EXHIBIT 10.79
CONVERTIBLE DEBENTURES AND WARRANTS PURCHASE AGREEMENT
BETWEEN
CALYPTE BIOMEDICAL CORPORATION
AND
THE INVESTORS SIGNATORY HERETO
CONVERTIBLE DEBENTURES AND WARRANTS PURCHASE AGREEMENT dated as of
January 22, 2001 (the "Agreement"), between the Investors signatory hereto (each
an "Investor" and together the "Investors"), and Calypte Biomedical Corporation,
a corporation organized and existing under the laws of the State of Delaware
(the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase, in the aggregate, (i) $1,100,000 principal
amount of Convertible Debentures (as defined below) and (ii) Warrants (as
defined below); and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and/or 4(6) ("Section 4(6)") of the United
States Securities Act of 1933, as amended (the "Securities Act") and/or
Regulation D ("Regulation D") and the other rules and regulations promulgated
thereunder, and/or upon such other exemption from the registration requirements
of the Securities Act as may be available with respect to any or all of the
investments in securities to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "CAPITAL SHARES" shall mean the Common Stock and any shares of any
other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
Section 1.2. "CAPITAL SHARES EQUIVALENTS" shall mean any securities, rights, or
obligations that are convertible into or exchangeable for or give any right to
subscribe for any Capital Shares of the Company or any warrants, options or
other rights to subscribe for or purchase Capital Shares or any such convertible
or exchangeable securities.
Section 1.3. "CLOSING" shall mean the closings of the purchase and sale of the
Convertible Debentures and Warrants pursuant to Section 2.1.
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Section 1.4. "CLOSING DATE" shall mean the dates on which all conditions to the
Closings have been satisfied (as defined in Section 2.1(b) hereto) and the
Closings shall have occurred.
Section 1.5. "COMMON STOCK" shall mean the Company's common stock, $0.001 par
value per share.
Section 1.6. "CONVERSION SHARES" shall mean the shares of Common Stock issuable
upon conversion of the Convertible Debentures.
Section 1.7. "CONVERTIBLE DEBENTURE(S)" shall mean the 6% convertible
debenture(s) due 90 calendar days from their date of issuance, in the form of
EXHIBIT A hereto.
Section 1.8. "DAMAGES" shall mean any loss, claim, damage, judgment, penalty,
deficiency, liability, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements and reasonable costs and expenses
of expert witnesses and investigation).
Section 1.9. "EFFECTIVE DATE" shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in the Registration Rights Agreement.
Section 1.10. "ESCROW AGENT" shall have the meaning set forth in the Escrow
Agreement.
Section 1.11. "ESCROW AGREEMENT" shall mean the Escrow Agreement in
substantially the form of EXHIBIT C hereto executed and delivered
contemporaneously with this Agreement.
Section 1.12. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Section 1.13. "LEGEND" shall mean the legend set forth in Section 9.1.
Section 1.14. "MATERIAL ADVERSE EFFECT" shall mean any effect on the business,
operations, properties, stock price or financial condition of the Company that
is material and adverse to the Company and its subsidiaries and affiliates,
and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement, the Registration Rights Agreement,
the Convertible Debentures, the Warrants or the Escrow Agreement in any material
respect. Notwithstanding anything herein to the contrary, any adverse change,
event or effect that is directly attributable to conditions affecting the United
States economy or our industry generally shall not be deemed a Material Adverse
Effect unless such conditions adversely affect the Company in a materially
disproportionate manner.
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Section 1.15. "MATURITY DATE" shall mean the date on which the outstanding
principle amount and any accrued but unpaid interest of the Convertible
Debentures are due and payable as set forth in the Convertible Debenture.
Section 1.16. "OUTSTANDING" when used with reference to shares of Common Stock
or Capital Shares (collectively the "Shares"), shall mean, at any date as of
which the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
PROVIDED, HOWEVER, that "Outstanding" shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.17. "PERSON" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
Section 1.18. "PRINCIPAL MARKET" shall initially mean the Nasdaq Small-Cap
Market and shall also include the American Stock Exchange, the New York Stock
Exchange, or the NASDAQ National Market, whichever is at the time the principal
trading exchange or market for the Common Stock, based upon share volume.
Section 1.19. "PURCHASE PRICE" shall mean the sum of (i) as to the first
Closing, $500,000, in the aggregate, and (ii) as to the second Closing,
$500,000, in the aggregate. The Company and the Investor hereby agree and
acknowledge that the Purchase Prices paid at the first and second Closings
represent an original issue discount to the purchase of the Convertible
Debentures.
Section 1.20. "REGISTRABLE SECURITIES" shall mean the Conversion Shares and the
Warrant Shares until the earlier of the date that (i) the Registration Statement
has been declared effective by the SEC, and all Conversion Shares and Warrant
Shares have been disposed of pursuant to the Registration Statement, (ii) all
Conversion Shares and Warrant Shares have been sold under circumstances under
which all of the applicable conditions of Rule 144 (or any similar provision
then in force) under the Securities Act ("Rule 144") are met, (iii) all
Conversion Shares and Warrant Shares have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Conversion Shares and Warrant Shares may be sold
without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.
Section 1.21. "REGISTRATION RIGHTS AGREEMENT" shall mean the agreement regarding
the filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investors, on the date
hereof in the form annexed hereto as EXHIBIT B.
Section 1.22. "REGISTRATION STATEMENT" shall mean a registration statement on
Form S-3 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on
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such other form promulgated by the SEC for which the Company then qualifies and
which counsel for the Company shall deem appropriate, and which form shall be
available for the resale by the Investors of the Registrable Securities to be
registered thereunder in accordance with the provisions of this Agreement, the
Registration Rights Agreement and in accordance with the intended method of
distribution of such securities), for the registration of the resale by the
Investors of the Registrable Securities under the Securities Act.
Section 1.23. "REGULATION D" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.24. "SEC" shall mean the Securities and Exchange Commission.
Section 1.25. "SEC DOCUMENTS" shall mean the Company's latest Form 10-K or
10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K filed
thereafter, all registration statements filed as of the time in question, and
the Proxy Statement for its latest fiscal year as of the time in question until
such time as the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.
Section 1.26. "SECTION 4(2)" AND "SECTION 4(6)" shall have the meanings set
forth in the recitals of this Agreement.
Section 1.27. "SECURITIES ACT" shall have the meaning as set forth in the
recitals of this Agreement.
Section 1.28. "SHARES" shall have the meaning set forth in the definition of
"Outstanding" herein.
Section 1.29. "TRADING DAY" shall mean any day during which the Principal Market
shall be open for business.
Section 1.30. "WARRANTS" shall mean the Warrant set forth in Section 2.2),
substantially in the form of EXHIBIT E hereto, to be issued to the Investors
pro-rata hereunder.
Section 1.31. "WARRANT SHARES" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrants.
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ARTICLE II
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES AND WARRANTS
Section 2.1. INVESTMENT.
(a) Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Investors, severally and not jointly, agree to
purchase the Convertible Debentures together with the Warrants at the Purchase
Price on each Closing Date as follows:
(i) FIRST CLOSING. Upon execution and delivery of this
Agreement, the Investors shall purchase, in the aggregate,
$550,000 principal amount of Convertible Debentures. Each
Investor shall deliver to the Escrow Agent immediately
available funds in their proportionate amount of the
Purchase Price as set forth on the signature pages hereto,
and the Company shall deliver the Convertible Debentures
evidencing said principal sum and the Warrants to the
Escrow Agent, in each case to be held by the Escrow Agent
pursuant to the Escrow Agreement.
(ii) SECOND CLOSING. Any time during the period commencing
thirty (30) calendar days after the first Closing Date and
ending on the earlier of (A) sixty (60) calendar days after
the first Closing Date, (B) the end of the second
settlement period under the Equity Line Agreement (as
defined below), or (C) the Effective Date, at the election
of the Company, the Investors shall purchase, in the
aggregate, $550,000 principal amount of Convertible
Debentures within three (3) Trading Days of notice from the
Company; PROVIDED, HOWEVER, that the Company has filed the
registration statement ("Equity Line Registration
Statement") pursuant to that certain Common Stock Purchase
Agreement, dated November 2, 2000, between the Company and
Townsbury Investments Limited (the "Equity Line
Agreement"). Each Investor shall deliver to the Escrow
Agent immediately available funds in their proportionate
amount of the Purchase Price as set forth on the signature
pages hereto and the Company shall deliver the Convertible
Debentures evidencing said principal sum to the Escrow
Agent, to be held by the Escrow Agent pursuant to the
Escrow Agreement.
(iii) EACH CLOSING. Upon satisfaction of the conditions set forth
in Section 2.1(b), the Closings shall occur at the offices
of the Escrow Agent at which time the Escrow Agent (x)
shall release the Convertible Debentures and the Warrants
to the Investors, and (y) shall release the Purchase Price
(after all fees have been paid as set forth in the Escrow
Agreement), pursuant to the terms of the Escrow Agreement.
(b) Each Closing is subject to the satisfaction or waiver by the party
to be benefited thereby of the following conditions:
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(i) as to the first Closing only, acceptance and execution by
the Company and by the Investors, of this Agreement and all
exhibits hereto;
(ii) delivery into escrow by each Investor of immediately
available funds in their proportionate amount of the cash
portion of the Purchase Price of the applicable Convertible
Debenture and Warrant, as more fully set forth in the
Escrow Agreement;
(iii) all representations and warranties of the Investors
contained herein shall remain true and correct as of each
Closing Date (as a condition to the Company's obligations);
(iv) all representations and warranties of the Company contained
herein shall remain true and correct as of each Closing
Date (as a condition to the Investors' obligations);
(v) the Company shall have obtained all permits and
qualifications required by any state for the offer and sale
of the Convertible Debentures and Warrants, or shall have
the availability of exemptions therefrom;
(vi) the sale and issuance of the Convertible Debentures and the
Warrants hereunder, and the proposed issuance by the
Company to the Investors of the Common Stock underlying the
Convertible Debentures and the Warrants upon the conversion
or exercise thereof shall be legally permitted by all laws
and regulations to which the Investors and the Company are
subject and there shall be no ruling, judgment or writ of
any court prohibiting the transactions contemplated by this
Agreement;
(vii) delivery of the original fully executed Convertible
Debentures and Warrants certificates to the Escrow Agent;
(viii) as to the first Closing only, delivery to the Escrow Agent
of an opinion of Xxxxxx Xxxxxx White & XxXxxxxxx LLP,
counsel to the Company, in the form of EXHIBIT D hereto;
(ix) as to the first Closing only, delivery to the Escrow Agent
of the Irrevocable Instructions to Transfer Agent in the
form attached hereto as EXHIBIT F;
(x) as to the second Closing only, there shall have been no
Material Adverse Effect with respect to the Company since
the date of the first Closing; and
(xi) as to the first Closing only, delivery to the Escrow Agent
of the Registration Rights Agreement.
Section 2.2. WARRANTS. At the first Closing, the Company shall issue to the
Investors a warrant certificate to purchase, in the aggregate, up to 200,000
shares of Common Stock. The exercise
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price of the Warrants shall be $1.50. The Warrants shall be exercisable for a
period of three (3) years beginning on the first Closing Date. The Company shall
issue Warrants to the Investors pro rata among all Investors in proportion to
their respective initial purchases of the Convertible Debentures pursuant to
this Agreement. The shares of Common Stock underlying the Warrants shall be
registered for resale on the Registration Statement for resale by the Investors
pursuant to the Registration Rights Agreement.
Section 2.3. LIQUIDATED DAMAGES. The parties hereto acknowledge and agree that
the sums payable pursuant to this Agreement and the Registration Rights
Agreement shall constitute liquidated damages and not penalties. The parties
further acknowledge that a breach by either party of this Agreement, or Exhibits
thereto, (a) the amount of loss or damages likely to be incurred is incapable or
is difficult to precisely estimate, (b) the amounts specified in such agreements
bear a reasonable proportion and are not plainly or grossly disproportionate to
the probable loss likely to be incurred by the Investors in connection with the
failure by the Company to timely cause the registration of the Registrable
Securities or to deliver stock certificates upon any conversion, and (c) the
parties are sophisticated businesses and have been represented by sophisticated
and able legal and financial counsel and negotiated this Agreement at arm's
length.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR
Each Investor, severally and not jointly, represents and warrants to the Company
that:
Section 3.1. ORGANIZATION. The Investor is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization.
Section 3.2. INTENT. The Investor is entering into this Agreement for its own
account and not with a view to or for sale in connection with any distribution
of the Common Stock. The Investor has no present arrangement (whether or not
legally binding) at any time to sell the Convertible Debenture, and the Warrants
or any Conversion Shares or Warrant Shares or through any person or entity;
PROVIDED, HOWEVER, that by making the representations herein, the Investor does
not agree to hold such securities for any minimum or other specific term and
reserves the right to dispose of the Conversion Shares and Warrant Shares at any
time in accordance with federal and state securities laws applicable to such
disposition.
Section 3.3. SOPHISTICATED INVESTOR. The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it has the capacity to protect its own
interests in connection with this transaction and is capable of evaluating the
merits and risks of an investment in the Convertible Debentures, the Warrants
and the underlying Common Stock. The Investor has been represented by counsel of
its choice. The Investor acknowledges that an investment in the Convertible
Debentures and the Warrants and the underlying Common Stock is speculative and
involves a high degree of risk.
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Section 3.4. AUTHORITY. This Agreement and each agreement attached as an Exhibit
hereto which is required to be executed by the Investor has been duly authorized
and validly executed and delivered by the Investor and is a valid and binding
agreement of the Investor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 3.5. NOT AN AFFILIATE. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.
Section 3.6. ABSENCE OF CONFLICTS. The execution and delivery of this Agreement
and each agreement which is attached as an Exhibit hereto and executed by the
Investor in connection herewith, and the consummation of the transactions
contemplated hereby and thereby, and compliance with the requirements hereof and
thereof by the Investor, will not violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on the Investor or (a)
violate any provision of any indenture, instrument or agreement to which the
Investor is a party or is subject, or by which the Investor or any of its assets
is bound; (b) conflict with or constitute a material default thereunder; (c)
result in the creation or imposition of any lien pursuant to the terms of any
such indenture, instrument or agreement, or constitute a breach of any fiduciary
duty owed by the Investor to any third party; or (d) require the approval of any
third-party (which has not been obtained) pursuant to any material contract,
agreement, instrument, relationship or legal obligation to which the Investor is
subject or to which any of its assets, operations or management may be subject.
Section 3.7. DISCLOSURE; ACCESS TO INFORMATION. The Investor has received all
documents, records, books and other publicly available information pertaining to
Investor's investment in the Company that have been requested by the Investor.
The Company is subject to the periodic reporting requirements of the Exchange
Act, and the Investor has reviewed copies of all SEC Documents deemed relevant
by Investor.
Section 3.8. MANNER OF SALE. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting, television advertisement
or any other form of general solicitation or advertising.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that, except as set forth
on the SEC Documents or on the Disclosure Schedule prepared by the Company and
attached hereto:
Section 4.1. ORGANIZATION OF THE COMPANY. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted.
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Except as set forth on the Disclosure Schedules, the Company does not have any
subsidiaries, and does not own more that fifty percent (50%) of or control any
other business entity. The Company is duly qualified and is in good standing as
a foreign corporation to do business in every jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify would not have a
Material Adverse Effect.
Section 4.2. AUTHORITY. (i) The Company has the requisite corporate power and
corporate authority to conduct its business as now conducted, to enter into
and perform its obligations under this Agreement, the Registration Rights
Agreement, the Escrow Agreement and the Warrants, and to issue the
Convertible Debentures, the Conversion Shares, the Warrants and the Warrant
Shares pursuant to their respective terms, (ii) the execution, issuance and
delivery of this Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Convertible Debentures and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required, and (iii) this Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Warrants and the Convertible Debentures have been duly
executed and delivered by the Company and at each Closing shall 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, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. The Company has duly and
validly authorized and reserved for issuance shares of Common Stock
sufficient in number for the conversion of the Convertible Debentures and the
exercise of the Warrants. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock of the issuance of the
Conversion Shares and Warrant Shares. The Company further acknowledges that
its obligation to issue Conversion Shares and Warrant Shares upon conversion
of the Convertible Debentures and Warrant Shares upon exercise of the
Warrants in accordance with this Agreement and the Convertible Debentures is
absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company and notwithstanding the commencement of any case under 11 U.S.C.
Section 101 et seq. (the "Bankruptcy Code"). The Company shall not seek
judicial relief from its obligations hereunder except pursuant to the
Bankruptcy Code. In the event the Company is a debtor under the Bankruptcy
Code, the Company hereby waives to the fullest extent permitted any rights to
relief it may have under 11 U.S.C. Section 362 in respect of the conversion
of the Convertible Debentures and the exercise of the Warrants. The Company
agrees, without cost or expense to the Investors, to take or consent to any
and all action necessary to effectuate relief under 11 U.S.C. Section 362.
Section 4.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock of which 25,499,731 shares are
issued and outstanding, and 5,000,000 shares of preferred stock, $0.001 par
value per share, none of which are issued and outstanding. Except as set forth
in any of the Company's SEC Documents or SCHEDULE 4.3, there are no outstanding
Capital Shares Equivalents nor any agreements or understandings pursuant to
which any Capital Shares Equivalents may become outstanding. The Company is not
a party to any agreement granting registration or anti-dilution rights to any
person with respect to any of its
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equity or debt securities. All of the outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are fully paid and
non-assessable and have been issued pursuant to valid exemptions from
registration under the Securities Act and all applicable state "blue sky" laws.
Section 4.4. COMMON STOCK. The Company has registered its Common Stock pursuant
to Section 12(b) or (g) of the Exchange Act and is in full compliance with all
reporting requirements of the Exchange Act, and the Company is in compliance
with all requirements for the continued listing or quotation of its Common
Stock, and such Common Stock is currently listed or quoted on, the Principal
Market. As of the date hereof, the Company has not received any notice
regarding, and to its knowledge there is no threat, of the termination or
discontinuance of the eligibility of the Common Stock for on the Principal
Market.
Section 4.5. SEC DOCUMENTS. The Company has made available to the Investors true
and complete copies of the SEC Documents. The Company has not provided to the
Investors any information that, according to applicable law, rule or regulation,
should have been disclosed publicly prior to the date hereof by the Company, but
which has not been so disclosed. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act, and
rules and regulations of the SEC promulgated thereunder and the SEC Documents
did not contain any untrue statement of a material fact or omit 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. The financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was not incurred in the ordinary course of
business consistent with the Company's past practices since the last date of
such financial statements.
Section 4.6. EXEMPTION FROM REGISTRATION; VALID ISSUANCES. Subject to the
accuracy of the Investors' representations in Article III, the sale of the
Convertible Debentures and the Conversion Shares, the Warrants and Warrant
Shares will not require registration under the Securities Act and/or any
applicable state securities law. When validly converted in accordance with the
terms of the Convertible Debentures, the Conversion Shares, the Warrants and
Warrant
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Shares will be duly and validly issued, fully paid, and non-assessable. Neither
the sales of the Convertible Debentures, the Conversion Shares, the Warrants and
Warrant Shares pursuant to, nor the Company's performance of its obligations
under, this Agreement, the Registration Rights Agreement, the Escrow Agreement
or the Convertible Debentures and the Warrants will (i) result in the creation
or imposition by the Company of any liens, charges, claims or other encumbrances
upon the Convertible Debentures, the Warrants or the Conversion Shares and
Warrant Shares or, except as contemplated herein, any of the assets of the
Company, or (ii) entitle the holders of Outstanding Capital Shares to preemptive
or other rights to subscribe for or acquire the Capital Shares or other
securities of the Company. The Convertible Debentures, the Warrants and the
Conversion Shares and Warrant Shares, shall not subject the Investors to
personal liability to the Company or its creditors by reason of the possession
thereof.
Section 4.7. NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates nor, to the knowledge
of the Company, any person acting on its or their behalf (i) has conducted or
will conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to the sale of the Convertible
Debentures or the Warrants, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Convertible Debentures or the Conversion Shares and
the Warrants and Warrant Shares, under the Securities Act.
Section 4.8. NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of and payment of
interest upon the Convertible Debentures, Warrants and the Conversion Shares and
Warrant Shares, do not and will not (i) result in a violation of the Company's
Certificate of Incorporation or By-Laws or (ii) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or
instrument, or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (iii) result in a violation of any
federal, state or local law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or by which any material property or asset of the Company is bound or
affected, nor is the Company otherwise in violation of, conflict with or default
under any of the foregoing (except in each case for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not have, individually or in the aggregate, a Material Adverse Effect). The
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate would not have a Material
Adverse Effect. The Company is not required under any Federal, state or local
law, rule or regulation to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Convertible Debentures or the Warrants in
accordance with the terms hereof (other than any SEC or state securities filings
that may be required to be made by the Company subsequent to each Closing, any
registration statement that may be filed pursuant hereto); provided that, for
purposes of the
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representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investors
herein.
Section 4.9. NO MATERIAL ADVERSE CHANGE. Except as set forth in SCHEDULE 4.9 or
the SEC Documents, since the date of the financial statement contained in the
Company's most recently filed Form 10-Q (or Form 10-QSB) or Form 10-K (or Form
10-KSB), no Material Adverse Effect has occurred or exists with respect to the
Company. No material supplier has given notice, oral or written, that it intends
to cease or reduce the volume of its business with the Company from historical
levels.
Section 4.10. NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Except as set forth in
SCHEDULE 4.10 or the SEC Documents, since the date of the financial statement
contained in the Company's most recently filed Form 10-Q (or Form 10-QSB) or
Form 10-K (or Form 10-KSB), no event or circumstance has occurred or exists with
respect to the Company or its businesses, properties, prospects, operations or
financial condition, that, under any applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by the
Company but which has not been so publicly announced or disclosed in writing to
the Investors.
Section 4.11. NO INTEGRATED OFFERING. Except as set forth in the SEC Documents,
and other than pursuant to an effective registration statement under the
Securities Act, or pursuant to the issuance or exercise of employee stock
options or in connection with certain acquisitions, or pursuant to its
discussion with the Investors in connection with the transactions contemplated
hereby, the Company has not issued, offered or sold the Convertible Debentures,
the Warrants or any shares of Common Stock (including for this purpose any
securities of the same or a similar class as the Convertible Debentures,
Warrants or Common Stock, or any securities convertible into a exchangeable or
exercisable for the Convertible Debentures or Common Stock or any such other
securities) within the six-month period next preceding the date hereof, and the
Company shall not permit any of its directors, officers or affiliates directly
or indirectly to take, any action (including, without limitation, any offering
or sale to any Person of the Convertible Debentures or shares of Common Stock),
so as to make unavailable the exemption from Securities Act registration being
relied upon by the Company for the offer and sale to Investors of the
Convertible Debentures (and the Conversion Shares) and the Warrants (and the
Warrant Shares) as contemplated by this Agreement.
Section 4.12. LITIGATION AND OTHER PROCEEDINGS. Except as set forth in SEC
Documents or Schedule 4.12, there are no lawsuits or proceedings pending or, to
the knowledge of the Company, threatened, against the Company or any subsidiary,
nor has the Company received any written or oral notice of any such action,
suit, proceeding or investigation, which could reasonably be expected to have a
Material Adverse Effect. No judgment, order, writ, injunction or decree or award
has been issued by or, to the knowledge of the Company, requested of any court,
arbitrator or governmental agency which could result in a Material Adverse
Effect.
Section 4.13. NO MISLEADING OR UNTRUE COMMUNICATION. The Company and, to the
knowledge of the Company, any person representing the Company, or any other
person selling or offering to sell the Convertible Debentures or the Warrants in
connection with the transaction contemplated
12
by this Agreement, have not made, at any time, any oral communication in
connection with the offer or sale of the same which contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements, in the light of the circumstances under which they
were made, not misleading.
Section 4.14. MATERIAL NON-PUBLIC INFORMATION. The Company has not disclosed to
the Investors any material non-public information that (i) if disclosed, would
reasonably be expected to have a material effect on the price of the Common
Stock, or (ii) according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed.
Section 4.15. INSURANCE. The Company and each subsidiary maintains property and
casualty, general liability, workers' compensation, environmental hazard,
personal injury and other similar types of insurance, as necessary to conduct
its business, with financially sound and reputable insurers that is adequate,
consistent with industry standards and the Company's historical claims
experience. The Company has not received notice from, and has no knowledge of
any threat by, any insurer (that has issued any insurance policy to the Company)
that such insurer intends to deny coverage under or cancel, discontinue or not
renew any insurance policy presently in force.
Section 4.16. TAX MATTERS.
(a) The Company and each subsidiary has filed all Tax Returns, which it
is required to file under applicable laws; all such Tax Returns are true and
accurate and have been prepared in compliance with all applicable laws; the
Company has paid all Taxes due and owing by it or any subsidiary (whether or not
such Taxes are required to be shown on a Tax Return) and have withheld and paid
over to the appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder, creditor or
other third parties; and since December 31, 1999, the charges, accruals and
reserves for Taxes with respect to the Company (including any provisions for
deferred income taxes) reflected on the books of the Company are adequate to
cover any Tax liabilities of the Company if its current tax year were treated as
ending on the date hereof.
(b) No claim has been made by a taxing authority in a jurisdiction
where the Company does not file tax returns that the Company or any
subsidiary is or may be subject to taxation by that jurisdiction. There are,
to the Company's knowledge, no foreign, federal, state or local tax audits or
administrative or judicial proceedings pending or being conducted with
respect to the Company or any subsidiary; no information related to Tax
matters has been requested by any foreign, federal, state or local taxing
authority; and, except as disclosed above, no written notice indicating an
intent to open an audit or other review has been received by the Company or
any subsidiary from any foreign, federal, state or local taxing authority.
There are no material unresolved questions or claims concerning the Company's
Tax liability. The Company (A) has not executed or entered into a closing
agreement pursuant to Section 7121 of the Internal Revenue Code or any
predecessor provision thereof or any similar provision of state, local or
foreign law; or (B) has not agreed to or is required to make any adjustments
pursuant to Section 481 (a) of the Internal Revenue Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or any of its subsidiaries or has any
13
knowledge that the IRS has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to
the business or operations of the Company. The Company has not been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Internal Revenue Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Internal Revenue Code.
(c) The Company has not made an election under Section 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another
person that is not a subsidiary of the Company under (A) Treas. Reg. Section
1.1502-6 (or comparable provisions of state, local or foreign law), (B) as a
transferee or successor, (C) by contract or indemnity or (D) otherwise. The
Company is not a party to any tax sharing agreement. The Company has not made
any payments, is not obligated to make payments nor is it a party to an
agreement that could obligate it to make any payments that would not be
deductible under Section 280G of the Internal Revenue Code.
(d) For purposes of this Section 4.16:
"IRS" means the United States Internal Revenue Service.
"TAX" or "TAXES" means federal, state, county, local, foreign, or other income,
gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"TAX RETURN" means any return, information report or filing with respect to
Taxes, including any schedules attached thereto and including any amendment
thereof.
Section 4.17. PROPERTY. Neither the Company nor any of its subsidiaries owns any
real property. Each of the Company and its subsidiaries has good and marketable
title to all personal property owned by it, 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 to the Company's knowledge any real
property and buildings held under lease by the Company as tenant are held by it
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and intended to be made of such
property and buildings by the Company. The Company's present facilities are
adequate for the Company's reasonably foreseeable needs.
Section 4.18. INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, 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 Company's knowledge, neither the Company
nor any of its subsidiaries is
14
infringing upon or in conflict with any right of any other person with respect
to any Intangibles. No adverse claims have been asserted by any person to the
ownership or use of any Intangibles and the Company has no knowledge of any
basis for such claim.
Section 4.19. INTERNAL CONTROLS AND PROCEDURES. The Company maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which the Company or any subsidiary is a party or by
which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.
Section 4.20. PAYMENTS AND CONTRIBUTIONS. Neither the Company, any subsidiary,
nor any of its directors, officers or, to its knowledge, other employees has (i)
used any Company funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment of Company funds to any foreign or
domestic government official or employee; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other similar
payment to any person with respect to Company matters.
Section 4.21. PERMITS AND LICENSES. The Company holds all necessary permits and
licenses to conduct its business as presently conducted. All of such permits and
licenses are in full force and effect and the Company is not in material
violation of any thereof.
Section 4.22. NO MISREPRESENTATION. The representations and warranties of the
Company contained in this Agreement, any schedule, annex or exhibit hereto and
any agreement, instrument or certificate furnished by the Company to the
Investors pursuant to this Agreement, do not contain any 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, in light of the circumstances under
which they were made, not misleading.
Section 4.23. RELATED PARTY TRANSACTIONS. The Company is not a party to any
agreement or transaction with any of its officers, directors, greater than 5%
shareholders or any Affiliate (as defined in SEC Rule 405) of any of said
persons that would require disclosure under Item 404 of Regulation S-B that will
not be disclosed in the next Form 10-K (or Form 10-KSB), as amended.
ARTICLE V
COVENANTS OF THE INVESTORS
15
Each Investor, severally and not jointly, covenants with the Company
that:
Section 5.1. COMPLIANCE WITH LAW. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed.
Section 5.2. NO SHORT SALES. From the date hereof until the Convertible
Debentures are no longer outstanding or issuable pursuant to this Agreement, the
Investor and its affiliates shall not engage in short sales of the Company's
Common Stock (as defined in applicable SEC and NASD rules).
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1. REGISTRATION RIGHTS. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.
Section 6.2. RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, pro-rata among the Investors in proportion to
their respective initial purchases of such securities, shares of Common Stock
for the purpose of enabling the Company to issue 200% of the Conversion Shares
and Warrant Shares pursuant to this Agreement, based on the Conversion Price (as
defined in the Convertible Debenture) on the date hereof. On any date hereafter,
in the event the number of Shares reserved, as to any Investor, is less than
200% of the Conversion Shares necessary to convert all of such Investor's
Convertible Debenture, based on the then Conversion Price, and Warrant Shares to
exercise all of such Investor's Warrant (the "Trigger Amount"), then the Company
shall have sixty (60) days from such date to increase the number of shares
reserved as to such Investor above the Trigger Amount. The Company agrees to
present a proposal for stockholder approval to permit the Company to issue a
number of Conversion Shares which is in excess of 19.9% of the number of the
Company's issued and outstanding shares of Common Stock on the first Closing
Date ("NASD Limit"), at the earlier of (i) the 2001 annual meeting of
stockholders, or (ii) a special meeting of the stockholders to be held within
sixty (60) calendar days that the number of Conversion Shares becomes greater
than 125% of the NASD Limit, with the recommendation of the Board of Directors
that such proposal be approved, unless at the date of such meeting, less than
two percent (2%) of the principal amount of the Convertible Debentures remain
issued and outstanding, in which event the Company may withdraw such proposal
from a vote by the stockholders. Unless the Company obtains a waiver from all of
the Investors, if such proposal is required to be voted on and is not approved
at the 2001 meeting of the stockholders or if such special meeting is not held
within the required time period and such proposal is not approved at the special
meeting, the Company shall either (i) voluntarily de-list its Common Stock from
any Principal Market which requires such approval,
16
or (ii) redeem any un-converted Convertible Debentures of the outstanding
principal balance of the Convertible Debentures, plus any accrued but unpaid
interest at a redemption price equal to 150% of the outstanding principal amount
plus any accrued but unpaid interest, within five (5) Trading Days of such vote
or the date that such vote is otherwise required. Until the Company obtains
shareholder approval to permit the Company to issue a number of Conversion
Shares which is in excess of 19.9% of the number of the Company's issued and
outstanding shares of Common Stock on the first Closing Date, the Company agrees
that it shall not convert, as to each Investor, a Convertible Debenture into a
number of Conversion Shares which will cause the Company to issue to such
Investor more than such Investor's pro-rata portion (in proportion to their
respective initial purchases of securities pursuant to this Agreement) of 19.9%
of the number of the Company's issued and outstanding shares of Common Stock on
the first Closing Date.
Section 6.3. LISTING OF COMMON STOCK. The Company hereby agrees to maintain the
listing of the Common Stock on a Principal Market, and as soon as reasonably
practicable following the first Closing to list the Conversion Shares and the
Warrant Shares on the Principal Market. The Company further agrees, if the
Company applies to have the Common Stock traded on any other Principal Market,
it will include in such application the Conversion Shares and the Warrant
Shares, and will take such other action as is necessary or desirable in the
opinion of the Investors to cause the Conversion Shares and Warrant Shares to be
listed on such other Principal Market as promptly as possible. The Company will
take all action to continue the listing and trading of its Common Stock on a
Principal Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market
and shall provide Investors with copies of any correspondence to or from such
Principal Market which questions or threatens delisting of the Common Stock,
within three (3) Trading Days of the Company's receipt thereof, until the
Investors have disposed of all of their Registrable Securities.
Section 6.4. EXCHANGE ACT REGISTRATION. The Company will cause its Common Stock
to continue to be registered under Section 12(b) or (g) of the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Act until the Investors have
disposed of all of their Registrable Securities.
Section 6.5. LEGENDS. The certificates evidencing the Securities shall be free
of legends, except as set forth in Article IX. If the Transfer Agent or the
Investor's broker-dealer requires an opinion of counsel from the Company's
counsel pursuant to the Instructions to Transfer Agent attached hereto to issue
new certificates free of a legend to an Investor and Company's counsel fails to
deliver such opinion to the Transfer Agent within three (3) Trading Days from
receipt by Company's counsel of such a request from the Transfer Agent or the
Investor's broker-dealer, then the Company will pay such Investor, pro rata on a
weekly basis, as liquidated damages for such failure and not as a penalty, ten
percent (10%) per week of the market value of the Common Stock which would be
issuable upon conversion of such Investor's Convertible Debenture upon on any
date of determination for each week until such opinion is provided,
notwithstanding the
17
fact that the Company has instructed the Transfer Agent to accept such an
opinion from such Investor's counsel.
Section 6.6. CORPORATE EXISTENCE; CONFLICTING AGREEMENTS. The Company will take
all steps necessary to preserve and continue the corporate existence of the
Company. The Company shall not enter into any agreement, the terms of which
agreement would restrict or impair the right or ability of the Company to
perform any of its obligations under this Agreement or any of the other
agreements attached as exhibits hereto.
Section 6.7. CONSOLIDATION; MERGER. The Company shall not, at any time after the
date hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all of the assets of the Company to, another
entity (a "Consolidation Event") unless the resulting successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the obligation to deliver to the Investors such shares of stock and/or
securities as the Investors are entitled to receive pursuant to this Agreement
and the Convertible Debentures.
Section 6.8. ISSUANCE OF CONVERTIBLE DEBENTURES AND WARRANTS. The sale of the
Convertible Debentures, the Warrants and the issuance of the Conversion Shares
upon conversion and Warrant Shares upon the exercise of the Warrants of the
Convertible Debentures shall be made in accordance with the provisions and
requirements of Section 4(2), 4(6) or Regulation D and any applicable state
securities law. The Company shall make any necessary SEC and "blue sky" filings
as may be required to be made by the Company in connection with the sale of the
Securities to the Investors, and shall provide a copy thereof to the Investors
promptly after such filing.
Section 6.9. FUTURE FINANCING. The Company agrees to draw down the maximum
amount permitted under the Equity Line Agreement immediately after the effective
date of the Equity Line Registration Statement until the Purchaser no longer
holds any Convertible Debentures and further agrees use 50% of the proceeds
received pursuant to any equity financing (including any proceeds received in
connection with the Equity Line Agreement), to redeem all of the Convertible
Debentures held by the Investors pursuant to Section 5 of the Convertible
Debentures. The Company agrees that it will not enter into any other sale of its
securities or any Capital Shares Equivalents at a discount to the then-current
bid price until the earlier of (i) 180 days after the effective date of the
Registration Statement, (ii) two (2) years from the applicable Closing Date, or
(iii) the date on which the Investor no longer holds any of the Convertible
Debentures. The foregoing shall not prevent or limit the Company from granting
equity incentive awards pursuant to equity incentive and stock option plans
approved by the Company's stockholders or selling securities purchased pursuant
to the Company's Employee Stock Purchase Plan or engaging in any sale of
securities (i) pursuant to the exercise of options granted or to be granted
under an employee benefit plan which plan has been approved by the Company's
stockholders, (ii) pursuant to any compensatory plan for a full-time employee or
key consultant, (iii) in connection with a strategic partnership or other
business transaction, the principal purpose of which is not simply to raise
money, (iv) in a registered public offering by the Company which is underwritten
by one or more established investment banks (except an
18
equity line type financing), or (v) with the prior written approval of a
majority in interest of the Investors, which will not be unreasonably withheld.
In the event the Company enters into a sale of its securities pursuant to
subsection (iv) or (v) of this Section 6.9, the Investor shall have a right of
first refusal to participate in such financing. The Purchaser must notify the
Company with seven (7) Trading Days of receipt of notice of any such financing
that it intends to participate in.
Section 6.10. PRO-RATA REDEMPTION. The Company agrees that if it shall redeem
any of the Convertible Debentures, that it shall offer such redemption pro-rata
among all Investors in proportion to their respective initial purchases of such
securities pursuant to this Agreement.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1. SURVIVAL. The representations, warranties and covenants made by
each of the Company and each Investor in this Agreement, the annexes, schedules
and exhibits hereto and in each instrument, agreement and certificate entered
into and delivered by them pursuant to this Agreement, shall survive each
Closing and the consummation of the transactions contemplated hereby. In the
event of a breach or violation of any of such representations, warranties or
covenants, the party to whom such representations, warranties or covenants have
been made shall have all rights and remedies for such breach or violation
available to it under the provisions of this Agreement, irrespective of any
investigation made by or on behalf of such party on or prior to any Closing
Date, unless such party had actual knowledge of such breach or violation prior
to any Closing Date.
Section 7.2. INDEMNITY. (a) The Company hereby agrees to indemnify and hold
harmless the Investors, their respective Affiliates and their respective
officers, directors, partners and members (collectively, the "Investor
Indemnitees"), from and against any and all Damages, and agrees to reimburse the
Investor Indemnitees for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Investor Indemnitees and to the extent arising out of or in
connection with:
(i) any misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this Agreement;
or
(ii) any failure by the Company to perform in any material respect any
of its material covenants, agreements, undertakings or obligations set forth in
this Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Company pursuant to
this Agreement; or
19
(iii) any action instituted against the Investors, or any of them or
their respective Affiliates, by any stockholder of the Company who is not an
Affiliate of an Investor, with respect to any of the transactions contemplated
by this Agreement.
(b) Each Investor, severally and not jointly, hereby agrees to
indemnify and hold harmless the Company, its Affiliates and their respective
officers, directors, partners and members (collectively, the "Company
Indemnitees"), from and against any and all Damages, and agrees to reimburse the
Company Indemnitees for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of or in
connection with any misrepresentation, omission of fact, or breach of any of the
Investor's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Investor pursuant to this
Agreement. Notwithstanding anything to the contrary herein, the Investor shall
be liable under this Section 7.2(b) for only that amount as does not exceed the
net proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to the Registration Statement.
Section 7.3. NOTICE. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 7.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party from whom indemnification pursuant to Section
7.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is actually prejudiced by such omission or
delay. In connection with any Claim as to which both the Indemnifying Party and
the Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent
20
of the Indemnified Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not include an unconditional release of the Indemnified Party from all
liabilities with respect to such Claim or judgment.
All fees and expenses of the Indemnified Party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and all reasonable attorneys' fees and expenses) shall be paid to the
Indemnified Party, as incurred, within ten (10) Trading Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
Section 7.4. DIRECT CLAIMS. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article X. Judgment upon any award rendered by any arbitrators may be entered in
any court having competent jurisdiction thereof.
ARTICLE VIII
DUE DILIGENCE REVIEW
Section 8.1. DUE DILIGENCE REVIEW. Subject to Section 8.2, the Company shall
make available for inspection and review by the Investors, advisors to and
representatives of the Investors (who may or may not be affiliated with the
Investors and who are reasonably acceptable to the Company), any underwriter
participating in any disposition of the Registrable Securities on behalf of the
Investors pursuant to the Registration Statement, any such registration
statement or amendment or supplement thereto or any blue sky, Nasdaq or other
filing, all SEC Documents and other proposed filings with the SEC, and all other
publicly available corporate documents and properties of the Company as may be
reasonably necessary for the purpose of such review, and cause the Company's
officers, directors and employees to supply all such publicly available
information reasonably requested by the Investors or any such representative,
advisor or underwriter in connection with such Registration Statement
(including, without limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from time to time
after the filing and effectiveness of the Registration Statement for the sole
purpose of enabling the Investors and such representatives, advisors and
underwriters and their respective accountants and attorneys to conduct initial
and ongoing due diligence with respect to the Company and the accuracy of the
Registration Statement.
21
Section 8.2. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
(a) From and after the filing of the Registration Statement, the
Company shall not disclose material non-public information to the Investors,
advisors to or representatives of the Investors unless prior to disclosure of
such information the Company identifies such information as being non-public
information and provides the Investors, such advisors and representatives with
the opportunity to accept or refuse to accept such non-public information for
review. Other than disclosure of any comment letters received from the SEC staff
with respect to the Registration Statement, the Company may, as a condition to
disclosing any non-public information hereunder, require the Investors' advisors
and representatives to enter into a confidentiality agreement in form and
content reasonably satisfactory to the Company and the Investors.
(b) The Company will promptly notify the advisors and representatives
of the Investors and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement, would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein in light
of the circumstances in which they were made, not misleading. Nothing contained
in this Section 8.2 shall be construed to mean that such persons or entities
other than the Investors (without the written consent of the Investors prior to
disclosure of such information as set forth in Section 8.2(a)) may not obtain
non-public information in the course of conducting due diligence in accordance
with the terms of this Agreement and nothing herein shall prevent any such
persons or entities from notifying the Company of their opinion that based on
such due diligence by such persons or entities, that the Registration Statement
contains an untrue statement of a material fact or omits a material fact
required to be stated in the Registration Statement or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
(c) CONFIDENTIALITY. The Investors agree that they will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which it may obtain from the Company pursuant to information
obtained under this Section 8; PROVIDED, HOWEVER, that an Investor may disclose
such information (i) to its attorneys, accountants, consultants, and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, or (ii) pursuant to an order entered by a
legal, regulatory or administrative body having the authority to enter such
order provided, however, that, if practicable, prior to any such disclosure, the
applicable Investor shall give the Company prompt notice of such order so that
the Company may seek a protective order to take the other appropriate legal
action to avoid such disclosure. The Investor shall not assign its rights under
this Agreement to any Person identified to the Investor by the Company as a
competitor of the Company.
22
ARTICLE IX
LEGENDS; TRANSFER AGENT INSTRUCTIONS
Section 9.1. LEGENDS. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend or equivalent
(the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM SUCH REGISTRATION.
Section 9.2. TRANSFER AGENT INSTRUCTIONS. Upon the execution and delivery
hereof, the Company is issuing to the transfer agent for its Common Stock (and
to any substitute or replacement transfer agent for its Common Stock upon the
Company's appointment of any such substitute or replacement transfer agent)
instructions substantially in the form of EXHIBIT F hereto. Such instructions
shall be irrevocable by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be. After the Effective Date, in lieu of delivering physical
certificates representing the Common Stock issuable upon the conversion of, or
in lieu of interest payments on, the Convertible Debentures, the Company shall
cause its transfer agent to electronically transmit the Conversion Shares by
crediting the account of the Investor's prime broker with the Depository Trust
Company ("DTC") Fast Automated Securities Transfer program through its Deposit
Withdrawal Agent Commission ("DWAC") system no later than the applicable date of
delivery.
Section 9.3. NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend other
than the one specified in Section 9.1 has been or shall be placed on the share
certificates representing the Registrable Securities and no instructions or
"stop transfer orders," "stock transfer restrictions," or other restrictions
have been or shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Article IX.
Section 9.4. INVESTORS' COMPLIANCE. Nothing in this Article shall affect in any
way each Investor's obligations to comply with all applicable securities laws
upon resale of the Common Stock.
Section 9.5. RULE 144. Subject to the applicable securities laws, the Company
acknowledges and agrees that, for the purpose of calculating the holding period
of the Shares under Rule 144, the Conversion Shares shall be deemed to have been
acquired on the applicable Closing Date.
23
ARTICLE X
CHOICE OF LAW; ARBITRATION
Section 10.1. GOVERNING LAW/ARBITRATION. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any dispute under this Agreement
shall be exclusively submitted to arbitration under the American Arbitration
Association (the "AAA") in New York City, New York, and shall be finally and
conclusively determined by the decision of a board of arbitration consisting of
three (3) members (hereinafter referred to as the "Board of Arbitration")
selected according to the rules governing the AAA. The Board of Arbitration
shall meet on consecutive business days in New York City, New York, and shall
reach and render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the amount, if any, which
the losing party is required to pay to the other party in respect of a claim
filed. In connection with rendering its decisions, the Board of Arbitration
shall adopt and follow the laws of the State of New York unless the matter at
issue is the corporation law of the company's state of incorporation, in which
event the corporation law of such jurisdiction shall govern such issue. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. Any decision made by the Board
of Arbitration (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the parties to
the dispute, and entitled to be enforced to the fullest extent permitted by law
and entered in any court of competent jurisdiction. The Board of Arbitration
shall be authorized and is hereby directed to enter a default judgment against
any party failing to participate in any proceeding hereunder within the time
periods set forth in the AAA rules. The non-prevailing party to any arbitration
(as determined by the Board of Arbitration) shall pay the expenses of the
prevailing party, including reasonable attorney's fees, in connection with such
arbitration. Any party shall be entitled to obtain injunctive relief from a
court in any case where such relief is available, and the prevailing party in
such injunctive action shall be entitled to its reasonable attorneys' fees in
connection therewith.
ARTICLE XI
ASSIGNMENT
Section 11.1. ASSIGNMENT. Neither this Agreement nor any rights of the Investors
or the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Convertible Debentures and Warrants purchased or acquired by any Investor
hereunder with respect to the Convertible Debentures and Warrants held by such
person, and (b) upon the prior written consent of the Company, which consent
shall not unreasonably be withheld or delayed, each Investor's interest in this
Agreement may be assigned at any time, in whole or in part, to any other person
or entity (including any Affiliate of
24
the Investor) who agrees to make the representations and warranties contained in
Article III and who agrees to be bound by the terms of this Agreement.
ARTICLE XII
NOTICES
Section 12.1. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) hand delivered, (ii) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. The addresses for such communications shall be:
if to the Company: 0000 Xxxxxx Xxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxx White & XxXxxxxxx LLP
(shall not constitute notice) 000 Xxxxxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
if to the Investors: As set forth on the signature pages hereto
with a copy to: Xxxxxx Xxxxxxx, Esq.
(shall not constitute notice) Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
25
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 12.1.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. COUNTERPARTS/ FACSIMILE/ AMENDMENTS. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.
Section 13.2. ENTIRE AGREEMENT. This Agreement, the agreements attached as
Exhibits hereto, which include, but are not limited to the Convertible
Debentures, and Warrants the Escrow Agreement, and the Registration Rights
Agreement, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as is fully set forth
herein.
Section 13.3. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.
Section 13.4. HEADINGS. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Section 13.5. NUMBER AND GENDER. There may be one or more Investors parties to
this Agreement, which Investors may be natural persons or entities. All
references to plural Investors shall apply equally to a single Investor if there
is only one Investor, and all references to an Investor as "it" shall apply
equally to a natural person.
Section 13.6. REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied
upon for the determination of the trading price or trading volume of the Common
Stock on any given Trading Day for the purposes of this Agreement shall be
Bloomberg, L.P. or any successor thereto. The written mutual consent of the
Investors and the Company shall be required to employ any other reporting
entity.
26
Section 13.7. REPLACEMENT OF CERTIFICATES. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Convertible Debentures or any
Conversion Shares or Warrants or any Warrant Shares and (ii) in the case of any
such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form to the Company
or as may be required by the Company's Transfer Agent or (iii) in the case of
any such mutilation, on surrender and cancellation of such certificate, the
Company at its expense will execute and deliver, in lieu thereof, a new
certificate of like tenor.
Section 13.8. FEES AND EXPENSES. Each of the Company and the Investors agrees to
pay its own expenses incident to the performance of its obligations hereunder,
except that the Company shall pay the fees, expenses and disbursements of the
Investors as set forth in the Escrow Agreement.
Section 13.9. FINDER'S AND BROKER'S FEES. Each of the parties hereto represents
that it has had no dealings in connection with this transaction with any finder
or broker who will demand payment of any fee or commission from the other party
except as set forth in the Escrow Agreement. The Company on the one hand, and
the Investors, on the other hand, agree to indemnify the other against and hold
the other harmless from any and all liabilities to any person claiming brokerage
commissions or finder's fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.
Section 13.10. PUBLICITY. The Company agrees that it will not issue any press
release or other public announcement, except as required by law, of the
transactions contemplated by this Agreement without the prior consent of the
Investors, which shall not be unreasonably withheld nor delayed by more than two
(2) Trading Days from their receipt of such proposed release. No release shall
name the Investors without their express consent.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
27
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be executed by the undersigned, thereunto duly authorized, as this
__ day of January, 2001.
CALYPTE BIOMEDICAL CORPORATION
By: ____________________________________
Xxxxx Xxxx, President & CEO
INVESTORS:
Address: AMRO INTERNATION, S.A.
C/o Ultra Finance
Xxxxxxxxxxxxxxxxx 0
X.X. Xxx 0000 By: _____________________________________
Zurich XX-0000 Xxxxxxxxxxx X.X. Xxxxxxxx, Director
Fax: 000-000-000-0000
Purchase Price: $1,000,000
28
EXHIBIT A
6% CONVERTIBLE DEBENTURE
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE
RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
NO. 1 US $ 550,000
CALYPTE BIOMEDICAL CORPORATION
6% CONVERTIBLE DEBENTURE DUE __________ __, 2001
THIS DEBENTURE is issued by Calypte Biomedical Corporation, a
corporation organized and existing under the laws of the State of Delaware (the
"Company") and is designated as its 6% Convertible Debenture Due __________ __,
2001.
FOR VALUE RECEIVED, the Company promises to pay to AMRO
International, S.A. or permitted assigns (the "Holder"), the principal sum five
hundred fifty thousand and 00/100 (US $550,000) Dollars on __________ __, 2001
(the "Maturity Date") and to pay interest quarterly in arrears on the principal
sum outstanding at the rate of 6% per annum (based upon a 365 calendar day year)
accruing from the date of initial issuance. Accrual of interest shall commence
on the first business day to occur after the date of initial issuance and
continue until payment in full of the principal sum has been made or duly
provided for. The first interest payment shall be due and payable on the earlier
of the (i) Maturity Date, and (ii) upon redemption or conversion and on June 1,
September 1, December 1 and April 1 thereafter. If the Maturity Date or any
interest payment date is not a business day in the State of New York, then such
payment shall be made on the next succeeding business day. The Company will pay
the principal of, and any accrued and unpaid interest due upon this Debenture on
the Maturity Date by check or wire transfer to the person who is the registered
Holder. The forwarding of such check or money order shall constitute a payment
of principal and interest hereunder and shall satisfy and discharge the
liability for principal and interest on this Debenture to the extent of the sum
represented by such check or wire transfer plus any amounts so deducted.
This Debenture is subject to the following additional
provisions:
1
1. The Company shall be entitled to withhold
from all payments of interest on this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
2. This Debenture has been issued subject to
investment representations of the original purchaser hereof and may be
transferred or exchanged only in compliance with the Securities Act of 1933, as
amended (the "Act"), and other applicable state and foreign securities laws. The
Holder shall deliver written notice to the Company of any proposed transfer of
this Debenture. In the event of any proposed transfer of this Debenture, the
Company may require, prior to issuance of a new Debenture in the name of such
other person, that it receive reasonable transfer documentation including legal
opinions that the issuance of the Debenture in such other name does not and will
not cause a violation of the Act or any applicable state or foreign securities
laws. Prior to due presentment for transfer of this Debenture, the Company and
any agent of the Company may treat the person in whose name this Debenture is
duly registered on the Company's Debenture Register as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not this Debenture be overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary. This Debenture has been
executed and delivered pursuant to the Convertible Debenture and Warrants
Purchase Agreement dated as of January 19, 2001 between the Company and the
original Holder (the "Purchase Agreement"), and is subject to the terms and
conditions of the Purchase Agreement, which are, by this reference, incorporated
herein and made a part hereof, including but not limited to, the short sale
prohibition in Section 5.2 therein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth for such terms in the Purchase
Agreement.
3. On any Trading Day on or prior to the
Maturity Date, the Holder of this Debenture may convert the Purchase Price or
any portion thereof, into shares of Common Stock ("Conversion Shares"), at a
conversion price for each Conversion Share ("Conversion Price") equal to $____
(95% of the average closing bid price during the ten (10) consecutive Trading
Days immediately prior to the applicable Closing Date)(subject to adjustment for
stock splits and the like)(the "Set Price"). At any time commencing after the
Maturity Date, the Holder of this Debenture may convert the Purchase Price or
any portion thereof, into Conversion Shares at a Conversion Price equal to the
lesser of (A) the Set Price, and (B) 85% of the average of the three (3) lowest
closing bid prices during the twenty-two (22) Trading Days immediately prior to
the Conversion Date (as defined below). If, upon any conversion of this
Debenture, the Company's issuance of Conversion Shares would cause it to violate
any listing requirement of the Principal Market, then in lieu of such stock
issuance, the Company shall pay the Holder cash in an amount equal to the
closing price of the Common Stock on the Conversion Date multiplied by the
number of shares which would otherwise have been issuable upon such conversion
within five (5) calendar days. The Company shall be liable for the liquidated
damages set forth in Section 8 herein for any failure to make such payments to
the Investor within the specified period of time. Additionally, after the
Maturity Date, except for sales of its securities (i) pursuant to the exercise
of options granted or to be granted under an employee benefit plan which plan
has been approved by the Company's stockholders, (ii) pursuant to any
compensatory plan for a full-time employee or key consultant, (iii) in
connection with a strategic partnership or
2
other business transaction, the principal purpose of which is not simply to
raise money, or (iv) pursuant to the Equity Line Agreement, if during the period
beginning on the date hereof and ending when the Holder no longer holds any of
the principal amount of this Debenture or any accrued but unpaid interest of
this Debenture (the "MFN Period"), the Company sells any shares of its Common
Stock at a fixed per share selling price ("Per Share Selling Price") lower than
the Set Price per share, then the Set Price shall be adjusted downward to equal
such lower Per Share Selling Price. The Company shall give to each Investor
written notice of any such sale within 24 hours of the closing of any such sale.
(a) For the purpose of this Section 3, the
term "Per Share Selling Price" shall mean the amount actually paid by
third parties for each Conversion Share. A sale of shares of Common
Stock shall include the sale or issuance of rights, options, warrants
or convertible securities ("derivative securities") under which the
Company is or may become obligated to issue shares of Common Stock,
and in such circumstances the sale of Common Stock shall be deemed to
have occurred at the time of the issuance of the derivative securities
and the Per Share Selling Price of the Common Stock covered thereby
shall also include the exercise or conversion price thereof (in
addition to the consideration per underlying Conversion Share received
by the Company upon such sale or issuance of the derivative security).
In case of any such security issued within the MFN Period in a
"Variable Rate Transaction" or an "MFN Transaction" (each as defined
below), the Per Share Selling Price shall be deemed to be the lowest
fixed conversion or fixed exercise price at which such securities are
converted or exercised in the case of a Variable Rate Transaction, or
the lowest adjustment price in the case of an MFN Transaction. If
shares are issued for a consideration other than cash, the per share
selling price shall be the fair value of such consideration as
determined in good faith by the Board of Directors of the Company.
(b) For the purpose of Section 3(a), the
term "Variable Rate Transaction" shall mean a transaction in which the
Company issues or sells (a) any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive additional shares of Common Stock either (x) at a
conversion, exercise or exchange rate or other price that is based
upon and/or varies with the trading prices of or quotations for the
Common Stock at any time after the initial issuance of such debt or
equity securities, or (y) with a fixed conversion, exercise or
exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock (but excluding standard stock split anti-dilution provisions),
or (b) any securities of the Company pursuant to an "equity line"
structure which provides for the sale, from time to time, of
securities of the Company which are registered for resale pursuant to
the Securities Act.
(c) For the purposes of Section 4(a), the
term "MFN Transaction" shall mean a transaction in which the Company
issues or sells any securities in a capital raising transaction or
series of related transactions (the "New Offering")
3
which grants to an investor (the "New Investor") the right to receive
additional shares based upon future transactions of the Company on
terms more favorable than those granted to the New Investor in the New
Offering.
(d) In case of any stock split or reverse
stock split, stock dividend, reclassification of the common stock,
recapitalization, merger or consolidation, or like capital adjustment
affecting the Common Stock of the Company, the provisions of this
Section 3 shall be applied in a fair, equitable and reasonable manner
so as to give effect, as nearly as may be, to the purposes hereof.
4. The rate of interest on this Debenture shall
be six percent (6%), per annum (based on a 365 calendar day year), on the
outstanding principal until paid or converted and payable only in cash, pursuant
to this Debenture, unless otherwise agreed to by the Investor.
5. The Company shall use at least 50% of the
net proceeds from any other sale for cash of its securities (including the
Equity Line Agreement) (each a "Subsequent Sale"), to redeem this Debenture,
plus all accrued but unpaid interest and the applicable Payment Premium. During
the 90 calendar day period commencing on the Closing Date the Payment Premium
shall be 0% of the outstanding principal balance. During the period commencing
immediately thereafter the Payment Premium shall be 15% of the outstanding
principal balance. The Company shall give the Holder at least five (5) Trading
Days' notice prior to the closing date of a Subsequent Sale (each a "Subsequent
Sale Closing Date"). The Company shall make redemption payments to the Holder on
such Subsequent Sale Closing Date directly out of the proceeds of any such
Subsequent Sale. The Holder shall have the right to convert this Debenture as
set forth in Section 3 until the Trading Day immediately prior to the Trading
Day set for payment of the redemption price.
6. The Company shall have the right at any time
to deliver to the Holder a written notice of the Company's intent to redeem part
or all of the outstanding amount of this Debenture, plus all accrued but unpaid
interest, and the applicable Payment Premium, pursuant to the schedule of
Payment Premiums set forth in Section 5 herein. The Company shall make the
redemption payment to the Holder on the date set forth in the Company's notice
of redemption, or else the redemption notice shall be void, and the Company
shall thereafter not have any further right to redeem this Debenture. The notice
of redemption shall be delivered at least five (5) Trading Days prior to the
date of redemption. The Holder shall have the right to convert this Debenture as
set forth in Section 3 until the Trading Day prior to date of redemption, if
this Debenture is otherwise convertible at that time.
7. On the Maturity Date, the Company shall pay
the principal of and any accrued but unpaid interest due upon this Debenture,
less any amounts required by law to be deducted, to the registered Holder and
addressed to such Holder at the last address appearing on the debenture
register.
8.
4
(a) Conversion shall be effectuated by
surrendering this Debenture to the Company (if such Conversion will
convert all outstanding principal) together with the form of
conversion notice attached hereto as EXHIBIT A (the "Notice of
Conversion"), executed by the Holder evidencing such Holder's
intention to convert this Debenture or a specified portion (as above
provided) hereof, and accompanied, if required by the Company, by
proper assignment hereof in blank. Interest accrued or accruing from
the date of issuance to the Conversion Date shall be paid as set forth
above. No fraction of a share or scrip representing a fraction of a
share will be issued on conversion, but the number of shares issuable
shall be rounded to the nearest whole share. The "Conversion Date"
shall be deemed to be the date on which the Holder faxes the Notice of
Conversion duly executed to the Company. Facsimile delivery of the
Notice of Conversion shall be accepted by the Company at FACSIMILE
NUMBER (000) 000-0000 ATTN.: XXXXX XXXXXX AND A COPY OF THE NOTICE OF
CONVERSION SHALL BE FAXED SIMULTANEOUSLY TO FACSIMILE NUMBER (650)
324-0638, ATTN.: XXXXX XXXXXX, ESQ. Certificates representing Common
Stock upon conversion will be delivered to the Holder within four (4)
Trading Days from the Conversion Date. Delivery of Conversion Shares
shall be made to the address specified by the Holder in the Notice of
Conversion.
(b) The Company understands that a
delay in the issuance of Conversion Shares or, if applicable, cash,
upon a conversion pursuant to Section 3 herein beyond four (4) Trading
Days could result in economic loss to the Holder. As compensation to
the Holder for such loss, the Company agrees to pay late payments to
the Holder for late issuance of Conversion Shares in accordance with
the following schedule (where "No. Trading Days Late" is defined as
the number of Trading Days beyond four (4) Trading Days from the
Conversion Date).
------------------------------------------------------------ ---------------------------------------------------------
No. Trading Days Xxxx Xxxx Payment for Each
$5,000 of Principal Amount
Being Converted
------------------------------------------------------------ ---------------------------------------------------------
1 $100
------------------------------------------------------------ ---------------------------------------------------------
2 $200
------------------------------------------------------------ ---------------------------------------------------------
3 $300
------------------------------------------------------------ ---------------------------------------------------------
4 $400
------------------------------------------------------------ ---------------------------------------------------------
5 $500
------------------------------------------------------------ ---------------------------------------------------------
6 $600
------------------------------------------------------------ ---------------------------------------------------------
7 $700
------------------------------------------------------------ ---------------------------------------------------------
8 $800
------------------------------------------------------------ ---------------------------------------------------------
9 $900
------------------------------------------------------------ ---------------------------------------------------------
10 $1,000
------------------------------------------------------------ ---------------------------------------------------------
More than 10 $1,000 +$200 for each Trading Day
Late beyond 10 Trading Days
------------------------------------------------------------ ---------------------------------------------------------
5
The Company shall pay any payments incurred
under this Paragraph 8(b) in immediately available funds upon demand.
Nothing herein shall limit Holder's right to pursue injunctive relief
and/or actual damages for the Company's failure to issue and deliver
Conversion Shares or, if applicable, cash, to the Holder, including,
without limitation, the Holder's actual losses occasioned by any
"buy-in" of Common Stock necessitated by such late delivery.
Furthermore, in addition to any other remedies which may be available
to the Holder, in the event that the Company fails for any reason to
effect delivery of such Conversion Shares or, if applicable, cash,
within four (4) Trading Days from the Conversion Date, the Holder will
be entitled to revoke the relevant Notice of Conversion by delivering
a notice to such effect to the Company, whereupon the Company and the
Holder shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion, and in
such event no late payments shall be due in connection with such
withdrawn conversion.
(c) If at any time (a) the Company
challenges, disputes or denies the right of the Holder to effect the
conversion of this Debenture into Conversion Shares or, if applicable,
cash, or otherwise dishonors or rejects any Notice of Conversion
properly delivered in accordance with this Paragraph 8 or (b) any
Company stockholder who is not and has never been an Affiliate (as
defined in Rule 405 under the Securities Act of 1933, as amended) of
the Holder obtains a judgment or any injunctive relief from any court
or public or governmental authority which denies, enjoins, limits,
modifies, delays or disputes the right of the Holder hereof to effect
the conversion of this Debenture into Conversion Shares, then the
Holder shall have the right, by written notice, to require the Company
to promptly redeem this Debenture for cash at a redemption price equal
to one hundred fifty percent (150%) of the outstanding principal
amount hereof and all accrued and unpaid interest hereon. Under any of
the circumstances set forth above, the Company shall indemnify and
hold harmless the Holder and be responsible for the payment of all
costs and expenses of the Holder, including its reasonable legal fees
and expenses, as and when incurred in disputing any such action or
pursuing its rights hereunder (in addition to any other rights of the
Holder). In the event a Holder of this Debenture shall elect to
convert any or all of the outstanding principal amount hereof, the
Company may not refuse conversion based on any claim that the Holder
or any one associated or affiliated with the Holder of has been
engaged in any violation of law, agreement or for any other reason,
unless, an injunction from a court, on notice, restraining and or
enjoining conversion of all or part of this Debenture shall have been
sought and obtained and the Company posts a surety bond for the
benefit of the Holder in the amount of 150% of the principal amount of
this Debenture outstanding, which is subject to the injunction, which
bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall
be payable to such Holder to the extent it obtains judgment. In the
absence of an injunction precluding the same, the Company shall issue
Conversion Shares or, if applicable, cash, upon a properly noticed
conversion.
9. No provision of this Debenture shall alter
or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on, this
6
Debenture at the time, place, and rate, and in the coin or currency or
Conversion Shares herein prescribed. This Debenture is a direct
obligation of the Company.
10. No recourse shall be had for the payment of
the principal of, or the interest on, this Debenture, or for any claim
based hereon, or otherwise in respect hereof, against any
incorporator, shareholder, employee, officer or director, as such,
past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
11. In case of any (1) merger or consolidation
of the Company with or into another Person, or (2) sale by the Company
of more than one-half of the assets of the Company (on an as valued
basis) in one or a series of related transactions, the Holder shall
have the right to (A) deem such an occurrence an Event of Default and
exercise its rights of prepayment pursuant to Xxxxxxxxx 00 xxxxxx, (X)
convert its aggregate principal amount of this Debenture then
outstanding into the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common
Stock following such merger, consolidation or sale, and the Holder
shall be entitled upon such event or series of related events to
receive such amount of securities, cash and property as the Conversion
Shares into which such aggregate principal amount of this Debenture
could have been converted immediately prior to such merger,
consolidation or sales would have been entitled, or (C) in the case of
a merger or consolidation, (x) require the surviving entity to issue
convertible debentures with such aggregate stated value or in such
face amount, as the case may be, equal to the aggregate principal
amount of this Debenture then held by the Holder, plus all accrued and
unpaid interest and other amounts owing thereon, which newly issued
debentures shall have terms identical (including with respect to
conversion) to the terms of this Debenture and shall be entitled to
all of the rights and privileges of the Holder of this Debenture set
forth herein and the agreements pursuant to which this Debenture was
issued (including, without limitation, as such rights relate to the
acquisition, transferability, registration and listing of such shares
of stock other securities issuable upon conversion thereof), and (y)
simultaneously with the issuance of such convertible debentures, shall
have the right to convert such instrument only into shares of stock
and other securities, cash and property receivable upon or deemed to
be held by holders of Common Stock following such merger or
consolidation. In the case of clause (C), the conversion price
applicable for the newly convertible debentures shall be based upon
the amount of securities, cash and property that each Conversion Share
would receive in such transaction and the Conversion Price in effect
immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall
include such terms so as to continue to give the Holder the right to
receive the securities, cash and property set forth in this Paragraph
upon any conversion or redemption following such event. This Paragraph
shall similarly apply to successive such events.
12. The Holder, by acceptance hereof, agrees
that this Debenture is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Debenture or
the Conversion Shares thereof except under circumstances which will
not result in a violation of the Act or any applicable state Blue Sky
or foreign laws or similar laws relating to the sale of securities.
7
13. This Debenture shall be governed by and
construed in accordance with the laws of the State of New York. Each
of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York
in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing
of any such proceeding in such jurisdictions.
14. The following shall constitute an "Event of
Default":
a. The Company shall default in the payment of
principal or interest on this Debenture and
same shall continue for a period of three
(3) Trading Days; or
b. Any of the material representations or
warranties made by the Company herein, in
the Purchase Agreement, the Registration
Rights Agreement, or in any agreement,
certificate or financial statements
heretofore or hereafter furnished by the
Company in connection with the execution and
delivery of this Debenture or the Purchase
Agreement shall be false or misleading in
any material respect at the time made; or
c. The Company fails to issue Conversion Shares
to the Holder or to cause its Transfer Agent
to issue Conversion Shares, or, if
applicable, cash, upon proper exercise by
the Holder of the conversion rights of the
Holder in accordance with the terms of this
Debenture, fails to transfer or to cause its
Transfer Agent to transfer any certificate
for Conversion Shares issued to the as and
when required by this Debenture or the
Registration Rights Agreement, and such
transfer is otherwise lawful, or fails to
remove any restrictive legend or to cause
its Transfer Agent to transfer any
certificate or any Conversion Shares issued
to the Holder as and when required by this
Debenture, the Purchase Agreement or the
Registration Rights Agreement and such
legend removal is otherwise lawful, and any
such failure shall continue uncured for five
(5) business days; or
d. The Company shall fail to perform or
observe, in any material respect, any other
covenant, term, provision, condition,
agreement or obligation of the Company under
the Purchase Agreement, the Registration
Rights Agreement or this Debenture and such
failure shall continue uncured for a period
of thirty (30) days after written notice
from the Holder of such failure; or
e. The Company shall (1) admit in writing its
inability to pay its debts generally as they
mature; (2) make an assignment for the
benefit of creditors or commence proceedings
for its dissolution; or
8
(3) apply for or consent to the appointment
of a trustee, liquidator or receiver for its
or for a substantial part of its property or
business; or
f. A trustee, liquidator or receiver shall be
appointed for the Company or for a
substantial part of its property or business
without its consent and shall not be
discharged within sixty (60) days after such
appointment; or
g. Any governmental agency or any court of
competent jurisdiction at the instance of
any governmental agency shall assume custody
or control of the whole or any substantial
portion of the properties or assets of the
Company and shall not be dismissed within
sixty (60) days thereafter; or
h. Any money judgment, writ or warrant of
attachment, or similar process in excess of
One Hundred Thousand ($100,000) Dollars in
the aggregate shall be entered or filed
against the Company or any of its properties
or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period
of sixty (60) days or in any event later
than five (5) days prior to the date of any
proposed sale thereunder; or
i. Bankruptcy, reorganization, insolvency or
liquidation proceedings or other proceedings
for relief under any bankruptcy law or any
law for the relief of debtors shall be
instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed within sixty (60) days after such
institution or the Company shall by any
action or answer approve of, consent to, or
acquiesce in any such proceedings or admit
the material allegations of, or default in
answering a petition filed in any such
proceeding;
j. The Registration Statement is not declared
effective by the Commission within one
hundred eighty (180) days from the Closing
Date; and
k. The Company shall have its Common Stock
suspended or delisted from trading on a
Principal Market for in excess of five (5)
Trading Days.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and
the Holder
9
may immediately enforce any and all of the Holder's rights and remedies provided
herein or any other rights or remedies afforded by law.
15. Nothing contained in this Debenture shall
be construed as conferring upon the Holder the right to vote or to receive
dividends or to consent or receive notice as a shareholder in respect of any
meeting of shareholders or any rights whatsoever as a shareholder of the
Company, unless and to the extent converted in accordance with the terms hereof.
16. In no event shall the Holder be permitted
to convert this Debenture for Conversion Shares to the extent that (x) the
number of shares of Common Stock beneficially owned by such Holder (other than
Conversion Shares) plus (y) the number of Conversion Shares, would be equal to
or exceed 9.9% of the number of shares of Common Stock then issued and
outstanding, including shares issuable upon conversion of this Debenture held by
such Holder after application of this Paragraph 16. As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder. To
the extent that the limitation contained in this Paragraph 16 applies, the
determination of whether this Debenture is convertible (in relation to other
securities owned by the Holder) and of which a portion of this Debenture is
convertible shall be in the sole discretion of such Holder, and the submission
of a Notice of Conversion shall be deemed to be such Holder's determination of
whether this Debenture is convertible (in relation to other securities owned by
such Holder) and of which portion of this Debenture is convertible, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. Nothing
contained herein shall be deemed to restrict the right of a Holder to convert
this Debenture at such time as such conversion will not violate the provisions
of this Paragraph 16. The provisions of this Paragraph 16 may be waived by the
Holder of this Debenture upon, at the election of the Holder, not less than 75
calendar days' prior notice to the Company, and the provisions of this Paragraph
16 shall continue to apply until such 75th day (or such later date as may be
specified in such notice of waiver). No conversion of this Debenture in
violation of this Paragraph 16 but otherwise in accordance with this Debenture
shall affect the status of the Common Stock issued upon such conversion as
validly issued, fully-paid and nonassessable. If instead of receiving cash on
the Maturity Date the Holder instead exercises its right to convert this
Debenture into Common Stock pursuant to Paragraph 3 by delivery of a Notice of
Conversion prior to receipt of payment, and such conversion would cause the
limit contained in the first sentence of this Paragraph 16 to be exceeded, such
conversion of this Debenture shall occur up to such limit and the remaining
unconverted portion of this Debenture shall be converted into Common Stock in
accordance with one or more Notices of Conversion delivered by the Holder 65
days after the Maturity Date.
10
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by an officer thereunto duly authorized.
Dated: January __, 2001
CALYPTE BIOMEDICAL CORPORATION
By:_________________________________
Xxxxx Xxxx, President & CEO
Attest:
-----------------------
11
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ ________________ of
the principal amount of the above Debenture No. ___ into Shares of Common
Stock of Calypte Biomedical Corporation (the "Company") according to the
conditions hereof, as of the date written below.
Date of Conversion* __________________________________________________________
Conversion Price* ____________________________________________________________
Accrued Interest _____________________________________________________________
Signature ____________________________________________________________________
[Name]
Address: _____________________________________________________________________
_____________________________________________________________________
* If such conversion represents the remaining principal balance of the
Debenture, the original Debenture must accompany this notice within three (3)
Trading Days.
12
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January 22, 2001, between
the investor or investors signatory hereto (each an "Investor" and together the
"Investors"), and Calypte Biomedical Corporation, a Delaware corporation (the
"Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Investors are purchasing from the Company, pursuant to a
Convertible Debentures and Warrants Purchase Agreement dated the date hereof
(the "Purchase Agreement") (capitalized terms not defined herein shall have the
meanings ascribed to them in the Purchase Agreement), $1,100,000, in the
aggregate, principal amount of the Company's 6% Convertible Debentures; and
WHEREAS, the Company desires to grant to the Investors the registration
rights set forth herein with respect to the Conversion Shares of Common Stock
issuable upon conversion of, or as interest upon, the Convertible Debentures,
shares of Common Stock issuable upon exercise of the Warrants purchased pursuant
to the Purchase Agreement and shares issuable in the event of a registration
default pursuant to Section 3(e) (the "Securities").
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. REGISTRABLE SECURITIES. As used herein the term "Registrable
Security" means the Securities until (i) the Registration Statement has been
declared effective by the Commission, and all Securities have been disposed of
pursuant to the Registration Statement, (ii) all Securities have been sold under
circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") are met,
(iii) all Securities have been otherwise transferred to holders who may trade
such Securities without restriction under the Securities Act, and the Company
has delivered a new certificate or other evidence of ownership for such
Securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Securities may be sold without any time, volume
or manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act. The term "Registrable Securities" means any
and/or all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be deemed to be made in the definition
of "Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
Section 2. RESTRICTIONS ON TRANSFER. Each Investor acknowledges and
understands that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Securities Act. Each Investor understands that no disposition or
transfer of the Securities may be made by Investor in the absence of (i) an
opinion of counsel to the Investor, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without registration
under the Securities Act or (ii) such registration.
With a view to making available to the Investors the benefits of
Rule 144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule 144;
(b) file with the Commission in a timely manner all reports and
other documents required to be filed with the Commission pursuant to Section 13
or 15(d) under the Exchange Act by companies subject to either of such sections,
irrespective of whether the Company is then subject to such reporting
requirements; and
(c) Upon request by the Transfer Agent, the Company shall
provide the Transfer Agent an opinion of counsel, which opinion shall be
reasonably acceptable to the Transfer Agent, that the Investor has complied with
the applicable conditions of Rule 000 ( xx any similar provision then in force)
under the Securities Act.
Section 3. REGISTRATION RIGHTS WITH RESPECT TO THE SECURITIES.
(a) The Company agrees that it will prepare and file with the
Commission, prior to April 15, 2001, a registration statement (on Form S-3, or
other appropriate registration statement form) under the Securities Act (the
"Registration Statement"), at the sole expense of the Company (except as
provided in Section 3(c) hereof), in respect of the Investors, so as to permit a
public offering and resale of the Securities under the Act by the Investors as
selling stockholders and not as underwriters.
The Company shall cause such Registration Statement to become
effective within ninety (90) calendar days (or 120 calendar days in the event of
a "full review" by the Commission) from the Closing Date, or, if earlier, within
five (5) days of SEC clearance to request acceleration of effectiveness. The
number of shares designated in the Registration Statement to be registered shall
include all the Warrant Shares and at least 200% of the shares which would be
issuable upon the conversion of the then outstanding principal amount of the
Convertible Debentures at the Conversion Price in effect on the date of the
filing of the Registration Statement and such number of shares as the Company
deems prudent for the purpose of issuing shares of Common Stock as interest on
the Convertible Debentures, and shall include appropriate language regarding
reliance upon Rule 416 to the extent permitted by the Commission. The Company
will notify the Investors and its transfer agent of the effectiveness of the
Registration Statement within one (1) Trading Day of such event. After the
Effective Date, in the event that the number of shares so registered shall prove
to be insufficient to register the resale of all of the Securities then issuable
(notwithstanding the limitations on conversion herein and in the Purchase
Agreement), then the Company shall be obligated to file, within fifteen (15)
days after the day on which the number of Securities registered for public
offering and resale by the Investors is less than 125% of the number of
Securities (calculated at the Conversion Price on such date) held by the
Investors on such date (the "Further Registration
2
Date") and the Company shall file a further registration statement registering a
number of shares of Common Stock to the extent that at least 200% of the shares
which would be required to be issued upon the conversion of the remaining
Convertible Debentures at the Conversion Price on the date of the filing of such
further registration statement are registered and shall use diligent best
efforts to prosecute such additional registration statement to effectiveness
within sixty (60) calendar days of the date of the Further Registration Date.
Each Investor shall have the right to convert all or any of its Convertible
Debenture into up to a number of registered shares of Common Stock equal to such
Investor's fraction of the aggregate Purchase Price multiplied by the initially
registered and, if applicable, subsequently registered Securities; PROVIDED,
HOWEVER, in no event shall this provision limit each Investor's right to convert
its Convertible Debenture into unregistered Common Stock.
(b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 effective under the
Securities Act until the earlier of (i) the date that none of the Securities
covered by such Registration Statement are or may become issued and outstanding,
(ii) the date that all of the Securities have been sold pursuant to such
Registration Statement, (iii) the date the Investors receive an opinion of
counsel to the Company, which counsel shall be reasonably acceptable to the
Investors, that the Securities may be sold under the provisions of Rule 144
without limitation as to volume, (iv) all Securities have been otherwise
transferred to persons who may trade such shares without restriction under the
Securities Act, and the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing a restrictive legend, (v)
all Securities may be sold without any time, volume or manner limitations
pursuant to Rule 144(k) or any similar provision then in effect under the
Securities Act in the opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Investor (the "Effectiveness Period"), or (vi)
three (3) years from the Effective Date.
(c) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing of
the Registration Statement under subparagraph 3(a) and in complying with
applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees of the Company) shall be borne by the Company. The Investors
shall bear the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered and the fees
and expenses of their counsel. The Investors and their counsel shall have a
reasonable period, not to exceed five (5) Trading Days, to review the proposed
Registration Statement or any amendment thereto, prior to filing with the
Commission, and the Company shall provide each Investor with copies of any
comment letters received from the Commission with respect thereto within two (2)
Trading Days of receipt thereof. The Company shall use its best efforts to
qualify any of the securities for sale in such states as any Investor reasonably
designates and shall furnish indemnification in the manner provided in Section 6
hereof. However, the Company shall not be required to qualify in any state which
will require an escrow or other restriction relating to the Company and/or the
sellers, or which will require the Company to qualify to do business in such
state or require the Company to file therein any general consent to service of
process. The Company at its expense will supply the Investors with copies of the
applicable Registration Statement and the prospectus included therein and other
related documents in such quantities as may be reasonably requested by the
Investors.
3
(d) The Company shall not be required by this Section 3 to
include an Investor's Registrable Securities in any Registration Statement which
is to be filed if, in the opinion of counsel for both the Investor and the
Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the Investor and
the Company) the proposed offering or other transfer as to which such
registration is requested is exempt from applicable federal and state securities
laws and would result in all purchasers or transferees obtaining securities
which are not "restricted securities", as defined in Rule 144 under the
Securities Act.
(e) In the event that (i) the Registration Statement to be
filed by the Company pursuant to Section 3(a) above is not filed prior to Xxxxx
00, 0000, (xx) the Registration Statement is not declared effective by the
Commission within ninety (90) calendar days (120 calendar days in the event of a
"full review" by the Commission) of the Closing Date, or within five (5) days of
clearance by the Commission to request effectiveness, (iii) such Registration
Statement is not maintained as effective by the Company for the period set forth
in Section 3(b) above, or (iv) the additional registration statement referred to
in Section 3(a) is not filed within 15 calendar days or declared effective
within 60 calendar days as set forth therein (each a "Registration Default")
then the Company will pay each Investor (pro-rata on a monthly basis), for each
Registration Default then in effect, as liquidated damages and not as a penalty,
during any period in which a Registration Default is occurring, two percent (2%)
per month of (i) the then outstanding principal amount of the Convertible
Debentures, and (ii) the value of any outstanding Warrants (valued at the
difference between the average closing bid price during the applicable month and
the Exercise Price multiplied by the number of Warrant Shares the Warrants are
exercisable into), held by such Investor until such Registration Default no
longer exists ("Liquidated Damages"). Such payment of the Liquidated Damages
shall be made to the Investors in cash, or, at the option of the Investor, in
shares of Common Stock (based on the Conversion Price (as defined in the
Convertible Debenture)) on the Trading Day prior to the date of payment) on the
last day of each month during which a Registration Default occurred or was
continuing, without demand therefor by the Investor; PROVIDED, HOWEVER, that the
payment of the Liquidated Damages shall not relieve the Company from its
obligations to register the Securities pursuant to this Section. Notwithstanding
anything to the contrary contained herein, a failure to maintain the
effectiveness of an filed Registration Statement or the ability of an Investor
to use an otherwise effective Registration Statement to effect resales of
Securities during the period after forty-five (45) days and within ninety (90)
days from the end of the Company's fiscal year resulting solely from the need to
update the Company's financial statements contained or incorporated by reference
in such Registration Statement shall not constitute a Registration Default and
shall not trigger the accrual of liquidated damages hereunder.
If the Company does not remit the payment to the Investors as set
forth above, the Company will pay the Investors reasonable costs of collection,
including attorneys' fees, in addition to the Liquidated Damages. The
registration of the Securities pursuant to this provision shall not affect or
limit the Investors' other rights or remedies as set forth in this Agreement.
4
(f) The Company shall not be precluded from including in any
registration statement which it is required to file pursuant to this Section 3
any other securities apart from the Registrable Securities.
(g) If at any time or from time to time after the effective
date of any Registration Statement, the Company notifies the Investors in
writing of the existence of a Potential Material Event (as defined in Section
3(h) below), the Investors shall not offer or sell any Securities or engage in
any other transaction involving or relating to Securities, from the time of the
giving of notice with respect to a Potential Material Event until the Investors
receive written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a Potential
Material Event; PROVIDED, HOWEVER, that the Company may not so suspend the right
to such holders of Securities for more than twenty (20) calendar days in the
aggregate during any twelve month period, during the period the Registration
Statement is required to be in effect, and if such period is exceeded, such
event shall be a Registration Default and subject to liquidated damages as set
forth in Section 3(e) hereof. If a Potential Material Event shall occur prior to
the date a Registration Statement is required to be filed, then the Company's
obligation to file such Registration Statement shall be delayed without penalty
for not more than twenty (20) days, and such delay or delays shall not
constitute a Registration Default. Such twenty (20) day period shall NOT be in
addition to the twenty (20) day period allowed during the period the
Registration Statement is required to be in effect. THE COMPANY MUST GIVE THE
INVESTORS NOTICE IN WRITING PRIOR TO THE FIRST DAY OF THE BLACKOUT PERIOD
IMMEDIATELY UPON KNOWLEDGE THAT SUCH A BLACKOUT PERIOD WILL OCCUR AND SUCH
NOTICE MUST BE ACKNOWLEDGED IN WRITING BY THE INVESTORS. FAILURE TO PROVIDE THE
INVESTORS WITH SUCH NOTICE SHALL CONSTITUTE A REGISTRATION DEFAULT DURING THE
ENTIRE APPLICABLE PERIOD THAT THE REGISTRATION STATEMENT IS SUSPENDED.
Compliance by the Company with this Section 3(g) will not result in or be deemed
a breach of any of the Company's obligations set forth in the Purchase Agreement
not to disclose non-public information to the Investors.
(h) "Potential Material Event" means any of the following: (a)
the possession by the Company of material information not ripe for disclosure in
a registration statement, as determined in good faith by the Chief Executive
Officer or the Board of Directors of the Company that disclosure of such
information in a Registration Statement would be detrimental to the business and
affairs of the Company; or (b) any material engagement or activity by the
Company which would, in the good faith determination of the Chief Executive
Officer or the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Chief Executive Officer or
the Board of Directors of the Company that the applicable Registration Statement
would be materially misleading absent the inclusion of such information.
Section 4. COOPERATION WITH COMPANY. The Investors will cooperate with
the Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company (which shall
include all information regarding the Investors and proposed manner of sale of
the Registrable Securities required to be disclosed in any Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and
5
performing their obligations under any underwriting agreement, if the offering
is an underwritten offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering. Nothing in this
Agreement shall obligate any Investor to consent to be named as an underwriter
in any Registration Statement. The obligation of the Company to register the
Registrable Securities shall be absolute and unconditional as to those
Securities which the Commission will permit to be registered without naming the
Investors as underwriters. Any delay or delays caused by the Investors by
failure to cooperate as required hereunder shall not constitute a Registration
Default.
Section 5. REGISTRATION PROCEDURES. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible, subject to
the Investors' assistance and cooperation as reasonably required with respect to
each Registration Statement:
(a) (i) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all Registrable Securities covered by such Registration Statement
whenever the Investors shall desire to sell or otherwise dispose of the same
(including prospectus supplements with respect to the sales of Registrable
Securities from time to time in connection with a registration statement
pursuant to Rule 415 promulgated under the Act) and (ii) take all lawful action
such that each of (A) the Registration Statement and any amendment thereto does
not, when it becomes effective, contain 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, in light of the circumstances under which they were
made, not misleading and (B) the prospectus forming part of the Registration
Statement, and any amendment or supplement thereto, does not at any time during
the Registration Period 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, in light of the circumstances under which they were made,
not misleading;
(b) (i) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), provide draft
copies thereof to the Investors as required by Section 3(c) and reflect in such
documents all such comments as the Investors (and their counsel) reasonably may
propose respecting the Selling Shareholders and Plan of Distribution sections
(or equivalents); (ii) furnish to each Investor such numbers of copies of a
prospectus including a preliminary prospectus or any amendment or supplement to
any prospectus, as applicable, in conformity with the requirements of the Act,
and such other documents, as such Investor may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities
owned by such Investor; and (iii) provide to each Investor copies of any
comments and communications from the Commission relating to the Registration
Statement, if lawful to do so;
6
(c) register and qualify the Registrable Securities covered by
the Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Investors shall reasonably request (subject to the
limitations set forth in Section 3(c) above), and do any and all other acts and
things which may be necessary or advisable to enable each Investor to consummate
the public sale or other disposition in such jurisdiction of the Registrable
Securities owned by such Investor;
(d) list such Registrable Securities on the Principal Market,
if the listing of such Registrable Securities is then permitted under the rules
of such Principal Market;
(e) notify each Investor at any time when a prospectus relating
thereto covered by the Registration Statement is required to be delivered under
the Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in the 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 in the light of the circumstances then existing, subject to
Section 3(g), and the Company shall prepare and file a curative amendment under
Section 5(a) as quickly as commercially possible and during such period, the
Investors shall not make any sales of Registrable Securities pursuant to the
Registration Statement;
(f) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;
(g) cooperate with the Investors to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts, as the case
may be, as the Investors reasonably may request and registered in such names as
the Investors may request; and, within three (3) Trading Days after a
Registration Statement which includes Registrable Securities is declared
effective by the Commission, deliver and cause legal counsel selected by the
Company to deliver to the transfer agent for the Registrable Securities (with
copies to the Investors) an appropriate instruction and, to the extent
necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their Registrable
Securities in accordance with the intended methods therefor provided in the
prospectus which are customary for issuers to perform under the circumstances;
(i) in the event of an underwritten offering, promptly include
or incorporate in a prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such prospectus
7
supplement or post-effective amendment as soon as practicable after it is
notified of the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment; and
(j) maintain a transfer agent and registrar for its Common
Stock.
Section 6. INDEMNIFICATION.
(a) To the maximum extent permitted by law, the Company agrees
to indemnify and hold harmless the Investors and each person, if any, who
controls an Investor within the meaning of the Securities Act (each a
"Distributing Investor") against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees and expenses), to which the Distributing Investor may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, or any related final prospectus or
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the extent, and
only to the extent, that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by the
Distributing Investor, its counsel, affiliates or any underwriter, specifically
for use in the preparation thereof or (ii) by such Investor's failure to deliver
to the purchaser a copy of the most recent prospectus (including any amendments
or supplements thereto. This indemnity agreement will be in addition to any
liability, which the Company may otherwise have.
(b) To the maximum extent permitted by law, each Distributing
Investor agrees that it will indemnify and hold harmless the Company, and each
officer and director of the Company or person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees and expenses) to which the Company or any such
officer, director or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement, or any related final prospectus or amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in such Registration Statement, final prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by such Distributing Investor, its counsel, affiliates or any
underwriter, specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability,
8
which the Distributing Investor may otherwise have. Notwithstanding anything to
the contrary herein, the Distributing Investor shall be liable under this
Section 6(b) for only that amount as does not exceed the net proceeds to such
Distributing Investor as a result of the sale of Registrable Securities pursuant
to the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action against such indemnified
party, such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 6, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
which it may have to any indemnified party except to the extent the failure of
the indemnified party to provide such written notification actually prejudices
the ability of the indemnifying party to defend such action. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, assume the defense thereof,
subject to the provisions herein stated and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section 6 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified parties as a group
shall have the right to employ one separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party unless (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by its counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the indemnified party or any other
indemnified party (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the indemnified party, which firm shall be
designated in writing by the indemnified party). No settlement of any action
against an indemnified party shall be made without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld so long
as such settlement includes a full release of claims against the indemnified
party.
All fees and expenses of the indemnified party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and all reasonable attorneys' fees and expenses) shall be paid to the
indemnified party, as incurred, within ten (10) Trading Days of written notice
thereof to the indemnifying party; provided, that the indemnifying party may
require such indemnified party to undertake to reimburse all such fees
9
and expenses to the extent it is finally judicially determined that such
indemnified party is not entitled to indemnification hereunder.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 6 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
applicable Distributing Investor shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees and
expenses), in either such case (after contribution from others) on the basis of
relative fault as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the applicable Distributing Investor on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Distributing Investor agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Notwithstanding any other provision of this Section 7, in no event shall any (i)
Investor be required to undertake liability to any person under this Section 7
for any amounts in excess of the dollar amount of the proceeds received by such
Investor from the sale of such Investor's Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) pursuant to
any Registration Statement under which such Registrable Securities are
registered under the Securities Act and (ii) underwriter be required to
undertake liability to any person hereunder for any amounts in excess of the
aggregate discount, commission or other compensation payable to such underwriter
with respect to the Registrable Securities underwritten by it and distributed
pursuant to such Registration Statement.
Section 8. NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) hand delivered, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by facsimile, addressed as set forth in the
Purchase
10
Agreement or to such other address as such party shall have specified most
recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the first business day following the date of sending
by reputable courier service, fully prepaid, addressed to such address, or (c)
upon actual receipt of such mailing, if mailed. Either party hereto may from
time to time change its address or facsimile number for notices under this
Section 8 by giving at least ten (10) days' prior written notice of such changed
address or facsimile number to the other party hereto.
Section 9. ASSIGNMENT. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The rights granted the Investors under this Agreement may be
assigned to any purchaser of substantially all of the Registrable Securities (or
the rights thereto) from an Investor, as otherwise permitted by the Purchase
Agreement.
Section 10. ADDITIONAL COVENANTS OF THE COMPANY. The Company agrees that
at any time that the Registration Statement is on Form S-3, for so long as it
shall be required to maintain the effectiveness of such registration statement,
it shall file all reports and information required to be filed by it with the
Commission in a timely manner and take all such other action so as to maintain
such eligibility for the use of such form.
Section 11. COUNTERPARTS/FACSIMILE. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when together shall constitute but one and the same instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties. In lieu of the original, a facsimile
transmission or copy of the original shall be as effective and enforceable as
the original.
Section 12. REMEDIES. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.
Section 13. CONFLICTING AGREEMENTS. The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the holders of Registrable Securities in this Agreement or otherwise
prevents the Company from complying with all of its obligations hereunder.
11
Section 14. HEADINGS. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 15. GOVERNING LAW, ARBITRATION. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any dispute under this Agreement
shall be submitted to arbitration under the American Arbitration Association
(the "AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected as
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. Any decision made by the Board of Arbitration (either
prior to or after the expiration of such thirty (30) calendar day period) shall
be final, binding and conclusive on the parties to the dispute, and entitled to
be enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The Board of Arbitration shall be authorized and is
hereby directed to enter a default judgment against any party failing to
participate in any proceeding hereunder within the time periods set forth in the
AAA rules. The non-prevailing party to any arbitration (as determined by the
Board of Arbitration) shall pay the expenses of the prevailing party, including
reasonable attorneys' fees, in connection with such arbitration. Any party shall
be entitled to obtain injunctive relief from a court in any case where such
relief is available, and the non-prevailing party in any such injunctive
proceeding shall pay the expenses of the prevailing party, including reasonable
attorneys' fees, in connection with such injunctive proceeding.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
12
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on this __ day of January, 2001.
CALYPTE BIOMEDICAL CORPORATION
By:_____________________________________
Xxxxx Xxxx, President & CEO
INVESTOR:
AMRO INTERNATIONAL, S.A.
By:_____________________________________
X.X. Xxxxxxxx, Director
13
EXHIBIT C
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of January 22, 2001
by and among Calypte Biomedical Corporation, a corporation incorporated under
the laws of the State of Delaware (the "Company"), the investors signatory
hereto (each an "Investor" and together the "Investors") and Xxxxxxx Xxxxxx &
Green, P.C., (the "Escrow Agent"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Convertible Debentures and Warrants
Purchase Agreement referred to in the first recital.
W I T N E S S E T H:
WHEREAS, the Investors will be purchasing from the Company, in the
aggregate, up to $1,100,000 principal amount of Convertible Debentures (the
"Convertible Debentures") and Warrants, at the Purchase Price set forth in the
Convertible Debentures and Warrants Purchase Agreement (the "Purchase
Agreement") dated the date hereof between the Investors and the Company, which
will be issued as per the terms contained herein and in the Purchase Agreement;
WHEREAS, it is intended that the purchase of the securities be
consummated in accordance with the requirements set forth by Sections 4(2)
and/or 4(6) and/or Regulation D promulgated under the Securities Act of 1933, as
amended; and
WHEREAS, the Company and the Investors have requested that the Escrow
Agent hold the applicable Purchase Price with respect to the Closings in escrow
until the Escrow Agent has received the Convertible Debentures, the Warrants and
certain other closing documents specified herein.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1. The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase
of the $1,100,000 principal amount of Convertible Debentures and the Warrants as
contemplated by the Purchase Agreement.
1.2.(a) At the first Closing, upon the Escrow Agent's receipt of
the applicable Purchase Price for such Closing into its master escrow account
from the Investors, together with executed counterparts of this Agreement, the
Registration Rights
Agreement, the Purchase Agreement, it shall telephonically advise the Company,
or the Company's designated attorney or agent, of the amount of funds it has
received into its account.
(b) Wire transfers to the Escrow Agent shall be made as
follows:
Xxxxxxx Xxxxxx & Green, P.C.
Master Escrow Account
Chase Manhattan Bank
0000 Xxxxxxxx - Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA No. 000000000
Account No. 000-0-000000
Attention: L. Borneo
1.3. Upon receipt of said notice, the Company shall deliver to the
Escrow Agent Convertible Debentures evidencing the $550,000 principal amount of
Convertible Debentures and the Warrants to be issued to each Investor at the
Closing together with:
(i) an executed original counterpart to the Purchase Agreement;
(ii) an executed original Registration Rights Agreement;
(iii) the executed original opinion of Xxxxxx Xxxxxx White &
XxXxxxxxx LLP in the form of EXHIBIT E to the Purchase
Agreement; and
(iv) an executed original counterpart of this Escrow Agreement.
In the event that the foregoing items are not in the Escrow Agent's
possession within three (3) Trading Days of the Escrow Agent notifying the
Company that the Escrow Agent has custody of the Purchase Price applicable to
such Convertible Debentures, then each Investor shall have the right to demand
the return of said Purchase Price.
1.4. At the first Closing, once the Escrow Agent confirms the
validity of the issuance of the applicable Convertible Debentures and the
Warrants by means of its receipt of a Release Notice in the form attached hereto
as EXHIBIT X executed by the Company and each Investor, it shall verify and
enter the Exercise Price on the face of the Warrant, verify and enter the
applicable Closing Date and the Set Price on each Convertible Debenture and then
wire 95% of said Purchase Price per the written instructions of the Company, net
of $25,000 to Xxxxxxx, Xxxxxx & Green, P.C. for the Investor's legal, escrow and
administrative costs and the remaining 5% as directed by Ladenburg Xxxxxxxx &
Co. Inc.
1.5. Once the applicable Purchase Price has been wired per the
Company's instructions, the Escrow Agent shall arrange to have the Convertible
Debentures, the Warrants, the Escrow Agreement, the Registration Rights
Agreement, the voting agreements and the opinion of counsel delivered as per
instructions from the parties.
2
1.6. At the second Closing, the Company, upon receipt of said
notice of receipt of funds, shall deliver to the Escrow Agent Convertible
Debentures evidencing in the aggregate $550,000 principal amount of Convertible
Debentures to be issued to the Investors.
1.7. In the event that the foregoing items are not in the Escrow
Agent's possession within three (3) Trading Days of the Escrow Agent notifying
the Company that the Escrow Agent has custody of the Purchase Price applicable
to such Convertible Debentures, then each Investor shall have the right to
demand the return of said Purchase Price.
1.8. Once Escrow Agent confirms the validity of the issuance of the
Convertible Debentures by means of its receipt of a Release Notice in the form
attached hereto as EXHIBIT X executed by the Company and each Investor, it shall
verify and enter the applicable Closing Date and Set Price on the Convertible
Debentures and it shall immediately wire 95% of the Purchase Price per the
written instructions of the Company and the remaining 5% as directed by
Ladenburg Xxxxxxxx & Co. Inc.
1.9. Once the Purchase Price has been sent as set forth above, the
Escrow Agent shall then arrange to have the applicable Convertible Debentures
delivered as per instructions from the Investors.
ARTICLE 2
MISCELLANEOUS
2.1. No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed any extension of
the time for performance of any other obligation or act.
2.2. Except as otherwise set forth above, all notices or other
communications required or permitted hereunder shall be in writing, and shall be
sent as set forth in the Purchase Agreement.
2.3. This Escrow Agreement shall be binding upon and shall inure to
the benefit of the permitted successors and permitted assigns of the parties
hereto.
2.4. This Escrow Agreement is the final expression of, and contains
the entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
3
2.5. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same.
2.6. The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Any action to enforce, arising out of,
or relating in any way to, any provisions of this Escrow Agreement shall only be
brought in a state or Federal court sitting in New York City.
2.7. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, each Investor and
the Escrow Agent.
2.8. The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, and without gross negligence or willful misconduct.
2.9. The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
2.10. The Escrow Agent shall not be liable in any respect on account
of the identity, authorization or rights of the parties executing or delivering
or purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder.
2.11. The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Investors, and may continue to act as legal counsel for the Investors, from time
to time, notwithstanding its duties as the Escrow Agent hereunder. The Company
consents to the Escrow Agent in such capacity as legal counsel for the Investors
and waives any claim that such representation represents a conflict of interest
on the part of the Escrow Agent. The Company understands that the Investors and
the Escrow Agent are relying explicitly on the foregoing provision in entering
into this Escrow Agreement.
4
2.12. The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Investors. In the event of any such resignation, the Investors
and the Company shall appoint a successor Escrow Agent.
2.13. If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
2.14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment or a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the City of New York in accordance with the
applicable procedure therefor.
2.15. The Company and each Investor agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent, in its capacity as the Escrow Agent and not as counsel to the Investor,
hereunder or the transactions contemplated hereby or by the Purchase Agreement
other than any such claim, liability, cost or expense to the extent the same
shall have been determined by final, unappealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.
5
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of this __ day of January, 2001.
CALYPTE BIOMEDICAL CORPORATION
By:__________________________________
Xxxxx Xxxx, President & CEO
INVESTOR:
AMRO International, S.A.
By:__________________________________
X.X. Xxxxxxxx, Director
ESCROW AGENT:
XXXXXXX XXXXXX & GREEN, P.C.
By:__________________________________
Xxxxxx X. Xxxxxxx, Authorized
Signatory
6
EXHIBIT X TO
ESCROW AGREEMENT
RELEASE NOTICE
The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of ________
__, 2001 among Calypte Biomedical Corporation, the Investors signatory thereto
and Xxxxxxx Xxxxxx & Green, P.C., as Escrow Agent (the "Escrow Agreement";
capitalized terms used herein and not defined shall have the meaning ascribed to
such terms in the Escrow Agreement), hereby notify the Escrow Agent that each of
the conditions precedent to the purchase and sale of the Convertible Debentures
and Warrants set forth in the Convertible Debenture and Warrants Purchase
Agreement have been satisfied. The Company and the undersigned Investor hereby
confirm that all of their respective representations and warranties contained in
the Purchase Agreement remain true and correct and authorize the release by the
Escrow Agent of the funds and documents to be released at the Closings as
described in the Escrow Agreement. This Release Notice shall not be effective
until executed by the Company and the Investor.
This Release Notice may be signed in one or more counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have caused this Release Notice to
be duly executed and delivered as of this __ day of ___________, 2001.
CALYPTE BIOMEDICAL CORPORATION
By: _____________________________________
Xxxxx Xxxx, President & CEO
AMRO INTERNATIONAL, S.A.
By:______________________________________
X.X. Xxxxxxxx, Director
7
EXHIBIT E
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.
STOCK PURCHASE WARRANT
To Purchase 200,000 Shares of Common Stock of
CALYPTE BIOMEDICAL CORPORATION
THIS CERTIFIES that, for value received, AMRO International, S.A. (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after January __, 2001 (the "Initial Exercise
Date") and on or prior to the close of business on the third anniversary of the
Initial Exercise Date (the "Termination Date"), but not thereafter, to subscribe
for and purchase from Calypte Biomedical Corporation, a Delaware corporation
(the "Company"), up to 200,000 shares (the "Warrant Shares") of Common Stock,
$0.001 par value, of the Company (the "Common Stock"). The purchase price of one
share of Common Stock (the "Exercise Price") under this Warrant shall be $1.50.
The Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. In the event of any conflict
between the terms of this Warrant and the Convertible Debentures and Warrants
Purchase Agreement dated January 22, 2001 pursuant to which this Warrant has
been issued (the "Purchase Agreement"), the Purchase Agreement shall control.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth for such terms in the Purchase Agreement.
1
1. TITLE TO WARRANT. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
2. AUTHORIZATION OF SHARES. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. EXERCISE OF WARRANT. Except as provided in Section 4 herein, exercise
of the purchase rights represented by this Warrant may be made at any time or
times on or after the Initial Exercise Date and on or before the close of
business on the Termination Date. Exercise of this Warrant or any part hereof
shall be effected by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed (which notice may be delivered pursuant to the
notice provision of the Purchase Agreement), at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the
books of the Company) and upon payment of the Exercise Price of the shares
thereby purchased by wire transfer or cashier's check drawn on a United States
bank, the Holder shall be entitled to receive a certificate for the number of
Warrant Shares so purchased. Certificates for shares purchased hereunder shall
be delivered to the Holder within five (5) Trading Days after the date on which
the Notice of Exercise Form has been deemed delivered to the Company provided
that all of the conditions of exercise of this warrant have been met by such
date. This Warrant shall be deemed to have been exercised and such certificate
or certificates shall be deemed to have been issued, and the Holder or any other
person so designated to be named therein shall be deemed to have become a Holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price and all taxes required
to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of
such shares, have been paid. If this Warrant shall have been exercised in part,
the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
This Warrant may also be exercised by means of a "cashless exercise" in
which the Holder shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A) = the average of the high and low trading prices per
share of Common Stock on the Trading Day preceding the
date of such election;
(B) = the Exercise Price of the Warrants; and
(X) = the number of Warrant Shares issuable upon exercise
of the Warrants in accordance with the terms of this
Warrant.
2
Notwithstanding anything herein to the contrary, in no event shall the
Holder be permitted to exercise this Warrant for Warrant Shares to the extent
that (x) the number of shares of Common Stock owned by such Holder (other than
Warrant Shares) plus (y) the number of Warrant Shares, would be equal to or
exceed 9.9% of the number of shares of Common Stock then issued and outstanding,
including shares issuable upon exercise of this Warrant held by such Holder
after application of this Section 3(d). As used herein, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange Act. To the
extent that the limitation contained in this Section 3(d) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of such Holder, and the submission
of a Notice of Exercise shall be deemed to be such Holder's determination of
whether this Warrant is exercisable (in relation to other securities owned by
such Holder) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. Nothing
contained herein shall be deemed to restrict the right of a Holder to exercise
this Warrant into shares of Common Stock at such time as such exercise will not
violate the provisions of this Section 3(d). The provisions of this Section 3(d)
may be waived by the Holder upon, at the election of the Holder, with not less
than 75 days' prior notice to the Company, and the provisions of this Section
3(d) shall continue to apply until such 61st day (or such later date as may be
specified in such notice of waiver). No exercise of this Warrant in violation of
this Section 3(d) but otherwise in accordance with this Warrant shall affect the
status of the Warrant Shares as validly issued, fully-paid and nonassessable.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the Exercise Price.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder of this Warrant or
in such name or names as may be directed by the Holder subject to applicable
laws; provided, however, that in the event certificates for Warrant Shares are
to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.
6. CLOSING OF BOOKS. The Company will not close its shareholder books or
records in any manner which prevents the timely exercise of this Warrant.
7. TRANSFER, DIVISION AND COMBINATION. (a) Subject to compliance with any
applicable securities laws, transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company, together with a written
3
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new Holder for the purchase of Warrant
Shares without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants
of like terms upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 7(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 7.
(d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Warrants.
8. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or payment.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. (a) Stock
Splits, etc. The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of any of
4
the following. In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of
its outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a greater number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock or (iv) issue any shares of its capital stock in a reclassification of
the Common Stock, then the number of Warrant Shares purchasable upon exercise
of this Warrant immediately prior thereto shall be adjusted so that the
Holder of this Warrant shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which it would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof. Upon each such adjustment of the kind and number of Warrant Shares
or other securities of the Company which are purchasable hereunder, the
Holder shall thereafter be entitled to purchase the number of Warrant Shares
or other securities resulting from such adjustment at an Exercise Price per
Warrant Share or other security obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
purchasable pursuant hereto immediately prior to such adjustment and dividing
by the number of Warrant Shares or other securities of the Company resulting
from such adjustment. An adjustment made pursuant to this paragraph shall
become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments to the number of
Warrant Shares for which this Warrant is exerscisable, which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 11.
For purposes of this Section 11, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or
5
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 11 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
12. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its sole
discretion, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
13. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
Holder of this Warrant notice of such adjustment or adjustments setting forth
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
14. NOTICE OF CORPORATE ACTION. If at any time:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation where the Company is not the surviving
corporation, or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 10 calendar days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 10 calendar days' prior written
notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause also shall specify (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
the date on which the holders of Common Stock shall be entitled to any such
dividend, distribution or right, and the amount
6
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 16(d). To the extent that the notice
required to be given to the Holder hereunder is material, non-public
information, then such Holder shall sign such confidentiality agreement with the
Company as it or its counsel may reasonably require to protect against the
premature disclosure of such event.
15. AUTHORIZED SHARES. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.
The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares, and (c) use all commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
Upon the request of the Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant and
the obligations of the Company hereunder.
Before taking any action which would cause an adjustment reducing
the current Exercise Price below the then par value, if any, of the Warrant
Shares, the Company shall take any corporate action which may be necessary in
order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Exercise Price.
7
Before taking any action which would result in an adjustment in
the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
16. MISCELLANEOUS.
(a) JURISDICTION. This Warrant shall constitute a contract
under the laws of New York without regard to its conflict of law principles or
rules, and be subject to arbitration pursuant to the terms set forth in the
Purchase Agreement.
(b) RESTRICTIONS. The Holder hereof acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws.
(c) NONWAIVER AND EXPENSES. No course of dealing or any delay
or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies, notwithstanding that all rights hereunder terminate on the Termination
Date. If the Company willfully fails to comply with any material provision of
this Warrant, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by the Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.
(e) LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder to exercise this Warrant or to
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of Holder hereof, shall give rise to any liability of Holder for the purchase
price of any Warrant Shares or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
(f) REMEDIES. Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) SUCCESSORS AND ASSIGNS. Subject to applicable securities
laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Company and the
successors and permitted assigns of the Holder. The provisions of this Warrant
are intended to be for the benefit of all Holders from time to time of this
Warrant and shall be enforceable by any such Holder.
8
(h) INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against the Holder in any manner relating to or arising out of any
failure by the Company to perform or observe in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Warrant;
PROVIDED, HOWEVER, that the Company will not be liable hereunder to the extent
that any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are
found in a final non-appealable judgment by a court to have resulted from the
Holder's negligence, bad faith or willful misconduct in its capacity as a
stockholder or warrantholder of the Company.
(i) AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(j) SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(k) HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
[SIGNATURE PAGE FOLLOWS.]
9
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: January __, 2001
CALYPTE BIOMEDICAL CORPORATION
By:_________________________________________
Xxxxx Xxxx, President & CEO
10
NOTICE OF EXERCISE
To: Calypte Biomedical Corporation
(1) The undersigned hereby elects to purchase ________ shares
of Common Stock (the "Common Stock"), of Calypte Biomedical Corporation pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing
said shares of Common Stock in the name of the undersigned or in such other name
as is specified below:
__________________________________
(Name)
__________________________________
(Address)
__________________________________
Dated:
___________________________________
Signature
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
____________________________________________________________________.
____________________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
EXHIBIT F
INSTRUCTIONS TO TRANSFER AGENT
CALYPTE BIOMEDICAL CORPORATION
January 22, 2001
ChaseMellon Shareholder Services
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxx
Dear Sirs:
Reference is made to the Convertible Debenture and Warrant Purchase
Agreement and all exhibits thereto (the "Purchase Agreement") dated as of
January 22, 2001, between the investors signatory thereto (the "Investors") and
Calypte Biomedical Corporation (the "Company"). Pursuant to the Agreement, and
subject to the terms and conditions set forth in the Agreement, the Company has
issued to the Investors, in the aggregate, (i) $1,100,000 principal amount of 6%
Convertible Debentures and (ii) the Warrant to purchase shares of Common Stock
(the "Warrant"). As a condition to the effectiveness of the Purchase Agreement,
the Company has agreed to issue to you, as the transfer agent for the Company's
Common Stock (the "Transfer Agent"), these instructions relating to the Common
Stock ("Common Stock") to be issued to the Investors (or a permitted assignee)
pursuant to the Purchase Agreement upon conversion of the Convertible Debentures
or upon exercise of the Warrant. All capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Purchase Agreement.
1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND
Pursuant to the Purchase Agreement and the Registration Rights
Agreement, the Company is required to prepare and file with the SEC, and
maintain the effectiveness of, a registration statement or registration
statements registering the resale of the Common Stock to be acquired by the
Investors (i) upon exercise of the Warrant and (ii) upon conversion of the
Convertible Debentures, all as provided in the Registration Rights Agreement.
The Company will advise the Transfer Agent in writing of the effectiveness of
any such registration statement promptly upon its being declared effective, and
shall deliver an opinion of its counsel to that effect. The Transfer Agent shall
be entitled to rely on such advice and such opinion and shall assume that such
registration statement remains in effect unless the Transfer Agent is otherwise
advised in writing by the Company or such counsel, and the Transfer Agent shall
not be required to independently confirm the continued effectiveness of such
registration statement. In the circumstances set forth in the following three
paragraphs, the Transfer Agent shall deliver to the appropriate Investor
certificates representing Common Stock not bearing the Legend without requiring
further advice or instruction or additional documentation from the
Company or its counsel or the Investor or its counsel or any other party (other
than as described in such paragraphs).
(a) At any time after the effective date of the registration statement
(provided that the Company has not informed the Transfer Agent in writing that
such registration statement is not effective) upon any surrender of one or more
certificates evidencing Common Stock which bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates free of the
Legend to replace those surrendered, in such names and in such denominations as
the Investor may request, provided that in connection with any such event, the
Investor (or its permitted assignee) shall confirm in writing to the Transfer
Agent that (i) the Investor has sold, pledged or otherwise transferred or agreed
to sell, pledge or otherwise transfer such Common Stock in a bona fide
transaction to a third party that is not an affiliate of the Company; and (ii)
the Investor confirms to the transfer agent that the Investor has complied with
the prospectus delivery requirement.
(b) In the event a registration statement is not filed by the Company,
or for any reason the registration statement which is filed by the Company is
not declared effective by the SEC, the Investor, or its permitted assignee, or
its broker confirms to the Transfer Agent that (i) the Investor has beneficially
owned the shares of Common Stock for at least one year, (ii) counting the shares
surrendered as being sold upon the date the unlegended Certificates would be
delivered to the Investor (or the Trading Day immediately following if such date
is not a Trading Day), the Investor will not have sold more than the greater of
(a) one percent (1%) of the total number of outstanding shares of Common Stock
or (b) the average weekly trading volume of the Common Stock for the preceding
four weeks during the three months ending upon such delivery date (or the
Trading Day immediately following if such date is not a Trading Day), and (iii)
the Investor has complied with the manner of sale and notice requirements of
Rule 144 under the Securities Act; or
(c) The Investor (or its permitted assignee) shall represent that it
is permitted to dispose of such shares of Common Stock without limitation as to
amount or manner of sale pursuant to Rule 144(k) under the Securities Act.
In the case of subparagraphs (b) or (c), the Transfer Agent shall be
entitled to require an opinion of counsel to the Company or from counsel to the
Investor (which opinion shall be from an attorney or law firm reasonably
acceptable to the Transfer Agent and be in form and substance reasonably
acceptable to the Transfer Agent). Any advice, notice, or instructions to the
Transfer Agent required or permitted to be given hereunder may be transmitted
via facsimile to (000) 000-0000.
2. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK
In connection with any exchange of the Convertible Debentures or
exercise of Warrant pursuant to which the Investor acquires Common Stock under
the Agreement, the Transfer Agent is hereby instructed to deliver to the
Investor, certificates representing Common Stock (with or without the Legend, as
appropriate) within two (2) Trading Days of receipt by the Transfer Agent of a
copy of the Notice of Conversion (in the case of the
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Convertible Debenture) or Notice of Exercise (in the case of the Warrant) from
the Investor, and to deliver such certificates to the Investor, in the case of
original issuance, and in the case of subsequent transfer, if the Transfer Agent
is able to deliver such Common Stock to the Investor's account pursuant to the
DWAC system of the Depository Trust Company, the Transfer Agent shall make
delivery pursuant to such system and provide the Investor with confirmation
thereof in lieu of such Common Stock certificates.
3. FEES OF TRANSFER AGENT; INDEMNIFICATION
The Company agrees to pay the Transfer Agent for all fees incurred in
connection with these Irrevocable Instructions. The Company agrees to indemnify
the Transfer Agent and its officers, employees and agents, against any losses,
claims, damages or liabilities, joint or several, to which it or they become
subject based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions, other than as a result of the
Transfer Agent's gross negligence or willful misconduct.
4. THIRD PARTY BENEFICIARY
The Company and the Transfer Agent acknowledge and agree that the
Investors are each an express third party beneficiary of these Irrevocable
Instructions and shall be entitled to rely upon, and enforce, the provisions
thereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this
Instruction to the Transfer Agent as of this 22nd day of January, 2001.
CALYPTE BIOMEDICAL CORPORATION
By:_________________________________
Xxxxx Xxxx, President & CEO
AGREED:
By:__________________________
Name:
Title:
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