EXHIBIT 10.1
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SECURITIES PURCHASE AGREEMENT
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This Securities Purchase Agreement (this "Agreement") is dated as of
September 10, 2003, by and among MacroChem Corporation, a Delaware corporation
(the "Company"), and the purchasers identified on the signature pages hereto
(each a "Purchaser" and collectively the "Purchasers"); and
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule
506 promulgated thereunder, the Company desires to issue and sell to the
Purchasers, and the Purchasers, severally and not jointly, desire to purchase
from the Company in the aggregate, up to $3,500,000 of Common Stock and Warrants
to purchase additional shares of Common Stock equal to 20% of the number of
shares of Common Stock purchased hereunder; provided that the actual number of
shares of Common Stock and Warrants shall not exceed 5,600,000 in the aggregate.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in Section
3.1(j).
"Affiliate" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule
144. With respect to a Purchaser, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as
such Purchaser will be deemed to be an Affiliate of such Purchaser.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in
the State of New York or the Commonwealth of Massachusetts are authorized
or required by law or other governmental action to close.
"Closing" means the closing of the purchase and sale of the Shares and
the Warrants pursuant to Section 2.1.
"Closing Date" means the date of the Closing, which shall be the date
hereof.
"Closing Price" means on any particular date (a) the last reported
closing price per share of Common Stock on such date on the Trading Market
(as reported by Bloomberg L.P. at 4:15 PM (New York time) as the last
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reported closing price for regular session trading on such day), or (b) if
there is no such price on such date, then the closing price on the Trading
Market on the date nearest preceding such date (as reported by Bloomberg
L.P. at 4:15 PM (New York time) as the closing price for regular session
trading on such day), or (c) if the Common Stock is not then listed or
quoted on the Trading Market and if prices for the Common Stock are then
reported in the "pink sheets" published by the Pink Sheets LLC (formerly
the National Quotation Bureau Incorporated) (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent
price per share of the Common Stock so reported, or (d) if the shares of
Common Stock are not then publicly traded the fair market value of a share
of Common Stock as determined by an appraiser selected in good faith by the
Purchasers of a majority in interest of the Shares.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, $0.01 par value
per share, and any securities into which such common stock may hereafter be
reclassified.
"Common Stock Equivalents" means any securities of the Company or its
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
"Company Counsel" means Ropes & Xxxx LLP.
"Disclosure Schedules" means the Disclosure Schedules attached as
Annex I hereto.
"Effective Date" means the date that the Registration Statement is
first declared effective by the Commission.
"Escrow Agent" shall mean Xxxxxxx Xxxxxxxxx LLP.
"Escrow Agreement" shall mean the Escrow Agreement dated the date of
this Agreement among the Company, each Purchaser and the Escrow Agent, in
the form of Exhibit D hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Intellectual Property Rights" shall have the meaning ascribed to such
term in Section 3.1(o).
"Liens" means a lien, charge, security interest, encumbrance, right of
first refusal or other restriction.
"Material Adverse Effect" shall have the meaning ascribed to such term
in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such term in
Section 3.1(m).
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"Per Unit Purchase Price" equals $0.71292, subject to adjustment for
reverse and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the date of
this Agreement and before the Closing.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering
the resale by the Purchasers of the Shares and the Warrant Shares.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and
each Purchaser, in the form of Exhibit C hereto.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SEC Reports" shall have the meaning ascribed to such term in Section
3.1(h).
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means an aggregate of up to 4,500,000 shares of Common Stock,
which are being issued and sold by the Company to the Purchasers at the
Closing.
"Subscription Amount" means, as to each Purchaser and the Closing, the
amounts set forth below such Purchaser's signature block on the signature
page hereto, in United States dollars and in immediately available funds.
"Subsidiary" means any Person in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest.
"Trading Day" means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not listed on a Trading
Market, a day on which the Common Stock is traded on the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is not quoted on the OTC Bulletin Board, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding to
its functions of reporting prices); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii)
hereof, then Trading Day shall mean a Business Day.
"Trading Market" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
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American Stock Exchange, the New York Stock Exchange, the Nasdaq National
Market or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Registration Rights
Agreement, the Warrant and the Escrow Agreement.
"Unit" means a Share and a Warrant to purchase one-fifth share of
Common Stock.
"Warrants" means Common Stock Purchase Warrants, in the form of
Exhibit A, issuable to the Purchasers at Closing, which warrants shall be
exercisable immediately and have an exercise price equal to 115% of the
Closing Price and a term of exercise of three years.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. At the Closing, each Purchaser shall purchase, severally and
not jointly, and the Company shall issue and sell, to each Purchaser such number
of Units set forth opposite such Purchaser's name on Schedule A hereto at the
Per Unit Purchase Price. Upon satisfaction of the conditions set forth in
Section 2.2, the Closing shall occur at the offices of the Escrow Agent, or such
other location as the parties shall mutually agree.
2.2 Closing Conditions.
(a) At the Closing the Company shall deliver or cause to be delivered
to the Escrow Agent (except as otherwise provided below):
(i) this Agreement duly executed by the Company;
(ii) one or more stock certificates, registered in the name of
such Purchaser free and clear of all restrictive and other legends
(except as expressly provided in Section 4.1(b) hereof), evidencing
such number of Shares equal to the number of Units set forth opposite
such Purchaser's name on Schedule A hereto, registered in the name of
such Purchaser;
(iii) a Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire up to
the number of shares of Common Stock equal to one-fifth of the number
of Units set forth opposite such Purchaser's name on Schedule A
hereto;
(iv) the Registration Rights Agreement duly executed by the
Company;
(v) the Escrow Agreement and Release Notice; and
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(vi) a legal opinion of Company Counsel, in the form of Exhibit B
attached hereto.
(b) At the Closing each Purchaser shall deliver or cause to be
delivered to the Escrow Agent the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser's Subscription Amount as to such Closing by
wire transfer to the account of the Escrow Agent as provided to the
Purchasers in the Escrow Agreement;
(iii) the Escrow Agreement and Release Notice; and
(iv) the Registration Rights Agreement duly executed by such
Purchaser.
(c) All representations and warranties of the other party contained
herein shall remain true and correct as of the Closing Date.
(d) As of the Closing Date, there shall have been no Material Adverse
Effect with respect to the Company since the date hereof.
(e) From the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, at any time
prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New York State
authorities.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries.
(b) Organization and Qualification. The Company is an entity duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. The Company is not in violation of any of the provisions of its
certificate of incorporation or bylaws. The Company is duly qualified to
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conduct business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to
be so qualified or in good standing, as the case may be, would not have or
reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, or condition
(financial or otherwise) of the Company, or (iii) adversely impair the
Company's ability to perform fully on a timely basis its obligations under
any Transaction Document (any of (i), (ii) or (iii), a "Material Adverse
Effect").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of
the Company and no further consent or action is required by the Company,
its Board of Directors or its stockholders. Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principals of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity) and except to the extent that rights to indemnification and
contribution contained in this Agreement may be limited by federal or state
securities laws or public policy relating thereto.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of the Company's certificate of
incorporation or bylaws, or (ii) conflict with, or constitute a 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 (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company
debt or otherwise) or other understanding to which the Company is a party
or by which any property or asset of the Company is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of clauses (ii)
and (iii), such as would not have or reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (a) the filing with the Commission of the
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Registration Statement, the application(s) to each Trading Market for the
listing of the Shares and Warrant Shares for trading thereon in the time
and manner required thereby, and applicable Blue Sky filings, (b) such as
have already been obtained or such exemptive filings as are required to be
made under applicable securities laws, (c) such other filings as may be
required following the Closing Date under the Securities Act, the Exchange
Act and corporate law or (d) such as could not have a Material Adverse
Effect.
(f) Issuance of the Securities. The Shares and the Warrants are duly
authorized and, the Shares and Warrants Shares when issued and paid for in
accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all liens, charges,
security interests, encumbrances, rights of first refusal or other
restrictions (collectively, "Liens") and shall not be subject to preemptive
rights or similar rights of stockholders. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement and the Warrants.
(g) Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock, options and other securities of the
Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) as of June 30,
2003, is as set forth in Schedule 3.1(g). All outstanding shares of capital
stock are duly authorized, validly issued, fully paid and nonassessable and
have been issued in compliance with all applicable securities laws. Except
as disclosed in Schedule 3.1(g), there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company
is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common
Stock. Except as set forth on Schedule 3.1(g), there are no anti-dilution
or price adjustment provisions contained in any security issued by the
Company (or in any agreement providing rights to security holders) and the
issue and sale of the Company Securities will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than
the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price
under such securities. To the knowledge of the Company, except as
specifically disclosed in Schedule 3.1(g), no Person or group of related
Persons beneficially owns (as determined pursuant to Rule 13d-3 under the
Exchange Act), or has the right to acquire, by agreement with or by
obligation binding upon the Company, beneficial ownership of in excess of
5% of the outstanding Common Stock, ignoring for such purposes any
limitation on the number of shares of Common Stock that may be owned at any
single time.
(h) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange
Act, for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing
materials, including the exhibits thereto (together with any materials
filed by the Company under the Exchange Act, whether or not required),
being collectively referred to herein as the "SEC Reports" and, together
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with the Disclosure Schedules to this Agreement, the "Disclosure
Materials") on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities
Act and the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, as applicable, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and
fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. All material agreements to which the Company is
a party or to which the property or assets of the Company are subject are
included as part of or specifically identified in the SEC Reports.
(i) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in the SEC
Reports or on Schedule 3.1(i), (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in
a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) liabilities incurred
in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made
with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information.
(j) Litigation. Except as disclosed in the SEC Reports, there is no
action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company
or any of its properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an "Action") which (i) adversely affects
or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company, nor, to the knowledge of the
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Company, any director or officer thereof, is or has been the subject of any
Action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or,
to the knowledge of the Company, any current or former director or officer
of the Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the
Company or any Subsidiary under the Exchange Act or the Securities Act at
least since January 1, 2000.
(k) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees
of the Company which could reasonably be expected to result in a Material
Adverse Effect.
(l) Compliance. Except as disclosed in the SEC Reports, the Company is
not (i) in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would
result in a default by the Company under), nor has the Company received
notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties
is bound (whether or not such default or violation has been waived), (ii)
in violation of any order of any court, arbitrator or governmental body, or
(iii) in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and
local laws applicable to its business, except in the case of clauses (i),
(ii) and (iii) as would not have or reasonably be expected to result in a
Material Adverse Effect.
(m) Regulatory Permits. The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local
or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the failure to
possess such permits would not have or reasonably be expected to result in
a Material Adverse Effect ("Material Permits"), and the Company has not
received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(n) Title to Assets. Except as disclosed on Schedule 3.1(n), the
Company has good and marketable title in fee simple to all real property
owned by it which is material to the business of the Company and good and
marketable title in all personal property owned by it that is material to
the business of the Company, in each case free and clear of all Liens,
except for Liens 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 Liens for the payment of federal, state or
other taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the Company
are held by it under valid, subsisting and enforceable leases with which
the Company is in material compliance.
(o) Patents and Trademarks. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other similar rights that are
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necessary or material for use in connection with its business as described
in the SEC Reports and which the failure to so have could have or
reasonably be expected to result in a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). The Company has not
received a written notice that the Intellectual Property Rights used by the
Company violates or infringes the rights of any Person at least since
January 1, 2000. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by
another Person of any of the Intellectual Property Rights.
(p) Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as are prudent and customary in the businesses in which the Company is
engaged.
(q) Transactions With Affiliates and Employees. Except as set forth in
the SEC Reports and as disclosed on Schedule 3.1(q), none of the officers
or directors of the Company and, to the knowledge of the Company, none of
the employees of the Company is presently a party to any transaction with
the Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(r) Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and
designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its subsidiaries, is made
known to the certifying officers by others within those entities,
particularly during the period in which the Company's Form 10-K or 10-Q, as
the case may be, is being prepared. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of
a date within 90 days prior to the filing date of the Form 10-Q for the
quarter ended March 31, 2003 (such date, the "Evaluation Date"). The
Company presented in its Form 10-Q for the quarter ended June 30, 2003 the
conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company's internal controls (as such term is defined in Item
307(b) of Regulation S-K under the Exchange Act) or, to the knowledge of
the Company, in other factors that could significantly affect the Company's
internal controls.
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(s) Certain Fees. Except for the fees described on Schedule 3.1(s),
all of which are payable to registered broker-dealers, no brokerage or
finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf
of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement.
(t) Private Placement. Assuming the accuracy of the Purchasers'
representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchasers as contemplated hereby. Except
for the filing of a notice of listing additional shares with the Trading
Market, the issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market. Neither the
Company nor any Person acting on the Company's behalf has sold or offered
to sell or solicited any offer to buy the Securities by means of any form
of general solicitation or advertising.
(u) Investment Company. The Company is not, and is not an Affiliate
of, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(v) Registration Rights. No Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of
the Company.
(w) Listing and Maintenance Requirements. Except as disclosed on
Schedule 3.1(w), the Company has not, in the two years preceding the date
hereof, received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading
Market. Except as disclosed on Schedule 3.1(w), the Company is, and has no
reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements.
(x) Application of Takeover Protections. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation
(or similar charter documents) or the laws of its state of incorporation
that is or could become applicable to the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including, without limitation, the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities.
(y) Disclosure. The Company confirms that neither the Company nor any
other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that constitutes or might
constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations and
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covenants in effecting transactions in securities of the Company. All
disclosure provided to the Purchasers regarding the Company, its business
and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
(z) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Securities Act or any applicable shareholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated.
(aa) Solvency. Based on the financial condition of the Company as of
the Closing Date, (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and including the anticipated proceeds of the
sale of the Securities; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the
cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid.
(bb) Acknowledgment Regarding Purchasers' Purchase of Company
Securities. The Company acknowledges and agrees that each of the Purchasers
is acting solely in the capacity of an arm's length purchaser with respect
to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company or any other Purchaser (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with the
Transaction Document and the transactions contemplated hereby and thereby
is merely incidental to such Purchaser's purchase of the Securities. The
Company further represents to each Purchaser that the Company's decision to
enter into the Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
(cc) S-3 Eligibility. The Company is eligible to register the resale
of the Shares and Warrant Shares on Form S-3.
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3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement including the
purchase of the Securities has been duly authorized by all necessary
corporate or similar action on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser,
and when delivered by such Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principals of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity) and except to the extent that rights to
indemnification and contribution contained in this Agreement may be limited
by federal or state securities laws or public policy relating thereto.
(b) Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to
the provisions of this Agreement, at all times to sell or otherwise dispose
of all or any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws. Nothing contained herein shall be deemed a representation or warranty
by such Purchaser to hold Securities for any period of time. Such Purchaser
is acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the
Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is and at each exercise date
under its respective Warrant it will be an "accredited investor" as defined
in Rule 501(a) under the Securities Act.
(d) Experience of Such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of
such investment.
(e) Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
13
from, representatives of the Company concerning the terms and conditions of
the offering of the Securities and the merits and the risks of investing in
the Securities; (ii) access to information about the Company and the
Company's financial conditions, results of operation, business, properties,
management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information
which the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with
respect to the investment and to verify the accuracy and completeness of
the information contained in the Disclosure Materials. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect
such Purchaser's right to rely on the truth, accuracy and completeness of
the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(f) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article,
notice or other communication regarding such Securities published in any
newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general
advertisement.
(g) Reliance. Such Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
requirements of the Securities Act and (ii) the availability of such
exemption, depends in part on, and the Company will rely upon the accuracy
and truthfulness of, the foregoing representations and warranties and such
Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of pursuant to an effective
registration statement under the Securities Act, to the Company or pursuant
to an available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities
laws. In connection with any transfer of Securities other than pursuant to
an effective registration statement or pursuant to Rule 144(k), to the
Company, to an Affiliate of a Purchaser or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities
Act. The Company hereby consents to and agrees to register on the books of
the Company and with its transfer agent, without any such legal opinion
(unless otherwise required by its transfer agent), any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that
14
the transferee agrees to be bound by all of the applicable provisions of
the Transaction Documents, including the representations of the Purchaser,
and certifies to the Company that it is an "accredited investor" as defined
in Rule 501(a) under the Securities Act.
(b) The Purchasers agree to the imprinting, so long as is required by
this Section 4.1(b), of a legend on any of the Securities in the following
form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING,
THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THESE
SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to
time pledge or grant a security interest in some or all of the Securities
in connection with a bona fide margin agreement or other loan or financing
agreement secured by the Securities and, if required under the terms of
such arrangement, such Purchaser may transfer pledged or secured Securities
to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal counsel of
the pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge or transfer.
At the appropriate Purchaser's expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer
of the Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend the
list of selling stockholders thereunder.
(c) Certificates evidencing the Shares and Warrant Shares shall not
contain any legend (including the legend set forth in Section 4.1(b)), (i)
while a registration statement (including the Registration Statement)
covering the resale of such Shares or Warrant Shares is effective under the
Securities Act, or (ii) following any sale of such Shares or Warrant Shares
pursuant to Rule 144, or (iii) if such Shares or Warrant Shares are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission).
The Company shall cause its counsel to issue a legal opinion to the
Company's transfer agent promptly after the Effective Date if required by
the Company's transfer agent to effect the removal of the legend hereunder.
If all or any portion of a Warrant is exercised at a time when there is an
15
effective registration statement to cover the resale of the Warrant Shares,
such Warrant Shares shall be issued free of all legends. The Company agrees
that following the Effective Date or at such time as such legend is no
longer required under this Section 4.1(c), it will, no later than three
Trading Days following the delivery by a Purchaser to the Company or the
Company's transfer agent of a certificate representing Shares or Warrant
Shares, as the case may be, issued with a restrictive legend, deliver or
cause to be delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends. The Company
may not make any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions on transfer set
forth in this Section.
(d) In addition to such Purchaser's other available remedies, the
Company shall pay to a Purchaser, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Shares or Warrant Shares (based on the
Closing Price of the Common Stock on the date such Securities are submitted
to the Company's transfer agent) subject to Section 4.1(c), $10 per Trading
Day (increasing to $20 per Trading Day five (5) Trading Days after such
damages have begun to accrue) for each Trading Day after such third Trading
Day until such certificate is delivered. Nothing herein shall limit such
Purchaser's right to pursue actual damages for the Company's failure to
deliver certificates representing any Securities as required by the
Transaction Documents, and such Purchaser shall have the right to pursue
all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief.
(e) Each Purchaser severally and not jointly agrees that the removal
of the restrictive legend from certificates representing Securities as set
forth in this Section 4.1 is predicated upon the Company's reliance that
the Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus
delivery requirements, or an exemption therefrom.
4.2 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any such holder of Securities, the Company shall deliver to such holder a
written certification of a duly authorized officer as to whether it has complied
with the preceding sentence. As long as any Purchaser owns Securities, if the
Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell the
Securities under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144.
4.3 Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.
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4.4 Subsequent Placements
(a) Except with the consent of each Purchaser, from the date hereof
until 30 Trading Days after the Effective Date, the Company will not,
directly or indirectly, offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its equity or equity equivalent
securities, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for Common
Stock.
(b) Notwithstanding anything to the contrary herein, this Section 4.4
shall not apply to the following: (i) the granting of options to employees,
consultants, officers and directors of the Company pursuant to any stock
option plan duly adopted by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, or (ii)
the exercise of any security issued by the Company in connection with the
offer and sale of the Company's securities pursuant to this Agreement, or
(iii) the exercise of or conversion of any convertible securities, options
or warrants issued and outstanding on the date hereof, provided such
securities have not been amended since the date hereof, or (iv) the
issuance of securities in connection with a business combination, joint
venture or development agreement or strategic partnership or similar
agreement approved by the Company's board of directors, a primary purpose
of which is not to raise equity capital.
4.5 Securities Laws Disclosure; Publicity. The Company shall by 8:30 a.m.,
Eastern Daylight Time on the Trading Day following the Closing Date, issue a
press release reasonably acceptable to the Purchasers disclosing all material
terms of the transactions contemplated by the Transaction Documents. The Company
and each Purchaser shall consult with each other in issuing any press releases
with respect to the transactions contemplated hereby, and neither the Company
nor any Purchaser shall issue any such press release or otherwise make any such
public statement without the prior consent of the Company, with respect to any
press release of any Purchaser, or without the prior consent of each Purchaser,
with respect to any press release of the Company, which consent shall not
unreasonably be withheld, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party with prior
notice of such public statement or communication. Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser, or include
the name of any Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such Purchaser,
except (i) as required by federal securities law in connection with the
registration statement contemplated by the Registration Rights Agreement and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under subclause (i) or (ii).
4.6 Shareholders Rights Plan. No claim will be made or enforced by the
Company that any Purchaser is an "Acquiring Person" under any shareholders
rights plan or similar plan or arrangement in effect or hereafter adopted by the
Company, or that any Purchaser could be deemed to trigger the provisions of any
such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.
17
4.7 Non-Public Information. The Company covenants and agrees that neither
it nor any other director or officer of the Company will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.8 Use of Proceeds. Except as set forth on Schedule 4.8 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital purposes and not for the satisfaction of any portion of the
Company's debt (other than payment of trade payables in the ordinary course of
the Company's business and prior practices), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.
4.9 Reimbursement. If any Purchaser, other than by reason of its
negligence or willful misconduct, becomes involved in any capacity in any
Proceeding by or against any Person who is a stockholder of the Company (except
as a result of sales, pledges, margin sales and similar transactions by such
Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses (including
the cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchasers who are
actually named in such action, proceeding or investigation, and partners,
members, shareholders, directors, agents, employees and controlling persons (if
any), as the case may be, of the Purchasers and any such Affiliate, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Purchasers and any such Affiliate
and any such Person. The Company also agrees that neither the Purchasers nor any
such Affiliates, partners, members, shareholders, directors, agents, employees
or controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement except to the extent caused by
such Purchaser or other entity's negligence or willful misconduct.
4.10 [INTENTIONALLY OMITTED]
4.11 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, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Warrant Shares pursuant to the
Warrants.
4.12 Listing of Common Stock. The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common Stock on a
Trading Market, and as soon as reasonably practicable following the Closing (but
not later than the Effective Date) to list the applicable Shares and Warrant
Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
include in such application the Shares and Warrant Shares, and will take such
18
other action as is necessary or desirable in the reasonable opinion of the
Purchasers to cause the Shares and Warrant Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of such Trading Market.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third Business Day following the date of this Agreement;
provided that no such termination will affect the right of any party to xxx for
any breach by the other party (or parties).
5.2 Fees and Expenses. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement, except that the Company shall pay
$25,000 to defray the legal expenses of X.X. Xxxxx Securities, Inc., the
placement agent for this transaction. The Company shall pay all stamp and other
taxes and duties levied in connection with the sale of the Securities.
5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number on the signature pages attached hereto on a day that is not a
Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c)
the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached hereto.
5.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
19
5.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. No Purchaser may assign any
or all of its rights under this Agreement to any Person except in connection
with a transfer of Securities permitted under Section 4.1(a), and then only if
such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the "Purchasers".
5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Sections 4.9.
5.9 Governing Law. The corporate law of the State of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in The City of New
York, Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by delivering a copy thereof via overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto (including its affiliates, agents, officers, directors and
employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
20
5.10 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and delivery and/or exercise of the
Securities, as applicable for a period of three years.
5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
5.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
21
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall, to the
extent permissible under applicable law, be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
5.17 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company which may have been made or given by any
other Purchaser or by any agent or employee of any other Purchaser, and no
Purchaser or any of its agents or employees shall have any liability to any
other Purchaser (or any other person) relating to or arising from any such
information, materials, statements or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no other
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment hereunder. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. The Company has elected to
provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by the Purchasers.
(Signature Page Follows)
22
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
MACROCHEM CORPORATION Address for Notice:
------------------
000 Xxxxxxxx Xxxxxx
By:/s/ Xxxxxx X. XxXxxxxx Xxxxxxxxx, XX 00000
---------------------- Tel: 000- 000-0000
Name: Xxxxxx X. XxXxxxxx Fax: 000-000-0000
Title: President and C.E.O. Attn: Xxxxxx X. XxXxxxxx, CEO
With copy to (which shall not constitute notice):
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
[SIGNATURE PAGE CONTINUES]
23
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
BRISTOL INVESTMENT FUND, LTD Address for Notice:
------------------
Bristol Capital Advisors, LLC
0000 Xxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
By:/s/ Xxxx Xxxxxxx Tel: (000) 000-0000
---------------- Fax: (000) 000-0000
Name: Xxxx Xxxxxxx Attn: Xxx Xxxx, Esq.
Title: Director
Subscription Amount: $358,000.00
Tax I.D. #:
------------------------
24
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
WEST END CONVERTIBLE FUND L.P. Address for Notice:
------------------
c/o WEC Partners LLC
000 Xxxxxxxx Xxxxxx, # 000
Xxx Xxxxxxxx, XX 00000
By:/s/ Xxxxx Xxxxxxxx Tel: 000-000-0000
------------------ Fax: 000-000-0000
Name: Xxxxx Xxxxxxxx Attn: Xxxxxx Xxxx
Title: Managing Member of GP
Subscription Amount: $50,852.11
Tax I.D. #:
------------------------
25
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
CRESCENT INTERNATIONAL LTD. Address for Notice:
------------------
x/x XxxxxXxxxx (Xxxxxxxxxxx) X.X.
00, xx. Xxxxx-Xxxxx
X.X. Xxx 000
XX-0000 Xxxxxxxx/Xxxxxx
Xxxxxxxxxxx
By:/s/ Xxx Xxxx Tel: + 00 00 0000000
------------------ Fax: + 00 00 0000000
Name: Xxx Xxxx Attn: Xxx Xxxx/Maxi Brezzi
Title:
Subscription Amount: $382,838.40
Tax I.D. #:
------------------------
26
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
XXXXXXX PARTNERS, L.P. Address for Notice:
------------------
c/x Xxxxxxx Capital, LLC
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
By:/s/ Xxxxxxx Xxxxx Tel: (000) 000-0000
----------------- Fax: (000) 000-0000
Name: Xxxxxxx Xxxxx Attn: xx@xxxx.xxx
Title: Managing Partner of GP
Subscription Amount: $249,522
Tax I.D. #:
------------------------
27
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
XXXXXX XXXXXXX Address for Notice:
------------------
0000 Xxxxx Xxxxx Xxxxx
Xxxx X-0
Xxxxxxx, XX 00000
By:/s/ Xxxxxx Xxxxxxx Tel: 000-000-0000
------------------ Fax: 000-000-00
Name: Xxxxxx Xxxxxxx Attn: Xxxxxx
Title:
Subscription Amount: $22,375
Tax I.D. #:
------------------------
28
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
XXXXX XXXXXXXXXX Address for Notice:
------------------
c/o Spear Leeds
0000 Xxxxxxxxx Xx
Xxx. 000 X. Xxxxx
Xxxxxxx, XX 00000
By:/s/ Xxxxx Xxxxxxxxxx Tel: 000-000-0000
-------------------- Fax: 000-000-0000
Name: Xxxxx Xxxxxxxxxx Attn:
Title:
Subscription Amount: $22,375
Tax I.D. #:
------------------------
29
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
MIDSUMMER INVESTMENT, LTD Address for Notice:
------------------
c/o Midsummer Capital
485 Madison Ave, 23rd Fl.
Xxx Xxxx, XX 00000
By:/s/ Xxxxx Xxxxxxx Tel: 000-000-0000
----------------- Fax: 000-000-0000
Name: Xxxxx Xxxxxxx Attn: Xxxxx Xxxxxxx
Title: Managing Director of Midsummer
Capital LLC as Investment Advisor
to Midsummer Investment Ltd.
Subscription Amount: $447,500.00
Tax I.D. #:
------------------------
30
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
NORTH BAR CAPITAL Address for Notice:
------------------
0000 XX 000xx Xxxxxxx
Xxxxxxxx, XX 00000
By:/s/ Xxxxx Xxxx Tel: 000-000-0000
-------------- Fax: 000-000-0000
Name: Attn: Xxxxx Xxxx
Title: Vice President
Subscription Amount: $
Tax I.D. #:
------------------------
31
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
OTAPE INVESTMENTS LLC Address for Notice:
------------------
0 Xxxxxxxxxxxxxx Xx.
Xxxxxxxx, XX 00000
By:/s/ Xxxxxxx X. Xxxxx Tel: (000) 000-0000
-------------------- Fax: (000) 000-0000
Name: Xxxxxxx X. Xxxxx Attn: Xxxx Xxxxxxx
Title: General Counsel
Subscription Amount: $179,000
Tax I.D. #:
------------------------
32
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
PLATINUM PARTNERS VALUE Address for Notice:
ARBITRAGE FUND LP ------------------
000 Xxxx 00xx Xxxxxx, 00 Xxxxx
Xxx Xxxx, XX 00000
By:/s/ Xxxxx Xxxxxxx Tel: 000-000-0000
----------------- Fax: 000-000-0000
Name: Xxxxx Xxxxxxx Attn: Xxxxx Xxxxxxx
Title: CFO
Subscription Amount: $217,648
Tax I.D. #:
------------------------
33
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
XXXXX INTERNATIONAL Address for Notice:
------------------
Xxxxx International
c/o SBC Capital
00 Xxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx Xxxxxx, XX 00000
By:/s/ Xxxxxxx Xxxxx Tel: 000-000-0000
----------------- Fax: 000-000-0000
Name: Xxxxxxx Xxxxx Attn: Xxxx Xxxxxxxx
Title: Officer
Subscription Amount: $179,000
Tax I.D. #:
------------------------
34
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
XXXX X. XXXXXX AND XXXX XXXXXX Address for Notice:
------------------
0000 Xxxxxxx Xxxx Xx. X.
Xxxxx Xxxxx Xxxxx, XX 00000
By:/s/ Xxxx X. Xxxxxx / /s/ Xxxx Xxxxxx Tel: (000) 000-0000
------------------------------------ Fax: (000) 000-0000
Name: Xxxx X. Xxxxxx / Xxxx Xxxxxx Attn: Xxxx X. Xxxxxx
Title:
Subscription Amount: $350,000.00
Tax I.D. #:
------------------------
35
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
SOUTHSHORE CAPITAL FUND LIMITED Address for Notice:
------------------
By:/s/ Xxxxxxxx Xxxx Bolh Tel: 000-000-0000
---------------------- Fax: 000-000-0000
Name: Navigator Management Ltd. Attn: Xxxxx Xxxx
Title: Director
Subscription Amount: $268,500
Tax I.D. #:
------------------------
36
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
ALPHA CAPITAL AG Address for Notice:
------------------
By:/s/ Xxxxxx Xxxxxxxx Tel:
------------------- Fax:
Name: Xxxxxx Xxxxxxxx Attn:
Title: Director
Subscription Amount: $313,250
Tax I.D. #:
------------------------
37
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
XXXXXXXXXXX XX Address for Notice:
------------------
000 Xxx Xx. #0000
Xxxxxxx, Xxx. X0X 0X0
By:/s/ Xxxxxxxxxxx XX Tel: 000-000-0000
------------------ Fax: 000-000-0000
Name: X. Xxxxxxxxxxx Attn: Xxxxxx Xxxx
Title: President
Subscription Amount: $179,000
Tax I.D. #:
------------------------
38
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
GAMMA OPPORTUNITY CAPITAL Address for Notice:
PARTNERS, LP ------------------
British Colonial Centre of
Commerce
One Bay Street, Suite 401
Nassau (NP), The Bahamas
By:/s/ Xxxxxxxxxxx Xxxxxxx Tel: 000-000-0000
----------------------- Fax: 000-000-0000
Name: Xxxxxxxxxxx Xxxxxxx Attn: Xxxxxxxxxxx Xxxxxxx
Title: Managing Director
Gamma Capital Advisors Ltd.
Subscription Amount: $44,750
Tax I.D. #:
------------------------
39
SCHEDULE A
----------
---------------------------------------- --------------- ------------------
Name of Purchaser Number of Units Number of Warrants
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
OTAPE Investments LLC 251,080 50,216
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Xxxxxxx Partners, L.P. 313,250 62,650
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
West End Convertible Fund L.P. 71,329 14,266
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Platinum Partners Value Arbitrage Fund
LP 305,291 61,058
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Bristol Investment Fund, Ltd. 502,160 100,432
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Xxxxxxxxxxx XX 251,080 50,216
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Crescent International Ltd. 537,000 107,400
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Midsummer Investment, Ltd. 627,700 125,540
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Alpha Capital AG 439,390 87,878
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Xxxxx International 251,080 50,216
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Gamma Opportunity Capital Partners LP 62,770 12,554
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Xxxx X. Xxxxxx and Xxxx Xxxxxx 439,390 87,878
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
North Bar Capital 62,770 12,554
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Southshore Capital Fund Ltd. 376,620 75,324
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Xxxxx Xxxxxxxxxx 31,385 6,277
---------------------------------------- --------------- ------------------
---------------------------------------- --------------- ------------------
Xxxxxx Xxxxxxx 31,385 6,277
---------------------------------------- --------------- ------------------
40
