Exhibit 2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, together with the Exhibits A, B, C(1),
C(2) and D and Schedules 3(a), 3(d) and 3(j), attached hereto and hereby
incorporated by reference (collectively, this "Agreement"), dated as of February
28, 1997 by and between XXXX/Biophile International Corporation, a Delaware
corporation, with headquarters located at 0000 X.X. 00xx Xxxx, Xxxxxxxxxxx,
Xxxxxxx 00000 (the "Company"), and Clearwater Fund IV, LLC, a Delaware limited
liability company ("Clearwater IV") and Clearwater Offshore Fund Ltd., a
corporation organized under the International Business Companies Act of the
Commonwealth of the Bahamas ("Clearwater Offshore") (Clearwater IV and
Clearwater Offshore are hereinafter sometimes collectively referred to as the
"Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");
B. The Buyers wish to purchase, in the amounts and upon the terms and
conditions stated in this Agreement, shares of the Company's 5% Cumulative
Convertible Preferred Stock, Series D, $10 par value per share (the "Preferred
Shares"), which shall be convertible into shares of the Company's Common Stock
(the "Common Stock"), $.01 par value, (as converted, the "Conversion Shares"),
and pursuant to which certain shares of Common Stock may be issued to the Buyers
in accordance with Section 2(c) of the Certificate of Designation therefor (the
"Damage Shares); and
C. Contemporaneously with the execution and delivery of this Agreement,
(i) the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit A (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws, and (ii) the Company and GFL
and Performance Fund Ltd. ("GFL") are executing and delivering a side letter
agreement in the form attached hereto as Exhibit B (the "Side Letter
Agreement").
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
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a. Purchase of Preferred Shares. Subject to Sections 6 and 7, below,
the Company shall issue and sell to the Buyers and the Buyers shall purchase an
aggregate of 10,000 Preferred Shares which shall be convertible into Conversion
Shares in accordance with the terms of the Certificate of Designations,
Preferences and Rights of 5% Cumulative Convertible Preferred Stock, Series D in
the form attached hereto as Exhibit C (the "Certificate of Designation"). The
per share purchase price of the Preferred Shares shall be One Thousand Dollars
($1,000). Subject to Sections 6 and 7, below, Clearwater IV shall purchase 8,000
of such Preferred Shares and Clearwater Offshore shall purchase 2,000 of such
Preferred Shares.
b. Closing Date. The date and time of the issuance and sale of the
Preferred Shares shall be 5:00 p.m. Eastern Standard Time on February 28, 1997
(the "Closing Date").
c. Closing. Subject to Section 6 and 7, below, the Buyers shall, at the
closing of the transactions contemplated by this Agreement (the "Closing"), pay
the purchase price for the Preferred Shares (the "Purchase Price") by wire
transfer of immediately available United States Dollars to the Company on the
Closing Date, and the Company shall promptly deliver a stock certificate, duly
executed on behalf of the Company, representing the Preferred Shares (the "Stock
Certificate") to the Buyer.
2. BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyers represent and warrant to the Company that:
a. Investment Purpose. The Buyers are purchasing the Preferred Shares
for its own account for investment only and not with a view towards, or for
resale in connection with, any "distribution" thereof within the meaning of the
1933 Act.
b. Accredited Investor Status. The Buyers are "accredited investors" as
that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. The Buyers understand that the Preferred
Shares 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 upon the truth and accuracy of, and the Buyers'
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyers set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyers to acquire the
Preferred Shares.
d. Information. The Buyers and their advisors, if any, have 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 Preferred
Shares which have been requested by the Buyers. The Buyers and their advisors,
if any, have been afforded the opportunity to ask questions of the Company and
have received answers that to their
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knowledge are complete and satisfactory. The Buyers understand that their
investment in the Preferred Shares involves a high degree of risk. The Buyers
have sought such accounting, legal and tax advice as they have considered
necessary to an informed investment decision with respect to their acquisition
of the Preferred Shares.
e. Governmental Review. The Buyers understand 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 Preferred Shares or
the fairness or suitability of the investment in the Preferred Shares, nor have
such authorities passed upon or endorsed the merits of the offering of the
Preferred Shares.
f. Transfer or Resale. The Buyers understand that (i) except as
provided in the Registration Rights Agreement, the Preferred Shares, the
Conversion Shares, and the Damage Shares have not been and are not being
registered under the 1933 Act or any state securities laws, and may not be
transferred unless (a) subsequently registered thereunder, or (b) the Buyers
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such 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 such securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or any state securities laws.
g. Legends. The Buyers understand that the Preferred Shares and, until
such time as the Conversion Shares and the Damage Shares (collectively, the
"Registrable Securities") have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Registrable Securities shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
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 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
COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
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ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH ANY APPLICABLE
STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Preferred Shares or any
Registrable Securities upon which it is stamped, if, unless otherwise required
by state securities laws, (a) the sale of such Preferred Shares or Registrable
Securities is registered under the 1933 Act, or (b) in connection with a sale
transaction, such holder provides the Company with an opinion of counsel, in
form, substance and scope reasonably acceptable to the Company, to the effect
that a public sale or transfer of the Preferred Shares or such Registrable
Securities may be made without registration under the 1933 Act, or (c) such
holder provides the Company with reasonable assurances that the Preferred Shares
or such Registrable Securities can be sold pursuant to Rule 144 under the 1933
Act (or a successor rule thereto) without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold.
h. Holdback Agreement. Buyers agree not to effect any sale or transfer
of any of (i) the Registrable Securities and/or (2) any Common Stock issued upon
conversion of the Company's 5% Cumulative Convertible Preferred Stock Series C,
$10 par value per share (the "Series C Common Shares"), for a one year period
commencing on the Closing Date, other than sales or transfers to "affiliates,"
as that term is defined under the 1934 Act, who agree in writing to be bound by
the foregoing; provided, however, that notwithstanding the foregoing, Buyers
shall have the right to pledge any or all of the Registrable Securities and the
Series C Common Shares in connection with margin transactions, provided such
Registrable Securities are not used to satisfy margin calls. In consideration of
this Agreement, the Company agrees to provide in the Amended and Restated
Certificate of Incorporation, a form of which is attached hereto as Exhibit
C(2), that the Conversion Price for the Company's 5% Cumulative Convertible
Preferred Stock Series C, $10 par value per share, shall be $3.00.
i. Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyers and is a valid and
binding agreement of the Buyers enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyers that:
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a. Organization and Qualification. The Company is a corporation
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of the subsidiaries of the Company (the "Subsidiaries") is a
corporation duly organized, validly existing in good and in good standing under
the laws of the jurisdictions in which it is incorporated. The Company and its
Subsidiaries each have the requisite corporate power to own their properties and
to carry on their business as now being conducted. The Company and each of the
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the name of the business conducted
by it makes such qualification necessary and where the failure so to qualify
would have a Material Adverse Effect. "Material Adverse Effect" means any
material adverse effect on the operations, properties or financial condition of
the Company and the Subsidiaries taken as a whole.
b. Each of the Subsidiaries of the Company is listed on Schedule 3(a),
attached hereto and hereby incorporated by reference. Other than the
Subsidiaries, the Company does not as of the date of this Agreement, and on the
Closing Date will not, own or control, directly or indirectly, any interest in
any other corporation, association, limited partnership, limited liability
company or other business entity of any kind whatsoever. The Company is not as
of the date of this Agreement, and on the Closing Date will not be, a
participant in any joint venture, partnership or similar arrangement.
c. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement, and to issue the Preferred Shares and the
Registrable Securities in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Registration Rights Agreement and
the Side Letter Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors, or its stockholders is required, (iii) this
Agreement, the Registration Rights Agreement and the Side Letter Agreement have
been duly executed and delivered by the Company, and (iv) this Agreement, the
Registration Rights Agreement and the Side Letter Agreement 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
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies or by other equitable principles of general application.
d. Capitalization. The authorized capital stock of the Company consists
of (i) 60,000,000 shares of Common Stock of which 43,743,301 shares are issued
and outstanding, and (ii) 200,000 shares of serial preferred stock, $10 par
value per share ("Preferred Stock") of which 2231 shares are issued and
outstanding as 5% Cumulative Convertible Preferred Stock, Series C. Ten Thousand
Preferred Shares will be issued at the Closing. No other shares of Common Stock
or of serial preferred stock will be issued and outstanding on the Closing Date.
All of such outstanding shares have been validly issued, are fully paid and
nonassessable and have been issued in compliance with applicable federal and
state securities laws. No shares of Common
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Stock or Preferred Stock are subject to preemptive rights or any other similar
rights of the stockholders of the Company. Except as disclosed in Schedule 3(d)
as of the effective date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities, and (iii) there are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of its or their securities under the
1933 Act (except the Registration Rights Agreement). The Company has furnished
to the Buyers true and correct copies of the Company's Articles of
Incorporation, as amended, as in effect on the date hereof ("Articles of
Incorporation") and the Company's Bylaws, as in effect on the date hereof (the
"Bylaws").
e. Issuance of Securities. The Registrable Securities and Preferred
Shares are duly authorized and, upon issuance in accordance with the terms
hereof and thereof, shall be validly issued, fully paid and non-assessable, free
from all liens and encumbrances, including, without limitation, liens and
charges with respect to the issuance thereof, not subject to any preemptive
rights, and issued in compliance with applicable federal and state securities
laws and the rules and regulations of each national securities exchange or
automated quotation system, if any, on which shares of Common Stock are listed
as of the date of issuance.
f. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Side Letter Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby will not (i) result in a violation of the Articles of
Incorporation or Bylaws 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 the Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, federal
and state securities laws and regulations and rules and regulations of national
securities exchanges and automated quotation systems, if any, on which the
Common Stock is listed as of the Closing Date) 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 for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). The
business of the Company and the Subsidiaries is not being conducted, and shall
not be conducted through the Registration Period (as defined herein), in
violation of any law, ordinance, regulation of any governmental entity, except
for possible violations which either singly or in the aggregate do not have a
Material Adverse Effect. Except as required under the 1933 Act and any
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
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in order for it to execute, deliver or perform any of its obligations under this
Agreement in accordance with the terms hereof.
g. SEC Documents, Financial Statements. Since May 31, 1992, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "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 (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as the
"SEC Documents"). As of their respective dates, 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 (as 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, 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). The Company is
current in all of its required filings, and otherwise in compliance with its
obligations, under the Exchange Act.
h. Representations Complete. None of the representations, warranties or
covenants made by Company in this Agreement, nor any statement made in any
Schedule, Exhibit or certificate furnished to Buyers pursuant to this Agreement,
when all such documents are read together in their entirety, contains or will at
the Closing contain any untrue statement of a material fact, or omits or will
omit at Closing to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
i. Absence of Certain Changes. Since November 30, 1996 there has been
no material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or prospects
of the Company.
j. Absence of Litigation. Except as set forth in Schedule 3(j), there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, wherein an unfavorable decision, ruling or
finding would have a
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Material Adverse Effect or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein.
To the Company's knowledge, there are no actions, suits, proceedings or
investigations pending against the employees of the Company before any court or
governmental agency (nor, to the Company's knowledge, is there any threat or
basis therefor) involving the prior employment of any of such employees, their
obligations under any agreements with prior employers or their use of
information or techniques allegedly proprietary to any of their former
employers. The Company is not a party to any order, writ, injunction, judgment,
or decree of any court or governmental agency or instrumentality. There is no
action, suit, proceeding, or investigation by the Company currently pending or
that the Company presently intends to initiate.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect to the
Preferred Shares as required under Regulation D and to provide a copy thereof to
the Buyers promptly after such filing.
c. Reporting Status. Until the earlier of (i) the date as of which the
Investors (as that term is defined in the Registration Rights Agreement) may
sell all of the Registrable Securities without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto), or (ii) the date
on which (A) the Investors have sold all the Registrable Securities and (B) none
of the Preferred Shares is outstanding (the "Registration Period"), the Company
shall file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the sale of
the Preferred Shares for the Company's internal working capital purposes and
shall not, directly or indirectly, use such proceeds for any loan to or
investment in any other corporation, partnership, enterprise or other person
except as the Company's board of directors deems necessary in order to develop
and commercialize the Company's technology.
e. Financial Information. The Company agrees to send the following
reports to the Buyers during the Registration Period: (i) within five (5) days
after the filing thereof with the SEC, a copy of its Annual Report on Form 10-K,
its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; and (ii)
within one day after release thereof, copies of all press releases issued by the
Company or any of its subsidiaries. In addition, the Company will furnish to the
Buyers any financial
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information, reports or analyses provided to any institution or other party
lending funds to the Company as soon as practicable after release of such
documents to such party.
f. Access to Information. The Buyers shall have the right to visit and
inspect any of the books and records and properties of the Company and its
subsidiaries, if any, and to discuss their affairs, finances and accounts with
their officers, all at such reasonable times and as often as may be reasonably
requested in writing and on reasonable notice.
g. Rule 144A(d)(4). The Company will comply with the requirements of
Rule 144A(d)(4).
h. Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the issuance of the Conversion Shares and
the Damage Shares.
i. Listing. The Company shall promptly secure the listing of the
Registrable Securities upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Registrable Securities from time to time issuable under the terms of this
Agreement and the Registration Rights Agreement.
j. Expenses. Each shall bear all of their own costs and expenses,
including legal and accounting fees, incurred in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall instruct its transfer agent to issue certificates,
registered in the name of the Buyers or their nominee, for the Conversion Shares
and Damage Shares in such amounts as specified from time to time by the Buyers
to the Company. Prior to registration of the Registrable Securities pursuant to
an effective registration statement, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
shall provide instructions and opinions of counsel to its transfer agent in
accordance with Section 3(p) of the Registration Rights Agreement. The Company
warrants that no instruction other than such instructions referred to in this
Section 5, and stop transfer instructions to give effect to Section 2(f) hereof,
in the case of the Registrable Securities, prior to registration of the
Registrable Securities under the 1933 Act, will be given by the Company to its
transfer agent and that the Preferred Shares and the Registrable Securities
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section shall affect in any way the Buyers'
obligations and agreement to comply with all applicable securities laws upon
resale of the Registrable Securities. If the Buyers provide the Company with an
opinion of counsel, reasonably satisfactory in form, scope and substance to the
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Company, that registration of a resale by the Buyers of any of the Preferred
Shares or the Registrable Securities is not required under the 1933 Act, the
Company shall permit the transfer, and promptly instruct its transfer agent to
issue one or more certificates in such name and in such denominations as
specified by the Buyers.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Preferred Shares is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:
a. The parties shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to each other.
b. The Buyers shall have delivered the Purchase Price to the Company by
wire transfer of immediately available funds pursuant to the wiring instructions
provided by the Company.
c. The Company and GFL shall have executed the Side Letter Agreement
and delivered the same to each other.
7. CONDITIONS TO THE BUYERS' OBLIGATION TO PURCHASE.
The obligation of the Buyers to purchase the Preferred Shares is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Buyers' sole
benefit and may be waived by the Buyers at any time in their sole discretion:
a. The parties shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to each other.
b. The Company and GFL shall have executed the Side Letter Agreement
and delivered the same to each other.
c. (i) The Board of Directors of the Company shall have caused the
Company to file with the Secretary of State of Delaware the Certificate of
Designation in the form attached hereto as Exhibit C(1); (ii) the Controlling
Shareholders shall have executed and delivered to the Buyers a Written Consent
of Shareholders approving the filing by the Company with the Secretary of State
of Delaware of the Amended and Restated Certificate of Incorporation in the form
attached hereto as Exhibit C(2); and (iii) the Board of Directors of the Company
shall have taken all other necessary or appropriate actions in order to
effectuate the filing by the Company, as promptly as possible after the Closing
Date, with the Secretary of State of Delaware of the
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Amended and Restated Certificate of Incorporation in the form attached hereto as
Exhibit C(2).
d. Until the Effective Date, as defined in the Registration Rights
Agreement, the Common Stock shall be authorized for quotation on the Small Cap
Market of the National Association of Securities Dealers Automated Quotation
("NASDAQ") System ("NASDAQ SmallCap") and trading in the Common Stock on NASDAQ
SmallCap shall not have been suspended by the SEC or NASDAQ.
e. The Buyers shall have received the opinion of the Company's counsel
dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyers and in substantially the same form as Exhibit D.
f. The Company shall have executed and delivered the Stock Certificate
to the Buyers.
8. INDEMNIFICATION.
a. Subject to Section 8(d), below, to the extent permitted by law, the
Company will indemnify, hold harmless and defend (i) the Buyers, and (ii) the
directors, officers and each person who controls either or both Buyers within
the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act"), if any (each, an "Indemnified Person"), against any losses,
claims, damages, liabilities or expenses (joint or several) (collectively,
"Claims") to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any breach by the Company of any of the
representations, warranties, covenants and/or agreements of the Company in this
Agreement. The Company shall reimburse the Indemnified Persons promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 8(a) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person.
b. Subject to Section 8(d), below, the Buyers agree jointly to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 8(a), the Company, and each of its directors and officers
(each an "Indemnified Party" and collectively, an "Indemnified Parties"),
against any Claim to which any of them may become subject, insofar as such Claim
arises out of or is based upon any breach by the Buyers of any of the
representations, warranties, covenants and/or agreements of the Buyers in this
Agreement, and the Buyers will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity
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agreement contained in this Section 8(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Buyers, which consent shall not be unreasonably withheld.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 8 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to made against any indemnifying party under this
Section 8, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. In such event, the Company or the Buyers, as the case may be, shall
pay reasonable fees for only one separate legal counsel for the Indemnified
Persons or the Indemnified Parties, as the case may be. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 8,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 8 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
d. Limitations on Indemnification Obligations. Notwithstanding anything
to the contrary in this Agreement:
(i) Neither the Company nor the Buyers shall be obligated to
indemnify any Indemnified Person or Indemnified Party, as the case may
be, pursuant to this Section 8, until the aggregate amount of all
Claims for which such Indemnified Person or Indemnified Party, as the
case may be, seeks to be so indemnified exceeds One Hundred Thousand
Dollars ($100,000), whereupon such Indemnified Person or Indemnified
Party shall be entitled to be so indemnified for the full amount of all
such Losses in excess of the foregoing threshold amount;
(ii) The maximum aggregate liability of the Company to the
Indemnified Persons for any reason whatsoever arising out of or related
to this Agreement, including, without limitation, for indemnification
with respect to Claims, shall not exceed Ten Million Dollars
($10,000,000) Dollars.
Page 24 of 89
(iii) The maximum aggregate liability of the Buyers to the
Indemnified Parties for any reason whatsoever arising out of or related
to this Agreement, including, without limitation, for indemnification
with respect to Claims, shall not exceed Ten Million Dollars
($10,000,000) Dollars.
9. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws.
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. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement: Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor either of the Buyers makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by telefacsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
0000 X.X. 00xx Xxxx
Xxxxxxxxxxx, XX 00000
Page 25 of 89
Attention: Xxxxxx X. Xxxx, Xx.
With copy to:
Marks & Murase, L.L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
If to Clearwater IV, at the address on the signature page.
With copy to:
Rosenman & Colin, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to Clearwater Offshore, at the address on the signature page.
With copy to:
Rosenman & Colin, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Each party shall provide notice to the other party of any change in address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor the Buyers shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other (which
consent may be withheld for any reason in the sole discretion of the party from
whom consent is sought). Notwithstanding the foregoing, either or both of the
Buyers may assign their respective rights hereunder to any of their
"affiliates," as that term is defined under the 1934 Act, without the consent of
the Company, provided, however, that any such assignment shall not release such
Buyer of its obligations hereunder unless such obligations are assumed by such
affiliate and the Company has consented to such assignment and assumption, such
consent not to be unreasonably withheld.
Page 26 of 89
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. The representations and warranties of the Company and the
Buyers contained in Sections 2 and 3 shall survive for a period of two (2) years
subsequent to the Closing, and the agreements and covenants set forth in
Sections 4, 5, 8(a), 8(b), 8(c), 8(d) and this Article 9 shall survive the
Closing. Each party which constitutes the Buyers shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
k. Publicity. The Company and the Buyers shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of the Buyers, to make any
press release with respect to such transactions as is required by applicable law
and regulations (although the Buyers shall be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof).
l. 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.
m. Termination. In the event that the Closing shall not have occurred
on or before five (5) days from the date hereof, this Agreement shall terminate
at the close of business on such date.
Page 27 of 89
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
XXXX/BIOPHILE INTERNATIONAL CORPORATION
By: /s/ Xxxxxx X. Xxxx Xx.
-----------------------
Name: Xxxxxx X. Xxxx Xx.
Its: President and CEO
CLEARWATER FUND IV, LLC
By: /s/ Hans Xxxxxxxx Xxxx
-----------------------
Name: Hans Xxxxxxxx Xxxx
Its: Managing Member
Address: 000 Xxxxx Xxxx Xxxx - Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
CLEARWATER OFFSHORE FUND, LTD.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------
Name: Xxxxxxx Xxxxxxxx
Its: Director
Address: c/o New World Trust (Bahamas) Limited
Xxxx-Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxx Xxxxxx
P.O. Box N 4465
Nassau, Bahamas
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Page 28 of 89
