and their officers,
employees and independent public accountants (and by this provision the Company
authorizes such accountants to discuss such affairs, finances and accounts,
whether or not a representative of the Company is present) all at such
reasonable times and intervals and to such reasonable extent as such Purchaser
or such other holder may desire; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to a Purchaser) of
any such information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement filed pursuant to the
Registration Rights Agreement, (b) the release of such information is ordered
pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or (c) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any confidential
information to any Inspector until and unless such Inspector shall have entered
into confidentiality agreements (in form and substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form of
this Section 4(o). Each Purchaser agrees that it shall, upon learning that
disclosure of such information is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the information
deemed confidential.
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company shall instruct its transfer agent to issue
certificates, registered in the name of each Purchaser or its nominee, for the
Conversion Shares and the Warrant Shares in such amounts as specified from time
to time by such Purchaser to the Company upon conversion of the Notes or
exercise of the Warrants, as applicable. To the extent and during the periods
provided in
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Section 2(f) and Section 2(g) of this Agreement, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this Agreement.
b. The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof in the case of the transfer of the Conversion
Shares and the Warrant Shares prior to registration of the Conversion Shares and
the Warrant Shares under the Securities Act or without an exemption therefrom,
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 and the Registration Rights Agreement.
Nothing in this Section shall affect in any way any Purchaser's obligations and
agreement set forth in Section 2(g) hereof to resell the Securities pursuant to
an effective registration statement or under an exemption from the registration
requirements of applicable securities law.
c. If any Purchaser provides the Company with an opinion of counsel,
which opinion of counsel shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration, or any Purchaser provides the Company with
reasonable assurances that such Securities may be sold under Rule 144 or such
Securities may be sold pursuant to an effective Registration Statement, the
Company shall permit the transfer, and, in the case of the Conversion Shares and
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such
Purchaser.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Notes
and the Warrants to each Purchaser hereunder is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions thereto,
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.
a. Each Purchaser shall have executed such Purchaser's signature
page to this Agreement and the Registration Rights Agreement and delivered the
same to the Company.
b. Each Purchaser shall have delivered such Purchaser's Purchase
Price in accordance with Section 1(b) above.
b. The representations and warranties of each Purchaser shall be
true and correct 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 representations and warranties shall be true and correct as
of such date), and each Purchaser shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by such Purchaser
at or prior to the Closing Date.
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d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of each Purchaser hereunder to purchase such
Purchaser's Notes and Warrants hereunder is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in such Purchaser's sole discretion:
a. The Company shall have executed the signature page to this
Agreement and the Registration Rights Agreement, and delivered the same to such
Purchaser.
b. The Company shall have delivered to such Purchaser duly executed
Notes and Warrants (in such denominations as such Purchaser shall request) in
accordance with Section 1(a) above.
c. The representations and warranties of the Company shall be true
and correct 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 representations and warranties shall be true and correct as
of such date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. Each Purchaser shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by any Purchaser.
d. No statute, rule, regulation, executive order, decree, ruling,
injunction, action or proceeding shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction or
any self-regulatory organization having authority over the matters contemplated
hereby which questions the validity of, or challenges or prohibits the
consummation of, any of the transactions contemplated by this Agreement.
e. Each Purchaser shall have received an opinion of the Company's
counsel, dated as of the Closing Date in substantially the form of Exhibit E
attached hereto.
f. No material adverse change or development in the business,
operations, properties, prospects, financial condition, or results of operations
of the Company shall have occurred since the date hereof.
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g. The Purchasers shall have received a copy of resolutions, duly
adopted by the Board of Directors of the Company, which shall be in full force
and effect at the time of the Closing, authorizing the execution, delivery and
performance by the Company of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement and the consummation by the Company of the
transactions contemplated hereby and thereby, certified as such by the Secretary
or Assistant Secretary of the Company.
h. Each of Dr. S. Xxxx Xxxxxx, Xx. Xxxx X. Xxxxxxx and Molex
Incorporated (each a "Stockholder" and collectively, the "Stockholders") shall
have executed and delivered to the Company, prior to or simultaneously with the
Closing, irrevocable proxies as contemplated by Section 4(m), which shall cover
all shares of the capital stock of the Company beneficially owned by such
Stockholder or over which such Stockholder has voting power and all shares of
the capital stock of the Company which such Stockholder may subsequently acquire
beneficial ownership of, or voting power with respect to, and shall authorize
the holder thereof to vote in favor of this Agreement, the Note, the Warrants
and the Registration Rights Agreement, and the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the Note and the
Warrants, the issuance of Conversion Shares upon conversion of or otherwise
pursuant to the Note and the issuance of Warrant Shares upon exercise of or
otherwise pursuant to the Warrants) at any meeting of the stockholders of the
Company or any other circumstance when such stockholders are entitled to vote
with respect thereto.
8. MISCELLANEOUS.
a. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
regard to the conflict of laws provisions thereof. The Company irrevocably
consents to the jurisdiction of the United States federal courts and the state
courts located in the State of Delaware in any suit or proceeding based on or
arising under this Agreement and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company further agrees that service of process upon
the Company mailed by first class mail shall be deemed in every respect
effective service of process upon the Company in any such suit or proceeding.
Nothing herein shall affect the right of any Purchaser to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
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. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed execution page(s)
hereof to be physically delivered to the other party within
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five (5) days of the execution hereof, provided that the failure to so deliver
any manually executed signature page shall not affect the validity or
enforceability of this Agreement.
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 or
the validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. 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 Purchaser make any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived other than by an instrument in
writing signed by the party to be charged with enforcement and no provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and each Purchaser.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by responsible overnight carrier,
and shall be effective five days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by responsible
overnight carrier, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Lumenon Innovative Lightwave Technology, Inc.
0000 Xxxxx-Xxxxxx Xxxxxxx
Xx. Xxxxxxx, Xxxxxx X00 0X0
Xxxxxx
Attention: Xxxxxxx Xxxxxxxx
with copies to:
De Grandpre Chaurette Xxxxxxxx
2000 Avenue XxXxxx College, Suite 1600
Montreal, Quebec X0X 0X0
Xxxxxx
Attention: Xxxxxx Xxxxxxx
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and:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
If to any Purchaser, to the address set forth under such Purchaser's
name on the execution page hereto executed by such Purchaser.
Each party shall provide notice to the other parties of any change
in address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except as
provided herein, neither the Company nor any Purchaser shall assign this
Agreement or any rights or obligations hereunder, except, upon the prior written
consent of the other, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, any Purchaser may assign its rights hereunder to
any of its "affiliates," as that term is defined under the Exchange Act, without
the consent of the Company or to any other person or entity with the consent of
the Company. This provision shall not limit any Purchaser's right to transfer
the Securities pursuant to the terms of this Agreement, the Notes, the Warrants
or the Registration Rights Agreement or to assign such Purchaser's rights
hereunder and/or thereunder to any such transferee. In addition, and
notwithstanding anything to the contrary contained in this Agreement, the Notes,
the Warrants or the Registration Rights Agreement, the Securities may be pledged
and all rights of any Purchaser under this Agreement or any other agreement or
document related to the transactions contemplated hereby may be assigned,
without further consent of the Company, to a bona fide pledgee in connection
with such Purchaser's margin or brokerage accounts.
h. 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; provided that Section 4(f) may be enforced by Heights.
i. Survival. The representations and warranties of the Company and
the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive
the Closing notwithstanding any due diligence investigation conducted by or on
behalf of any Purchaser. Moreover, none of the representations and warranties
made by the Company herein shall act as a waiver of any rights or remedies any
Purchaser may have under applicable U.S. federal or state securities laws. The
Company agrees to indemnify and hold harmless each Purchaser and each other
holder of the Securities and all of their stockholders, officers, directors,
employees, partners, members, agents and direct or indirect investors and
affiliates and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions
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contemplated by this Agreement) (collectively, the "Indemnitees") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as
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 this Agreement,
the Notes, the Warrants, the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement, the Notes, the Warrants, the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, (c)
any cause of action, suit or claim brought or made by any person or entity
(other than the Company) against such Indemnitee and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement, the
Notes, the Warrants, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby or (d) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities. 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. Any claim
for indemnification pursuant to this Section 8(i) shall be subject to the terms,
conditions and procedures set forth in the Registration Rights Agreement, which
terms, conditions and procedures are incorporated herein by reference.
j. Publicity. The Company and each Purchaser shall have the right to
review and approve, such approval not to be unreasonably withheld or delayed,
before issuance any press releases, SEC, NASDAQ or NASD filings, 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 Purchaser, to make any press release or SEC, NASDAQ or NASD
filings with respect to such transactions as is required by applicable law and
regulations (although each Purchaser shall be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof).
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 on or before July 28, 2000, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.
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m. Joint Participation in Drafting. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Notes, the
Warrants and the Registration Rights Agreement. As such, the language used
herein and therein shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction will
be applied against any party to this Agreement.
n. Equitable Relief. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to each Purchaser by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder (including, but not limited to, its obligations pursuant
to Section 5 hereof) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement (including,
but not limited to, its obligations pursuant to Section 5 hereof), that each
Purchaser shall be entitled, in addition to all other available remedies, to an
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.
o. Additional Acknowledgment. Each Purchaser acknowledges that it
has independently evaluated the merits of the transactions contemplated by this
Agreement, the Notes, the Warrants and the Registration Rights Agreement, that
it has independently determined to enter into the transactions contemplated
hereby and thereby, that it is not relying on any advice from or evaluation by
any other Purchaser, and that it is not acting in concert with any other
Purchaser in making its purchase of securities hereunder. The Purchasers and, to
its knowledge, the Company agree that the Purchasers have not taken any actions
that would deem such Purchasers to be members of a "group" for purposes of
Section 13(d) of the Exchange Act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
LUMENON INNOVATIVE LIGHTWAVE
TECHNOLOGY, INC.
By: /s/ S. Xxxx Xxxxxx
-------------------------------
Name: S. Xxxx Xxxxxx
Title: President
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management, Inc.,
its authorized agent
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxx
Title: Investment Manager
RESIDENCE: Cayman Islands
ADDRESS: c/o Heights Capital Management, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx and Xxxxxx Xxxxxxxx
with copies of all notices to:
Heights Capital Management, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esquire
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esquire
Telecopy: (000) 000-0000
Original Principal Amount: $23,300,000
Number of Warrants: 3,329,104
[signatures continued on next page]
CASTLE CREEK TECHNOLOGY PARTNERS LLC
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
RESIDENCE: Illinois
ADDRESS: 0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
with copies of all notices to:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esquire
Original Principal Amount of Notes: $11,700,000
Number of Warrants: 1,671,696
