COMMON STOCK PURCHASE AGREEMENT
Exhibit
10.1
EXECUTION
COPY
COMMON
STOCK PURCHASE AGREEMENT
(the
“Agreement”), dated as of October 21, 2005 by and between GLYCOGENESYS,
INC.,
a
Nevada corporation (the “Company”), and FUSION
CAPITAL FUND II, LLC,
an
Illinois limited liability company (the “Buyer”). Capitalized terms used herein
and not otherwise defined herein are defined in Section 10 hereof.
WHEREAS:
Subject
to the terms and conditions set forth in this Agreement, the Company wishes
to
sell to the Buyer, and the Buyer wishes to buy from the Company, up to Twenty
Million Dollars ($20,000,000) of the Company's common stock, par value $0.01
per
share (the “Common Stock”). The shares of Common Stock to be purchased hereunder
are referred to herein as the "Purchase Shares."
NOW
THEREFORE,
the
Company and the Buyer hereby agree as follows:
1.
PURCHASE
OF COMMON STOCK.
Subject
to the terms and conditions set forth in Sections 6, 7 and 9 below, the Company
hereby agrees to sell to the Buyer, and the Buyer hereby agrees to purchase
from
the Company, Purchase Shares as follows:
(a) Commencement
of Purchases of Common Stock.
The
purchase and sale of Purchase Shares hereunder shall commence (the
"Commencement") within five (5) Trading Days following the date of satisfaction
of the conditions to the Commencement set forth in Sections 6 and 7 below (the
date of such Commencement, the "Commencement Date").
(b) Buyer's
Purchase Rights and Obligations.
Subject
to the Company’s right to suspend purchases under Section 1(d)(ii) hereof, the
Buyer shall buy Purchase Shares (“Daily Purchases”) on each Trading Day during
each Monthly Period equal to the Daily Purchase Amount (as defined in Section
1(c)(i)) at the Purchase Price. From time to time, the Company shall also have
the right but not the obligation, by its delivery to the Buyer of a Block
Purchase Notice (as defined in Section 1(c)(iv)), to require the Buyer to buy
Purchase Shares (a “Block Purchase”) equal to the Block Purchase Amount (as
defined in Section 1(c)(iv)) at the Block Purchase Price (as defined in Section
1(c)(iv)). The
Buyer
shall promptly pay to the Company an amount equal to the Purchase Amount with
respect to such Purchase Shares as full payment for the purchase of the Purchase
Shares so received. The Company shall not issue any fraction of a share of
Common Stock upon any purchase. If the issuance would result in the issuance
of
a fraction of a share of Common Stock, the Company shall round such fraction
of
a share of Common Stock up or down to the nearest whole share. All payments
made
under this Agreement shall be made in lawful money of the United States of
America by check or wire transfer of immediately available funds to such account
as the Company may from time to time designate by written notice in accordance
with the provisions of this Agreement. Whenever any amount expressed to be
due
by the terms of this Agreement is due on any day that is not a Trading Day,
the
same shall instead be due on the next succeeding day which is a Trading
Day.
(c) The
Daily Purchase Amount; Company's Right to Decrease or Increase the Daily
Purchase Amount; the Block Purchase Amount.
(i) The
Daily Purchase Amount.
As used
herein the term “Original Daily Purchase Amount” shall mean Forty Thousand
Dollars ($40,000) per Trading Day. As used herein, the term “Daily Purchase
Amount” shall mean initially Forty Thousand Dollars ($40,000) per Trading Day,
which amount may be increased or decreased from time to time pursuant to this
Section 1(c).
(ii) Company’s
Right to Decrease the Daily Purchase Amount.
The
Company shall always have the right at any time to decrease the amount of the
Daily Purchase Amount by delivering written notice (a “Daily Purchase Amount
Decrease Notice”) to the Buyer which notice shall specify the new Daily Purchase
Amount. The decrease in the Daily Purchase Amount shall become effective one
Trading Day after receipt by the Buyer of the Daily Purchase Amount Decrease
Notice. Any purchases by the Buyer which have a Purchase Date on or prior to
the
first (1st) Trading Day after receipt by the Buyer of a Daily Purchase Amount
Decrease Notice must be honored by the Company as otherwise provided herein.
The
decrease in the Daily Purchase Amount shall remain in effect until the Company
delivers to the Buyer a Daily Purchase Amount Increase Notice (as defined
below).
(iii) Company’s
Right to Increase the Daily Purchase Amount.
The
Company shall have the right (but not the obligation) to increase the amount
of
the Daily Purchase Amount in accordance with the terms and conditions set forth
in this Section 1(c)(iii) by delivering written notice to the Buyer stating
the
new amount of the Daily Purchase Amount (a “Daily Purchase Amount Increase
Notice”). A Daily Purchase Amount Increase Notice shall be effective five (5)
Trading Days after receipt by the Buyer. The Company shall always have the
right
at any time to increase the amount of the Daily Purchase Amount up to the
Original Daily Purchase Amount. With respect to increases in the Daily Purchase
Amount above the Original Daily Purchase Amount, as the market price for the
Common Stock increases the Company shall have the right from time to time to
increase the Daily Purchase Amount as follows. For every $0.10 increase in
Threshold Price above $1.25 (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction), the Company shall have the right to increase the Daily
Purchase Amount by up to an additional $4,000 in excess of the Original Daily
Purchase Amount. “Threshold Price” for purposes hereof means the lowest Sale
Price of the Common Stock during the five (5) consecutive Trading Days
immediately prior to the submission to the Buyer of a Daily Purchase Amount
Increase Notice (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction).
For example, if the Threshold Price is $1.35, the Company shall have the right
to increase the Daily Purchase Amount to up to $44,000 in the aggregate. If
the
Threshold Price is $1.75, the Company shall have the right to increase the
Daily
Purchase Amount to up to $60,000 in the aggregate. Any increase in the amount
of
the Daily Purchase Amount shall continue in effect until the delivery to the
Buyer of a Daily Purchase Amount Decrease Notice. However, if at any time during
any Trading Day the Sale Price of the Common Stock is below the applicable
Threshold Price, such increase in the Daily Purchase Amount shall be void and
the Buyer’s obligations to buy Purchase Shares hereunder in excess of the
applicable maximum Daily Purchase Amount shall be terminated (e.g., if the
Company has issued a Daily Purchase Amount Increase Notice to purchase $60,000
but the Sale Price of the Common Stock subsequently is $1.65, the Daily Purchase
Amount shall be reduced to $56,000). Thereafter, the Company shall again have
the right to increase the amount of the Daily Purchase Amount as set forth
herein by delivery of a new Daily Purchase Amount Increase Notice only if the
Sale Price of the Common Stock is above the applicable Threshold Price on each
of five (5) consecutive Trading Days immediately prior to such new Daily
Purchase Amount Increase Notice.
(iv) The
Block Purchase Amount.
As used
herein the term “Block Purchase Amount” shall mean such Purchase Amount as
specified by the Company in a Block Purchase Notice. As used herein the term
“Block Purchase Notice” shall mean an irrevocable written notice from the
Company to the Buyer directing the Buyer to buy the Purchase Amount in Purchase
Shares as specified by the Company therein at the Block Purchase Price. For
a
Block Purchase Notice to be valid the following conditions must be met: (1)
the
Block Purchase Amount shall not exceed Two Hundred Fifty Thousand Dollars
($250,000) per Block Purchase Notice, (2) the Company must deliver the Purchase
Shares (based on a reasonable good faith estimate with any actual difference
in
the number of Purchase Shares to be settled within two Trading Days) on the
same
day as the Block Purchase Notice is delivered and (3) the Sale Price of the
Common Stock must have been above $1.75 (subject to equitable adjustment for
any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction) during the ten (10) Trading Days prior to the delivery
of
the Block Purchase Notice. The Block Purchase Amount may be increased to up
to
$500,000 if the Sale Price of the Common Stock is above $2.75 (subject to
equitable adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) during the ten (10) Trading
Days prior to the delivery of the Block Purchase Notice. The Block Purchase
Amount may be increased to up to $750,000 if the Sale Price of the Common Stock
is above $3.75 (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction)
during the ten (10) Trading Days prior to the delivery of the Block Purchase
Notice. The Block Purchase Amount may be increased to up to $1,000,000 if the
Sale Price of the Common Stock is above $4.75 (subject to equitable adjustment
for any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction) during the ten (10) Trading Days prior to the
delivery of the Block Purchase Notice. The Company may deliver multiple Block
Purchase Notices as it shall determine; provided however, at least ten (10)
Trading Days must have passed since the most recent Block Purchase was
completed. As used herein, the term “Block Purchase Price” shall mean the lesser
of (i) the lowest Sale Price of the Common Stock on the Trading Day that a
valid
Block Purchase Notice was received by the Buyer or (ii) the lowest Purchase
Price during the previous fifteen (15) Trading Days prior to the date that
the
valid Block Purchase Notice was received by the Buyer.
(d) Limitations
on Purchases.
(i) Limitation
on Beneficial Ownership.
The
Buyer shall not have the right or the obligation to purchase shares of Common
Stock under this Agreement to the extent that after giving effect to such
purchase the Buyer together with its affiliates would beneficially own in excess
of 9.9% of the outstanding shares of the Common Stock following such purchase.
For purposes hereof, the number of shares of Common Stock beneficially owned
by
the Buyer and its affiliates or acquired by the Buyer and its affiliates, as
the
case may be, shall include the number of shares of Common Stock issuable in
connection with a purchase under this Agreement with respect to which the
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (1) a purchase of the remaining Available
Amount which has not been submitted for purchase, and (2) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Company
(including, without limitation, any notes or warrants) subject to a limitation
on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Buyer and its affiliates.
For
purposes of this Section, in determining the number of outstanding shares of
Common Stock the Buyer may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company's most recent Form 10-Q or Form 10-K,
as
the case may be, (2) a more recent public announcement by the Company or (3)
any
other written communication by the Company or its Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the reasonable written
or
oral request of the Buyer, the Company shall promptly confirm orally and in
writing to the Buyer the number of shares of Common Stock then outstanding.
In
any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to any purchases under this Agreement by the Buyer since
the
date as of which such number of outstanding shares of Common Stock was reported.
Except as otherwise set forth herein, for purposes of this Section 1(d)(i),
beneficial ownership shall be determined in accordance with Section 13(d) of
the
Securities Exchange Act of 1934, as amended.
(ii) Company's
Right to Suspend Purchases.
The
Company may, at any time, give written notice (a " Daily Purchase Suspension
Notice") to the Buyer suspending Daily Purchases of Purchase Shares by the
Buyer
under this Agreement. The Daily Purchase Suspension Notice shall be effective
only for Daily Purchases that have a Purchase Date later than one (1) Trading
Day after receipt of the Daily Purchase Suspension Notice by the Buyer. Any
Daily Purchase by the Buyer that has a Purchase Date on or prior to the first
(1st) Trading Day after receipt by the Buyer of a Daily Purchase Suspension
Notice from the Company must be honored by the Company as otherwise provided
herein. Such Daily Purchase suspension shall continue in effect until a
revocation in writing by the Company, at its sole discretion.
(iii) Purchase
Price Floor.
The
Company shall not affect any sales under this Agreement and the Buyer shall
not
have the right nor the obligation to purchase any Purchase Shares under this
Agreement on any Trading Day where the Purchase Price for any purchases of
Purchase Shares would be less than the Floor Price. “Floor Price” means $0.25,
which shall
be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction.
(e) Records
of Purchases.
The
Buyer and the Company shall each maintain records showing the remaining
Available Amount at any give time and the dates and Purchase Amounts for each
purchase or shall use such other method, reasonably satisfactory to the Buyer
and the Company.
(f) Taxes.
The
Company shall pay any and all transfer, stamp or similar taxes that may be
payable with respect to the issuance and delivery of any shares of Common Stock
to the Buyer made under this Agreement.
(g) Compliance
with Principal Market Rules.
The
Company shall not effect any sale under this Agreement and the Buyer shall
not
have the right or the obligation to purchase shares of Common Stock under this
Agreement to the extent that after giving effect to such purchase the "Exchange
Cap" shall be deemed to be reached. The "Exchange Cap" shall be deemed to have
been reached if, at any time prior to the shareholders of the Company approving
the transaction contemplated by this Agreement, upon a purchase under this
Agreement, the Purchase Shares issuable pursuant to such purchase would,
together with all Purchase Shares previously issued under this Agreement, exceed
2,716,159 shares of Common Stock (19.99% of the 13,587,590 outstanding shares
of
Common Stock as of the date of this Agreement). The Company may, but shall
be
under no obligation to, request its shareholders to approve the transaction
contemplated by this Agreement. The Company shall not be required to issue
any
shares of Common Stock under this Agreement if such issuance would breach the
Company's obligations under the rules or regulations of the Principal
Market.
2. BUYER'S
REPRESENTATIONS AND WARRANTIES.
The
Buyer
represents and warrants to the Company that as of the date hereof and as of
the
Commencement Date:
(a) Investment
Purpose.
The
Buyer is entering into this Agreement and acquiring the Commitment Shares,
(as
defined in Section 4(f) hereof) (this Agreement and the Commitment Shares
are
collectively referred to herein as the "Securities"), for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof; provided however, by making the
representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term.
(b) Accredited
Investor Status.
The
Buyer is an "accredited investor" as that term is defined in Rule 501(a)(3)
of
Regulation D.
(c) Reliance
on Exemptions.
The
Buyer understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in
part
upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Securities.
(d) Information.
The
Buyer has been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale
of
the Securities that have been reasonably requested by the Buyer, including,
without limitation, the SEC Documents (as defined in Section 3(f) hereof).
The
Buyer understands that its investment in the Securities involves a high degree
of risk. The Buyer (i) is able to bear the economic risk of an investment in
the
Securities including a total loss, (ii) has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits
and
risks of the proposed investment in the Securities and (iii) has had an
opportunity to ask questions of and receive answers from the officers of the
Company concerning the financial condition and business of the Company and
others matters related to an investment in the Securities. Neither such
inquiries nor any other due diligence investigations conducted by the Buyer
or
its representatives shall modify, amend or affect the Buyer's right to rely
on
the Company's representations and warranties contained in Section 3 below.
The
Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Securities.
(e) No
Governmental Review.
The
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
(f) Transfer
or Resale.
The
Buyer understands that except as provided in the Registration Rights Agreement
(as defined in Section 4(a) hereof): (i) the Securities have not been and are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder or (B) an exemption exists permitting such Securities
to
be sold, assigned or transferred without such registration; (ii) any sale of
the
Securities made in reliance on Rule 144 may be made only in accordance with
the
terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
the
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined
in
the 0000 Xxx) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register the Securities
under the 1933 Act or any state securities laws or to comply with the terms
and
conditions of any exemption thereunder.
(g) Validity;
Enforcement.
This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Buyer and is a valid and binding agreement of the Buyer enforceable
against the Buyer in accordance with its terms, subject as to enforceability
to
general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(h) Residency.
The
Buyer is a resident of the State of Illinois.
(i) No
Prior Short Selling.
The
Buyer represents and warrants to the Company that at no time prior to the date
of this Agreement has any of the Buyer, its agents, representatives or
affiliates engaged in or effected, in any manner whatsoever, directly or
indirectly, any (i) "short sale" (as such term is defined in Rule 3b-3 of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) of the Common
Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to the Buyer that as of the date hereof and
as
of the Commencement Date:
(a) Organization
and Qualification.
The
Company and its "Subsidiaries" (which for purposes of this Agreement means
any
entity in which the Company, directly or indirectly, owns 50% or more of the
voting stock or capital stock or other similar equity interests) are
corporations duly organized and validly existing in good standing under the
laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power and authority to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing could not
reasonably be expected to have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means any material adverse effect on any
of: (i) the business, properties, assets, operations, results of operations
or
financial condition of the Company and its Subsidiaries, if any, taken as a
whole, or (ii) the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined in Section 3(b) hereof).
The Company has no Subsidiaries except as set forth on Schedule
3(a).
(b) Authorization;
Enforcement; Validity.
(i) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Registration Rights Agreement
and each of the other agreements entered into by the parties on the Commencement
Date and attached hereto as exhibits to this Agreement (collectively, the
"Transaction Documents"), and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation, the issuance
of
the Commitment Shares and the reservation for issuance and the issuance of
the
Purchase Shares issuable under this Agreement, have been duly authorized by
the
Company's Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its shareholders, except to comply
with the Exchange Cap, (iii) this Agreement has been, and each other Transaction
Document shall be on the Commencement Date, duly executed and delivered by
the
Company and (iv) this Agreement constitutes, and each other Transaction Document
upon its execution on behalf of the Company, shall constitute, the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally,
the
enforcement of creditors' rights and remedies. The Board of Directors of the
Company has approved the resolutions (the “Signing Resolutions”) substantially
in the form as set forth as Exhibit
C-1
attached
hereto to authorize this Agreement and the transactions contemplated hereby.
The
Signing Resolutions are valid, in full force and effect and have not been
modified or supplemented in any respect other than by the resolutions set forth
in Exhibit
C-2
attached
hereto regarding the registration statement referred to in Section 4 hereof.
The
Company has delivered to the Buyer a true and correct copy of the Signing
Resolutions as approved by the Board of Directors of the Company as certified
by
the Secretary of the Company. No other approvals or consents of the Company’s
Board of Directors and/or shareholders is necessary under applicable laws and
the Company’s Certificate of Incorporation and/or Bylaws to authorize the
execution and delivery of this Agreement or any of the transactions contemplated
hereby, including, but not limited to, the issuance of the Commitment Shares
and
the issuance of the Purchase Shares.
(c) Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of (i)
75,000,000 shares of Common Stock, of which as of the date hereof, 13,587,590
shares are issued and outstanding, no shares are held as treasury shares,
1,662,500 shares are reserved for issuance pursuant to the Company's stock
option plans of which only approximately 859,086 shares remain available for
future grants and 15,154,009 shares are issuable and reserved for issuance
pursuant to securities (other than stock options issued pursuant to the
Company's stock option plans) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (ii) 5,000,000 shares of Preferred Stock,
$0.01
par value, of which as of the date hereof 6153.51 shares of Series A preferred
stock, with a $2,430 per share liquidation preference 3471.15 shares of Series
B
preferred stock with a $2,115.13 per share liquidation preference and 3159.31
shares of Series D preferred stock are issued and outstanding with a $1,000
per
share liquidation preference. All of such outstanding shares have been, or
upon
issuance will be, validly issued and are fully paid and nonassessable. Except
as
disclosed in Schedule 3(c), (i) no shares of the Company's capital stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company, (ii) there are no outstanding
debt securities, (iii) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating
to,
or securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings
or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of
its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any
of
their securities under the 1933 Act (except the Registration Rights Agreement),
(v) there are no outstanding securities or instruments of the Company or any
of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries, (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this Agreement
and
(vii) the Company does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement. The Company has furnished
to the Buyer true and correct copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "Certificate
of Incorporation"), and the Company's By-laws, as amended and as in effect
on
the date hereof (the "By-laws"), and summaries of the terms of all securities
convertible into or exercisable for Common Stock, if any, and copies of any
documents containing the material rights of the holders thereof in respect
thereto.
(d) Issuance
of Securities.
The
Commitment Shares have been duly authorized and, upon issuance in accordance
with the terms hereof, the Commitment Shares shall be (i) validly issued, fully
paid and non-assessable and (ii) free from all taxes, liens and charges with
respect to the issue thereof. 8,000,000 shares of Common Stock have been duly
authorized and reserved for issuance upon purchase under this Agreement. 338,819
shares of Common Stock (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction)
have been duly authorized and reserved for issuance as Additional Commitment
Shares in accordance with Section 4(f) this Agreement. Upon
issuance and payment therefor in accordance with the terms and conditions of
this Agreement, the Purchase Shares shall be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock.
(e) No
Conflicts.
Except
as disclosed in Schedule 3(e), the execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the
transactions contemplated hereby and thereby (including, without limitation,
the
reservation for issuance and issuance of the Purchase Shares) will not (i)
result in a violation of the Certificate of Incorporation, any Certificate
of
Designations, Preferences and Rights of any outstanding series of preferred
stock of the Company or the By-laws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which
the Company or any of its Subsidiaries is a party, or result in a violation
of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market applicable to the Company or any of its Subsidiaries) or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except in the case of conflicts, defaults and violations under
clause (ii), which could not reasonably be expected to result in a Material
Adverse Effect. Except as disclosed in Schedule 3(e), neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, any Certificate of Designation, Preferences and
Rights of any outstanding series of preferred stock of the Company or By-laws
or
their organizational charter or by-laws, respectively. Except as disclosed
in
Schedule 3(e), neither the Company nor any of its Subsidiaries is in violation
of any term of or is in default under any material contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order or
any
statute, rule or regulation applicable to the Company or its Subsidiaries,
except for possible conflicts, defaults, terminations or amendments which could
not reasonably be expected to have a Material Adverse Effect. The business
of
the Company and its Subsidiaries is not being conducted, and shall not be
conducted, in violation of any law, ordinance, regulation of any governmental
entity, except for possible violations, the sanctions for which either
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act or applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents in accordance with the terms hereof or thereof. Except as disclosed
in
Schedule 3(e), all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence
shall
be obtained or effected on or prior to the Commencement Date. Except as listed
in Schedule 3(e), since October 1, 2004, the Company has not received nor
delivered any notices or correspondence from or to the Principal Market. The
Principal Market has not commenced any delisting proceedings against the
Company.
(f) SEC
Documents; Financial Statements.
Except
as disclosed in Schedule 3(f), since January 1, 2004, the Company has timely
filed all reports, schedules, forms, statements and other documents required
to
be filed by it with the SEC pursuant to the reporting requirements of the 1934
Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). As of their respective dates (except as they have been correctly
amended), the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC (except as they may have
been properly amended), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates (except as they
have been properly amended), the financial statements of the Company included
in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with
respect thereto. Such financial statements have been prepared in accordance
with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year-end audit adjustments). Except as listed
in
Schedule 3(f), the Company has received no notices or correspondence from the
SEC since January 1, 2004.
The SEC
has not commenced any enforcement proceedings against the Company or any of
its
subsidiaries.
(g) Absence
of Certain Changes.
Except
as disclosed in Schedule 3(g), since June 30, 2005, there has been no material
adverse change in the business, properties, operations, financial condition
or
results of operations of the Company or its Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any Bankruptcy Law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy or
insolvency proceedings. As of the date of this Agreement, the Company has
positive stockholders’ equity and, upon receipt of the funds available through
the purchase by the Buyer of the Purchase Shares under this Agreement, will
be
generally able to pay its debts as they become due.
(h) Absence
of Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries' officers
or
directors in their capacities as such, which could reasonably be expected to
have a Material Adverse Effect. A description of each action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body which, as of the date of this
Agreement, is pending or threatened in writing against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's
or
the Company's Subsidiaries' officers or directors in their capacities as such,
is set forth in Schedule 3(h).
(i) Acknowledgment
Regarding Buyer's Status.
The
Company acknowledges and agrees that the Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and
the
transactions contemplated hereby and thereby and any advice given by the Buyer
or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Buyer's purchase of the Securities. The Company further
represents to the Buyer that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by
the
Company and its representatives and advisors.
(j) No
General Solicitation.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 0000 Xxx) in connection with
the
offer or sale of the Securities.
(k) Intellectual
Property Rights.
The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all material trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary
to
conduct their respective businesses as now conducted. Except as set forth on
Schedule 3(k), none of the Company's material trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, government authorizations, trade
secrets or other intellectual property rights have expired or terminated, or,
by
the terms and conditions thereof, could expire or terminate within two years
from the date of this Agreement. The Company and its Subsidiaries do not have
any knowledge of any infringement by the Company or its Subsidiaries of any
material trademark, trade name rights, patents, patent rights, copyrights,
inventions, licenses, service names, service marks, service xxxx registrations,
trade secret or other similar rights of others, or of any such development
of
similar or identical trade secrets or technical information by others and,
except as set forth on Schedule 3(k), there is no claim, action or proceeding
being made or brought against, or to the Company's knowledge, being threatened
against, the Company or its Subsidiaries regarding trademark, trade name,
patents, patent rights, invention, copyright, license, service names, service
marks, service xxxx registrations, trade secret or other infringement, which
could reasonably be expected to have a Material Adverse Effect.
(l) Environmental
Laws.
The
Company and its Subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license
or
approval, except where, in each of the three foregoing clauses, the failure
to
so comply could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(m) Title.
The
Company and its Subsidiaries have good and marketable title in fee simple to
all
real property and good and marketable title to all personal property owned
by
them which is material to the business of the Company and its Subsidiaries,
in
each case free and clear of all liens, encumbrances and defects except such
as
are described in Schedule 3(m) or such as do not materially affect the value
of
such property and do not interfere with the use made and proposed to be made
of
such property by the Company and any of its Subsidiaries. Any real property
and
facilities held under lease by the Company and any of its Subsidiaries are
held
by them under valid, subsisting and enforceable leases with such exceptions
as
are not material and do not interfere with the use made and proposed to be
made
of such property and buildings by the Company and its Subsidiaries.
(n) Insurance.
The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company
nor
any such Subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as
may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its Subsidiaries, taken as a
whole.
(o) Regulatory
Permits.
The
Company and its Subsidiaries possess all material certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
(p) Tax
Status.
The
Company and each of its Subsidiaries has made or filed all federal and state
income and all other material tax returns, reports and declarations required
by
any jurisdiction to which it is subject (unless and only to the extent that
the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and
has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside
on
its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(q) Transactions
With Affiliates.
Except
as set forth on Schedule 3(q) and other than the grant or exercise of stock
options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (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
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has an interest or is an officer, director, trustee or
partner.
(r) Application
of Takeover Protections.
The
Company and its board of directors have taken or will take prior to the
Commencement Date all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Certificate of Incorporation or the laws of the state of its
incorporation which is or could become applicable to the Buyer as a result
of
the transactions contemplated by this Agreement, including, without limitation,
the Company's issuance of the Securities and the Buyer's ownership of the
Securities.
(s) Foreign
Corrupt Practices.
Neither
the Company, nor any of its Subsidiaries, nor any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the
Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
made
any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
4. COVENANTS.
(a) Filing
of Form 8-K and Registration Statement.
The
Company agrees that it shall, within the time required under the 1934 Act file
a
Report on Form 8-K disclosing this Agreement and the transaction contemplated
hereby. The Company shall also file within twenty (20) Trading Days from the
date hereof a new registration statement covering only the sale of the
Commitment Shares and at least 8,000,000 Purchase Shares in accordance with
the
terms of the Registration Rights Agreement between the Company and the Buyer,
dated as of the date hereof (“Registration Rights Agreement”). After such
registration statement is declared effective by the SEC, the Company agrees
and
acknowledges that any sales by the Company to the Buyer pursuant to this
Agreement are
sales
of the Company's equity securities in a transaction that is registered under
the
1933 Act.
(b) Blue
Sky.
The
Company shall take such action, if any, as is reasonably necessary in order
to
obtain an exemption for or to qualify (i) the initial sale of the Commitment
Shares and any Purchase Shares to the Buyer under this Agreement and (ii) any
subsequent resale of the Commitment Shares and any Purchase Shares by the Buyer,
in each case, under applicable securities or "Blue Sky" laws of the states
of
the United States in such states as is reasonably requested by the Buyer from
time to time, and shall provide evidence of any such action so taken to the
Buyer.
(c) Notice
of Variable Priced Financing.
The
Company agrees to provide to the Buyer prior written notice (“Equity Financing
Notice”) of any equity financing (including any debt financing with an equity
component) that the Company intends to enter into involving the issuance of
any
equity securities of the Company or any Subsidiary or securities convertible
or
exchangeable into or for equity securities of the Company or any Subsidiary
(including debt securities with an equity component) which, in any case (i)
are
convertible into or exchangeable for an indeterminate number of shares of common
stock, (ii) are convertible into or exchangeable for Common Stock at a price
which varies with the market price of the Common Stock, (iii) directly or
indirectly provide for any "re-set" or adjustment of the purchase price,
conversion rate or exercise price after the issuance of the security, or (iv)
contain any "make-whole" provision based upon, directly or indirectly, the
market price of the Common Stock after the issuance of the security, in each
case, other than reasonable and customary anti-dilution adjustments for issuance
of shares of Common Stock at a price which is below the market price of the
Common Stock. Such Equity Financing Notice shall be delivered to the Buyer
five
(5) Trading Days prior to the Company entering into definitive documentation
with respect to such equity financing, together with copies of all proposed
definitive documentation relating to such equity financing.
(d) Listing.
The
Company shall promptly secure the listing of all of the Purchase Shares and
Commitment Shares upon each national securities exchange and automated quotation
system, if any, upon which shares of Common Stock are then listed (subject
to
official notice of issuance) and shall maintain, so long as any other shares
of
Common Stock shall be so listed, such listing of all such securities from time
to time issuable under the terms of the Transaction Documents. The Company
shall
maintain the Common Stock's authorization for quotation on the Principal Market.
Neither the Company nor any of its Subsidiaries shall take any action that
would
be reasonably expected to result in the delisting or suspension of the Common
Stock on the Principal Market. The Company shall promptly, and in no event
later
than the following Trading Day, provide to the Buyer copies of any notices
it
receives from the Principal Market regarding the continued eligibility of the
Common Stock for listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section.
(e) Limitation
on Short Sales and Hedging Transactions.
The
Buyer agrees that beginning on the date of this Agreement and ending on the
date
of termination of this Agreement as provided in Section 11(k), the Buyer and
its
agents, representatives and affiliates shall not in any manner whatsoever enter
into or effect, directly or indirectly, any (i) "short sale" (as such term
is
defined in Rule 3b-3 of the 0000 Xxx) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.
(f) Issuance
of Commitment Shares; Limitation on Sales of Commitment Shares.
Immediately upon the execution of this Agreement, the Company shall issue to
the
Buyer 338,819 shares of Common Stock (the "Initial Commitment Shares").
Immediately at such time as the remaining Available Amount is $9,999,999 (i.e.,
the Buyer has purchased $10,000,001 of Purchase Shares), the Company shall
issue
to the Buyer 338,819 shares of Common Stock (the "Second Initial Commitment
Shares"). In connection with each purchase of Purchase Shares hereunder, the
Company agrees to issue to the Buyer a number of shares of Common Stock (the
“Additional Commitment Shares” and together with the Initial Commitment Shares
and the Second Initial Commitment Shares, the “Commitment Shares”) equal to the
product of (x) 677,638 and (y) the Purchase Amount Fraction. The “Purchase
Amount Fraction” shall mean a fraction, the numerator of which is the Purchase
Amount purchased by the Buyer with respect to such purchase of Purchase Shares
and the denominator of which is Twenty Million Dollars ($20,000,000). The
Additional Commitment Shares shall be equitably adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction.
The Initial
Commitment Shares shall be issued in certificated form and (subject to Section
5
hereof) shall bear the following restrictive legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF HOLDER’S COUNSEL, IN A
CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
The
Buyer
agrees that the Buyer shall not transfer or sell the Initial Commitment Shares
and the first 338,819 Additional Commitment Shares issued to the Buyer until
the
earlier of 250 Trading Days from the date hereof or the date on which this
Agreement has been terminated and shall not sell the Second Initial Commitment
Shares and the last 338,819 Additional Commitment Shares issued to the Buyer
until the earlier of 500 Trading Days from the date hereof or the date on which
this Agreement has been terminated, provided, however, that such restrictions
shall not apply: (i) in connection with any transfers to or among affiliates
(as
defined in the 1934 Act), (ii) in connection with any pledge in connection
with
a bona fide loan or margin account, (iii) in the event that the Commencement
does not occur on or before January 31, 2006, due to the failure of the Company
to satisfy the conditions set forth in Section 7 or (iv) if an Event of Default
has occurred, or any event which, after notice and/or lapse of time, would
become an Event of Default, including any failure by the Company to timely
issue
Purchase Shares under this Agreement. Notwithstanding the forgoing, the Buyer
may transfer Commitment Shares to a third party in order to settle a sale made
by the Buyer where the Buyer reasonably expects the Company to deliver Purchase
Shares to the Buyer under this Agreement so long as the Buyer maintains
ownership of the same overall number of shares of Common Stock by "replacing"
the Commitment Shares so transferred with Purchase Shares when the Purchase
Shares are actually issued by the Company to the Buyer.
(g) Due
Diligence.
The
Buyer shall have the right, from time to time as the Buyer may reasonably deem
appropriate, to perform reasonable due diligence on the Company during normal
business hours. The Company and its officers and employees shall provide
information and reasonably cooperate with the Buyer in connection with any
reasonable request by the Buyer related to the Buyer's due diligence of the
Company, including, but not limited to, any such request made by the Buyer
in
connection with (i) the filing of the registration statement described in
Section 4(a) hereof and (ii) the Commencement. Each party hereto agrees not
to
disclose any Confidential Information of the other party to any third party
and
shall not use the Confidential Information for any purpose other than in
connection with, or in furtherance of, the transactions contemplated hereby.
Each party hereto acknowledges that the Confidential Information shall remain
the property of the disclosing party and agrees that it shall take all
reasonable measures to protect the secrecy of any Confidential Information
disclosed by the other party. Each party agrees to maintain the secrecy of
any
Confidential Information in accordance with the terms of the Mutual
Nondisclosure Agreement between the parties dated October 3, 2005.
(h) Participation
Rights.
For a
period of 12.5 months from the date of this Agreement, the Company hereby grants
to the Buyer a right to participate in the purchase of any New Securities (as
defined below) that the Company may, from time to time, propose to issue and
sell in connection with any financing transaction, as follows. Not later than
5
Trading Days prior to the execution of any definitive documentation relating
to
the sale of any New Securities to any person or entity other than the Buyer
or
an Affiliate of the Buyer (a “New Person”), the Company shall deliver written
notice to Buyer of its intent to enter into any such transaction, describing
the
New Person and the type of New Securities in reasonable detail, and attaching
to
such notice copies of such definitive documentation. The Buyer shall have 10
Trading Days after receipt of such notice to purchase 12.5% of such New
Securities or any portion thereof, at the price and on the terms specified
in
such notice by giving written notice to the Company specifying the amount of
New
Securities to be purchased by the Buyer. In the event the Company has not sold
such New Securities to the New Person within 10 Trading Days after notice
thereof to the Buyer, the Company shall not thereafter issue or sell any New
Securities to any New Person without first again complying with this Section.
“New Securities” shall mean any shares of Common Stock, preferred stock or any
other equity securities of the Company or securities convertible or exchangeable
for equity securities of the Company, provided, however, that New Securities
shall not include, (i) shares of Common Stock issuable upon conversion,
redemption, exercise of or as dividends for any securities outstanding as of
the
date hereof, (ii) shares, options or warrants for Common Stock granted to
officers, directors and employees of the Company pursuant to stock option plans
approved by the Board of Directors of the Company, (iii) shares of Common Stock
or securities convertible or exchangeable for Common Stock issued pursuant
to
the acquisition of another company by consolidation, merger, or purchase of
all
or substantially all of the assets of such company or (iv) shares of Common
Stock or securities convertible or exchangeable into shares of Common Stock
issued in connection with a strategic transaction involving the Company and
issued to an entity or an affiliate of such entity that is engaged in the same
or substantially related business as the Company. The Buyer rights hereunder
shall not prohibit or limit the Company from selling any New Securities so
long
as the Company makes the same offer to the Buyer as provided herein. Otherwise
the Company shall be prohibited from selling any New Securities to any New
Person until it fully complies herewith.
5. TRANSFER
AGENT INSTRUCTIONS.
Immediately
upon the execution of this Agreement, the Company shall deliver to the Transfer
Agent a letter in the form as set forth as Exhibit
E
attached
hereto with respect to the issuance of the Initial Commitment
Shares. On
the
Commencement Date, the Company shall cause any restrictive legend on the Initial
Commitment Shares to
be
removed and all of the Purchase Shares and Commitment Shares, to be issued
under
this Agreement shall be issued without any restrictive legend unless the Buyer
expressly consents otherwise. The Company shall issue irrevocable instructions
to the Transfer Agent, and any subsequent transfer agent, to issue Purchase
Shares in the name of the Buyer for the Purchase Shares (the "Irrevocable
Transfer Agent Instructions"). The Company warrants to the Buyer that no
instruction other than the Irrevocable Transfer Agent Instructions referred
to
in this Section 5, will be given by the Company to the Transfer Agent with
respect to the Purchase Shares and that the Commitment Shares and the Purchase
Shares shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement and the Registration
Rights Agreement subject to the provisions of Section 4(f) in the case of the
Commitment Shares.
6.
CONDITIONS
TO THE COMPANY'S OBLIGATION TO COMMENCE SALES
OF SHARES OF COMMON STOCK.
The
obligation of the Company hereunder to commence sales of the Purchase Shares
is
subject to the satisfaction of each of the following conditions on or before
the
Commencement Date (the date that sales begin) and once such conditions have
been
initially satisfied, there shall not be any ongoing obligation to satisfy such
conditions after the Commencement has occurred; provided that these conditions
are for the Company's sole benefit and may be waived by the Company at any
time
in its sole discretion by providing the Buyer with prior written notice
thereof:
(a) The
Buyer
shall have executed each of the Transaction Documents and delivered the same
to
the Company.
(b) Subject
to the Company's compliance with Section 4(a), a registration statement covering
the sale of all of the Commitment Shares and at least 8,000,000 Purchase Shares
shall have been declared effective under the 1933 Act by the SEC and no stop
order with respect to the Registration Statement shall be pending or threatened
by the SEC.
(c) The
representations and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Commencement Date
as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Commencement Date.
7.
CONDITIONS
TO THE BUYER'S OBLIGATION TO COMMENCE PURCHASES
OF SHARES OF COMMON STOCK.
The
obligation of the Buyer to commence purchases of Purchase Shares under this
Agreement is subject to the satisfaction of each of the following conditions
on
or before the Commencement Date (the date that sales begin) and once such
conditions have been initially satisfied, there shall not be any ongoing
obligation to satisfy such conditions after the Commencement has
occurred:
(a) The
Company shall have executed each of the Transaction Documents and delivered
the
same to the Buyer.
(b) The
Company shall have issued to the Buyer the Initial Commitment Shares and shall
have removed the restrictive transfer legend from the certificate representing
the Initial Commitment Shares.
(c) The
Common Stock shall be authorized for quotation on the Principal Market, trading
in the Common Stock shall not have been within the last 365 days suspended
by
the SEC or the Principal Market and the Purchase Shares and the Commitment
Shares shall be approved for listing upon the Principal Market.
(d) The
Buyer
shall have received the opinions of the Company's legal counsel dated as of
the
Commencement Date substantially in the form of Exhibit
A
attached
hereto.
(e) The
representations and warranties of the Company shall be true and correct in
all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Commencement
Date
as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied
and
complied with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Commencement Date. The Buyer shall have received a
certificate, executed by the CEO, President or CFO of the Company, dated as
of
the Commencement Date, to the foregoing effect in the form attached hereto
as
Exhibit
B.
(f) The
Board
of Directors of the Company shall have adopted resolutions in substantially
the
form attached hereto as Exhibit
C
which
shall be in full force and effect without any amendment or supplement thereto
as
of the Commencement Date.
(g) As
of the
Commencement Date, the Company shall have reserved out of its authorized and
unissued Common Stock, (A) solely for the purpose of effecting purchases of
Purchase Shares hereunder, at least 8,000,000 shares of Common Stock and (B)
as
Additional Commitment Shares in accordance with Section 4(f) hereof, 338,819
shares of Common Stock.
(h) The
Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer shall
have been delivered to and acknowledged in writing by the Company and the
Company's Transfer Agent.
(i) The
Company shall have delivered to the Buyer a certificate evidencing the
incorporation and good standing of the Company in the State of Nevada issued
by
the Secretary of State of the State of Nevada as of a date within ten (10)
Trading Days of the Commencement Date.
(j) The
Company shall have delivered to the Buyer a certified copy of the Certificate
of
Incorporation as certified by the Secretary of State of the State of Nevada
within ten (10) Trading Days of the Commencement Date.
(k) The
Company shall have delivered to the Buyer a secretary's certificate executed
by
the Secretary of the Company, dated as of the Commencement Date, in the form
attached hereto as Exhibit
D.
(l) A
registration statement covering the sale of all of the Commitment Shares and
at
least 8,000,000 Purchase Shares shall have been declared effective under the
1933 Act by the SEC and no stop order with respect to the registration statement
shall be pending or threatened by the SEC. The Company shall have prepared
and
delivered to the Buyer a final form of prospectus to be used by the Buyer in
connection with any sales of any Commitment Shares or any Purchase Shares.
The
Company shall have made all filings under all applicable federal and state
securities laws necessary to consummate the issuance of the Commitment Shares
and the Purchase Shares pursuant to this Agreement in compliance with such
laws.
(m) No
Event
of Default has occurred, or any event which, after notice and/or lapse of time,
would become an Event of Default has occurred.
(n) On
or
prior to the Commencement Date, the Company shall take all necessary action,
if
any, and such actions as reasonably requested by the Buyer, in order to render
inapplicable any control share acquisition, business combination, shareholder
rights plan or poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the state of its incorporation which is or could become
applicable to the Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.
(o) The
Company shall have provided the Buyer with the information requested by the
Buyer in connection with its due diligence requests made prior to, or in
connection with, the Commencement, in accordance with the terms of Section
4(g)
hereof.
8.
INDEMNIFICATION.
In
consideration of the Buyer's execution and delivery of the Transaction Documents
and acquiring the Securities hereunder and in addition to all of the Company's
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless the Buyer and all of its affiliates,
shareholders, officers, directors, employees and direct or indirect investors
and any of the foregoing person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee
as
a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Indemnitee and arising out
of
or resulting from the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, other than with respect to Indemnified
Liabilities which directly and primarily result from the gross negligence or
willful misconduct of the Indemnitee. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each
of
the Indemnified Liabilities which is permissible under applicable
law.
9. EVENTS
OF DEFAULT.
An
"Event
of Default" shall be deemed to have occurred at any time as any of the following
events occurs:
(a) while
any
registration statement is required to be maintained effective pursuant to the
terms of the Registration Rights Agreement, the effectiveness of such
registration statement lapses for any reason (including, without limitation,
the
issuance of a stop order) or is unavailable to the Buyer for sale of all of
the
Registrable Securities (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, and such lapse
or unavailability continues for a period of ten (10) consecutive Trading Days
or
for more than an aggregate of thirty (30) Trading Days in any 365-day
period;
(b) the
suspension from trading or failure of the Common Stock to be listed on the
Principal Market for a period of three (3) consecutive Trading
Days;
(c) the
delisting of the Company’s Common Stock from the Principal Market, provided,
however, that the Common Stock is not within 2 Trading Days thereafter trading
on the New York Stock Exchange, the Nasdaq National Market, the American Stock
Exchange or the Nasdaq OTC Bulletin Board;
(d) the
failure for any reason by the Transfer Agent to issue Purchase Shares to the
Buyer within five (5) Trading Days after the applicable Purchase Date which
the
Buyer is entitled to receive;
(e) the
Company breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach could have a Material
Adverse Effect and except, in the case of a breach of a covenant which is
reasonably curable, only if such breach continues for a period of at least
five
(5) Trading Days;
(f) if
any
Person commences a proceeding against the Company pursuant to or within the
meaning of any Bankruptcy Law ;
(g) if
the
Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences
a
voluntary case, (B) consents to the entry of an order for relief against it
in
an involuntary case, (C) consents to the appointment of a Custodian of it or
for
all or substantially all of its property, (D) makes a general assignment for
the
benefit of its creditors, (E) becomes insolvent, or (F) is generally unable
to
pay its debts as the same become due;
(h) a
court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that (A) is for relief against the Company in an involuntary case, (B) appoints
a Custodian of the Company or for all or substantially all of its property,
or
(C) orders the liquidation of the Company or any Subsidiary;
(i) a
material adverse change in the business, properties, operations, financial
condition or results of operations of the Company or its Subsidiaries;
or
(j) if
at any
time after the Commencement Date, the "Exchange Cap" is reached. (The "Exchange
Cap" shall be deemed to be reached at such time if, upon submission of a
Purchase Notice under this Agreement, the issuance of such shares of Common
Stock would exceed that number of shares of Common Stock which the Company
may
issue under this Agreement without breaching the Company's obligations under
the
rules or regulations of the Principal Market).
In
addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof,
so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default,
has
occurred and is continuing, or so long as the Purchase Price is below the
Purchase Price Floor, the Buyer shall not be obligated to purchase any shares
of
Common Stock under this Agreement. If pursuant to or within the meaning of
any
Bankruptcy Law, the Company commences a voluntary case or any Person commences
a
proceeding against the Company, a Custodian is appointed for the Company or
for
all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an Event
of
Default as described in Sections 9(f), 9(g) and 9(h) hereof)
this Agreement shall automatically terminate without any liability or payment
to
the Company without further action or notice by any Person. No such termination
of this Agreement under Section 11(k)(i) shall affect the Company's or the
Buyer's obligations under this Agreement with respect to pending purchases
and
the Company and the Buyer shall complete their respective obligations with
respect to any pending purchases under this Agreement.
10. CERTAIN
DEFINED TERMS.
For
purposes of this Agreement, the following terms shall have the following
meanings:
(a) “1933
Act” means the Securities Act of 1933, as amended.
(b) “Available
Amount” means initially Twenty Million Dollars ($20,000,000) in the aggregate
which amount shall be reduced by the Purchase Amount each time the Buyer
purchases shares of Common Stock pursuant to Section 1 hereof.
(c) “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.
(d) “Closing
Sale Price” means, for any security as of any date, the last closing trade price
for such security on the Principal Market as reported by the Principal Market,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing trade price of such security on
the
principal securities exchange or trading market where such security is listed
or
traded as reported by the Principal Market.
(e) “Confidential
Information” means any information disclosed by either party to the other party,
either directly or indirectly, in writing, orally or by inspection of tangible
or electronic objects (including, without limitation, documents, prototypes,
samples, plant and equipment), which is designated as "Confidential,"
"Proprietary" or some similar designation. Information communicated orally
shall
be considered Confidential Information if such information is confirmed in
writing as being Confidential Information within fifteen (15) business days
after the initial disclosure. Confidential Information may also include
information disclosed to a disclosing party by third parties. Confidential
Information shall not, however, include any information which (i) was publicly
known and made generally available in the public domain prior to the time of
disclosure by the disclosing party; (ii) becomes publicly known and made
generally available after disclosure by the disclosing party to the receiving
party through no action or inaction of the receiving party; (iii) is already
in
the possession of the receiving party at the time of disclosure by the
disclosing party as shown by the receiving party’s files and records immediately
prior to the time of disclosure; (iv) is obtained by the receiving party from
a
third party without a breach of such third party’s obligations of
confidentiality; (v) is independently developed by the receiving party without
use of or reference to the disclosing party’s Confidential Information, as shown
by documents and other competent evidence in the receiving party’s possession;
or (vi) is required by law to be disclosed by the receiving party, provided
that
the receiving party gives the disclosing party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure.
(f) “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under
any
Bankruptcy Law.
(g) “Maturity
Date” means the date that is 500 Trading Days (25 Monthly Periods) from the
Commencement Date.
(h) “Monthly
Period” means each successive 20 Trading Day period.
(i) “Person”
means an individual or entity including any limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
(j) “Principal
Market” means the Nasdaq Capital Market; provided however, that in the event the
Company’s Common Stock is ever listed or traded on the Nasdaq National Market,
the Nasdaq OTC Bulletin Board, the New York Stock Exchange or the American
Stock
Exchange, then the “Principal Market” shall mean such other market or exchange
on which the Company’s Common Stock is then listed or traded.
(k) “Purchase
Amount” means the portion of the Available Amount to be purchased by the Buyer
pursuant to Section 1 hereof.
(l) “Purchase
Date” means the actual date that the Buyer is to buy Purchase Shares pursuant to
Section 1 hereof.
(m) “Purchase
Price” means, as of any Trading Day the lower of the (A) the lowest Sale Price
of the Common Stock on such Trading Day and (B) the arithmetic average of the
three (3) lowest Closing Sale Prices for the Common Stock during the twelve
(12)
consecutive Trading Days ending on the Trading Day immediately preceding such
date of determination (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction).
(n) “Sale
Price” means, for any security as of any date, any trade price for such security
on the Principal Market as reported by the Principal Market, or, if the
Principal Market is not the principal securities exchange or trading market
for
such security, the trade price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported
by the Principal Market.
(o) “SEC”
means the United States Securities and Exchange Commission.
(q) “Transfer
Agent” means the transfer agent of the Company as set forth in Section
11(f) hereof or such other person who is then serving as the transfer agent
for
the Company in respect of the Common Stock.
(r) “Trading
Day” means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time
less than the customary time.
11. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
The
corporate laws of the State of Nevada shall govern all issues concerning the
relative rights of the Company and its shareholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the other Transaction Documents shall be governed by the internal
laws of the State of Illinois, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Illinois or any
other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Illinois. Each party hereby irrevocably submits to
the
exclusive jurisdiction of the state and federal courts sitting in the City
of
Chicago, for the adjudication of any dispute hereunder or under the other
Transaction Documents or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement; Amendments.
With
the exception of the Mutual Nondisclosure Agreement between the parties dated
as
of October 3, 2005, this Agreement supersedes all other prior oral or written
agreements between the Buyer, the Company, their affiliates and persons acting
on their behalf with respect to the matters discussed herein, and this
Agreement, the other Transaction Documents and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. Any provision of this
Agreement may be amended or modified by mutual agreement of the Company and
the
Buyer, and any provision hereof may be waived only by the party against whom
enforcement is sought. The Company acknowledges and agrees that is has not
relied on, in any manner whatsoever, any representations or statements, written
or oral, other than as expressly set forth in this Agreement.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Trading Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
GlycoGenesys,
Inc.
00
Xx.
Xxxxx Xxxxxx, 0xx
Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention:
Xxxxxxx
X. Xxxxxx
With
a
copy to:
Xxxxx
XXX
Xxxxx
0000
00
Xxxxxxxxxx Xxxxxx Xxxx
Xxx
000,
XX Xxxxxx
Xxxxxxx
Xxxxxxx X0X 0X0 Xxxxxx
Telephone: (000)
000-0000
Facsimile:
(000)
000-0000
Attention:
Xxxxxx
Xxxxxx, Esq,
If
to the
Buyer:
Fusion
Capital Fund II, LLC
000
Xxxxxxxxxxx Xxxx Xxxxx, Xxxxx 0-000
Xxxxxxx,
XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx
X.
Xxxxxx
If
to the
Transfer Agent:
Computershare
Investor Services
000
Xxxxxxx Xx., Xxxxx 000
Xxxxxx,
XX 00000
Telephone:
(000)
000-0000
Facsimile: (000)
000-0000
Attention:
Xxxxx
Xxxxxx
or
at
such other address and/or facsimile number and/or to the attention of such
other
person as the recipient party has specified by written notice given to each
other party three (3) Trading Days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, and
recipient facsimile number or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt
by
facsimile or receipt from a nationally recognized overnight delivery service
in
accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Buyer, including by merger or consolidation. The Buyer may not
assign its rights or obligations under this Agreement.
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(i) Publicity.
The
Buyer shall have the right to approve before issuance any press release, SEC
filing or any other public disclosure made by or on behalf of the Company
whatsoever with respect to, in any manner, the Buyer, its purchases hereunder
or
any aspect of this Agreement or the transactions contemplated hereby. The Buyer
shall approve such public disclosure or raise objections within 2 Trading Days
of receipt from the Company. The Company agrees and acknowledges that its
failure to fully comply with this provision constitutes a material adverse
effect on its ability to perform its obligations under this Agreement.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(k) Termination.
This
Agreement may be terminated only as follows:
(i) By
the
Buyer any time an Event of Default exists without any liability or payment
to
the Company. However, if pursuant to or within the meaning of any Bankruptcy
Law, the Company commences a voluntary case or any Person commences a proceeding
against the Company, a Custodian is appointed for the Company or for all or
substantially all of its property, or the Company makes a general assignment
for
the benefit of its creditors, (any of which would be an Event of Default as
described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall
automatically terminate without any liability or payment to the Company without
further action or notice by any Person. No such termination of this Agreement
under this Section 11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.
(ii) In
the
event that the Commencement shall not have occurred, the Company shall have
the
option to terminate this Agreement for any reason or for no reason without
liability of any party to any other party.
(iii) In
the
event that the Commencement shall not have occurred on or before January 31,
2006, due to the failure to satisfy the conditions set forth in Sections 6
and 7
above with respect to the Commencement (and the nonbreaching party's failure
to
waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement at the close of business on such date or
thereafter without liability of any party to any other party.
(iv) If
by the
Maturity Date (including any extension thereof by the Company pursuant to
Section 10(g) hereof), for any reason or for no reason the full Available Amount
under this Agreement has not been purchased as provided for in Section 1 of
this
Agreement, by the Buyer without any liability or payment to the Company.
(v)
At any
time after the Commencement Date, the Company shall have the option to terminate
this Agreement for any reason or for no reason by delivering notice (a “Company
Termination Notice”) to the Buyer electing to terminate this Agreement without
any liability or payment to the Buyer. The Company Termination Notice shall
not
be effective until one (1) Trading Day after it has been received by the Buyer.
(vi) This
Agreement shall automatically terminate on the date that the Company sells
and
the Buyer purchases the full Available Amount as provided herein, without any
action or notice on the part of any party.
Except
as
set forth in Sections 11(k)(i) (in respect of an Event of Default under Sections
9(f), 9(g) and 9(h)) and 11(k)(vi), any termination of this Agreement pursuant
to this Section 11(k) shall be effected by written notice from the Company
to
the Buyer, or the Buyer to the Company, as the case may be, setting forth the
basis for the termination hereof. The representations and warranties of the
Company and the Buyer contained in Sections 2 and 3 hereof, the indemnification
provisions set forth in Section 8 hereof and the agreements and covenants set
forth in Section 11,
shall
survive the Commencement and any termination of this Agreement. No termination
of this Agreement shall affect the Company's or the Buyer's rights or
obligations (i) under the Registration Rights Agreement which shall survive
any
such termination or (ii) under this Agreement with respect to pending purchases
and the Company and the Buyer shall complete their respective obligations with
respect to any pending purchases under this Agreement.
(l) No
Financial Advisor, Placement Agent, Broker or Finder.
The
Buyer represents and warrants to the Company that it has not engaged any
financial advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Company shall be responsible for the
payment of any fees or commissions, if any, of any financial advisor, placement
agent, broker or finder relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold the Buyer harmless against,
any liability, loss or expense (including, without limitation, attorneys' fees
and out of pocket expenses) arising in connection with any such
claim.
(m) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(n) Remedies,
Other Obligations, Breaches and Injunctive Relief.
The
Buyer’s remedies provided in this Agreement shall be cumulative and in addition
to all other remedies available to the Buyer under this Agreement, at law or
in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy of the Buyer contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit the Buyer's right to pursue actual damages for any failure by the
Company to comply with the terms of this Agreement. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm
to
the Buyer and that the remedy at law for any such breach may be inadequate.
The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being
required.
(o) Changes
to the Terms of this Agreement.
This
Agreement and any provision hereof may only be amended by an instrument in
writing signed by the Company and the Buyer. The term "Agreement" and all
reference thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then
as
so amended or supplemented.
(p) Enforcement
Costs.
If: (i)
this Agreement is placed by the Buyer in the hands of an attorney for
enforcement or is enforced by the Buyer through any legal proceeding; or (ii)
an
attorney is retained to represent the Buyer in any bankruptcy, reorganization,
receivership or other proceedings affecting creditors' rights and involving
a
claim under this Agreement; or (iii) an attorney is retained to represent the
Buyer in any other proceedings whatsoever in connection with this Agreement,
then the Company shall pay to the Buyer, as incurred by the Buyer, all
reasonable costs and expenses including attorneys' fees incurred in connection
therewith, in addition to all other amounts due hereunder; provided, however,
in
the case of clause (i) or (iii) that if the Buyer is unsuccessful in the pursuit
of the claims or issues raised by the Buyer, the Buyer shall repay to the
Company all amounts paid to the Buyer pursuant to this Section
11(p).
(q) Failure
or Indulgence Not Waiver.
No
failure or delay in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of
any such power, right or privilege preclude other or further exercise thereof
or
of any other right, power or privilege.
*
* * * *
IN
WITNESS WHEREOF,
the
Buyer and the Company have caused this Common Stock Purchase Agreement to be
duly executed as of the date first written above.
THE
COMPANY:
GLYCOGENESYS,
INC.
By:/s/
Xxxx X. Burns__________
Name:
Xxxx X. Xxxxx
Title:
Senior Vice President and Chief Financial Officer
BUYER:
FUSION
CAPITAL FUND II, LLC
BY:
FUSION CAPITAL PARTNERS, LLC
BY:
SGM HOLDINGS CORP.
By:/s/
Xxxxxx X. Martin_________
Name:
Xxxxxx X. Xxxxxx
Title:
President
