EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May 14, 2001,
by and among GENUS, INC., a corporation organized under the laws of the State of
California (the "COMPANY"), and the purchasers (the "PURCHASERS") set forth on
the execution pages hereof (the "EXECUTION PAGES").
WHEREAS:
A. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("REGULATION D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT").
B. Each Purchaser desires to purchase, severally and not jointly,
subject to the terms and conditions stated in this Agreement, (i) shares of the
Company's common stock, no par value (the "COMMON STOCK"), and (ii) warrants in
the form attached hereto as Exhibit A (including any warrants issued in
replacement thereof, the "WARRANTS"), to acquire shares of Common Stock. The
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as the "WARRANT SHARES."
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit B (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the meanings
ascribed to them as provided below:
"BUSINESS DAY" shall mean any day on which the principal United States
securities exchange or trading market on which the Common Stock is listed or
traded as reported by NTMS (as defined below) is open for trading.
"CLOSING PRICE" shall mean for the Common Stock as of any date, the closing
bid price of such security on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by the
Research Service of Nasdaq Trading and Market Services (or a comparable
reporting service of national reputation selected by the Purchasers as provided
in Section 8(n) hereof, and reasonably acceptable to the Company if the Research
Service of Nasdaq Trading and Market Services is not then reporting closing bid
prices of such security) (collectively, "NTMS"), or if the foregoing does not
apply, the last reported sale price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by NTMS,
or, if no sale price is reported for such security by NTMS, the average of the
bid prices of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.), in
each case for such date or, if such date was not a Trading Day (as defined
below) for such security, on the next preceding day which was a Trading Day. If
the Closing Price cannot be calculated for a share of Common Stock as of either
of such dates on any of the foregoing bases, the Closing Price of such security
on such date shall be the fair market value as determined by an investment
banking firm selected by the Company and reasonably acceptable to the
Purchasers, with the costs of such appraisal to be borne by the Company.
"INVESTMENT AMOUNT" shall mean the dollar amount to be invested in the
Company at the Closing pursuant to this Agreement by a Purchaser, as set forth
on the Execution Page hereto executed by such Purchaser.
"MARKET PRICE" shall mean, with respect to any date of determination, the
Closing Price on the Trading Day immediately preceding such date of
determination, appropriately adjusted to reflect any stock dividend, stock split
or similar transaction during either such relevant period.
"MATERIAL ADVERSE EFFECT" shall mean any material adverse effect on (i) the
Securities, (ii) the ability of the Company to perform its obligations hereunder
(including the issuance of the Shares and the Warrants), under the Warrants
(including the issuance of the Warrant Shares) or under the Registration Rights
Agreement or (iii) the business, operations, properties, prospects or financial
condition of the Company and its subsidiaries, taken as a whole.
"PRO RATA PERCENTAGE" shall mean, with respect to any Purchaser, a
percentage computed by dividing such Purchaser's Investment Amount by the
aggregate Investment Amounts of all Purchasers.
"SECURITIES" shall mean the Shares, the Warrants and the Warrant Shares.
"SHARES" means the shares of Common Stock to be issued and sold by the
Company and purchased by the Purchasers at the Closing.
"TRADING DAY" shall mean a Business Day on which at least 10,000 shares of
Common Stock are traded on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by NTMS.
2. PURCHASE AND SALE OF SHARES AND WARRANTS.
a. Generally. Except as otherwise provided in this Section 2 and
subject to the satisfaction (or waiver) of the conditions set forth in Section 6
and Section 7 below, each Purchaser shall purchase the number of Shares and
Warrants determined as provided in this Section 2, and the Company shall issue
and sell such number of Shares and Warrants to each Purchaser for such
Purchaser's Investment Amount as provided below. The Company's agreement with
each of the Purchasers is a separate agreement, and the sale of the Securities
to each of the Purchasers is a separate sale.
b. Number of Closing Shares and Warrants; Form of Payment; Closing
Date.
i. On the Closing Date (as defined below), the Company shall sell and
each Purchaser shall buy (A) the number of Shares as is equal to the quotient of
(I) such Purchaser's Investment Amount divided by (II) $3.00 and (B) Warrants
exercisable for a number of shares of Common Stock equal to 50% of the number of
Shares referred to in subclause (A) above. On the Closing Date, each Purchaser
shall pay the Company an amount equal to such Purchaser's Investment Amount.
ii. On the Closing Date, each Purchaser shall pay its Investment Amount
by wire transfer to the Company, in accordance with the Company's written wiring
instructions against delivery of certificates representing the Shares and duly
executed Warrants being purchased by such Purchaser, and the Company shall
deliver such Shares and Warrants against delivery of such Purchaser's Investment
Amount.
iii. Subject to the satisfaction (or waiver) of the conditions thereto
set forth in Section 6 and Section 7 below, the date and time of the sale of the
Shares and the Warrants pursuant to this Agreement (the "CLOSING") shall be 4:00
pm. San Francisco time on May 14, 2001 or such other date or time as Xxxxx Fargo
Xxx Xxxxxx ("WFVK") and the Company may mutually agree ("CLOSING DATE"). The
Closing shall occur at the San Francisco offices of WFVK, or at such other place
as WFVK and the Company may otherwise mutually agree.
3. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
Each Purchaser severally and not jointly represents and warrants to the
Company as follows:
a. Purchase for Own Account. The Purchaser is purchasing the
Securities for the Purchaser's own account and not with a present view towards
the distribution thereof. The Purchaser understands that the Purchaser must
bear the economic risk of this investment indefinitely, unless the Securities
are registered pursuant to the Securities Act and any applicable state
securities or blue sky laws or an exemption from such registration is available,
and that the Company has no present intention of registering any such Securities
other than as contemplated by the Registration Rights Agreement.
Notwithstanding anything in this Section 3(a) to the contrary, by making the
foregoing representation, the Purchaser does not agree to hold the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption from registration under the Securities Act and any
applicable state securities laws.
b. Information. The Purchaser has been furnished all materials
(excluding any material nonpublic information) relating to the business,
finances and operations of the Company and its subsidiaries and materials
relating to the offer and sale of the Securities that have been requested by the
Purchaser. The Purchaser has been afforded the opportunity to ask questions of
the Company and has received what the Purchaser believes to be satisfactory
answers to any such inquiries. The Purchaser understands that its investment in
the Securities involves a high degree of risk. Neither such inquiries nor any
other due diligence investigation conducted by the Purchaser or its counsel or
any of its representatives shall modify, amend or affect the Purchaser's right
to rely on the Company's representations and warranties contained in Section 4
below.
c. Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
d. Authorization; Enforcement. The Purchaser has the requisite power
and authority to enter into and perform its obligations under this Agreement and
to purchase the Shares and the Warrants in accordance with the terms hereof.
This Agreement has been duly and validly authorized, executed and delivered on
behalf of the Purchaser and is a valid and binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity).
e. Transfer or Resale. The Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, or (b)
the Purchaser shall have delivered to the Company an opinion of counsel
reasonably acceptable to the Company (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that the Securities to be sold or transferred may be sold or transferred
under an exemption from such registration, and (ii) neither the Company nor any
other person is under any obligation to register such Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder, in each case, other than pursuant to the
Registration Rights Agreement.
f. Legends. The Purchaser understands that the Shares and the Warrants
and, until such time as the Shares and Warrant Shares have been registered under
the Securities Act as contemplated by the Registration Rights Agreement or
otherwise may be sold by the Purchaser under Rule 144, the certificates for the
Shares and Warrant Shares may bear a restrictive legend in substantially the
following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state of the United States. The securities
represented hereby may not be offered or sold in the absence of
an effective registration statement for the securities under
applicable securities laws unless offered, sold or transferred
under an available exemption from the registration requirements
of those laws.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if (a) the sale of such Security is registered under the Securities Act
or (b) in connection with the resale of such Security, such holder provides the
Company with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale
or transfer of such Security may be made without registration under the
Securities Act or (c) such holder provides the Company with reasonable
assurances that such Security can be sold under Rule 144(k). The Purchaser
agrees to sell all Securities, including those represented by a certificate(s)
from which the legend has been removed, pursuant to an effective registration
statement or under an exemption from the registration requirements of the
Securities Act. The legend shall be removed when such Security is sold pursuant
to an effective registration statement or may be sold by a Purchaser who is not
an "affiliate" of the Company under Rule 144(k).
g. Investor Status. The Purchaser is an "ACCREDITED INVESTOR" within
the meaning of Rule 501 Regulation D under the Securities Act. In the normal
course of its business, it invests in or purchases securities similar to the
Securities and it has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of purchasing the
Securities.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser as follows:
a. Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized and existing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
to own its properties and to carry on its business as now being conducted. 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 the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. Schedule 4(a) sets
forth the Company's jurisdiction of incorporation and the name of each of the
Company's subsidiaries and its jurisdiction of incorporation.
b. Authorization; Enforcement. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Warrants and the Registration Rights Agreement, to issue and sell
the Shares and the Warrants in accordance with the terms hereof and to issue the
Warrant Shares upon exercise of the Warrants in accordance with the terms of the
Warrants; (ii) the execution, delivery and performance of this Agreement, the
Warrants and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance of the
Shares and the issuance of the Warrants and the reservation for issuance and
issuance of the Warrant Shares) 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 shareholders is required; (iii) this Agreement has been duly
executed and delivered by the Company; and (iv) this Agreement constitutes, and,
upon execution and delivery by the Company and the other parties thereto to the
extent required of the Registration Rights Agreement and the Warrants, such
agreements will constitute, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
c. Capitalization. The capitalization of the Company and each of its
subsidiaries as of the date hereof is set forth on Schedule 4(c), including the
authorized capital stock, the number of shares issued and outstanding, the
number of shares issuable and reserved for issuance pursuant to the Company's
stock option plans, the number of shares issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of capital stock. All of such outstanding shares of the Company's
capital stock have been, or upon issuance will be, validly issued, fully paid
and nonassessable. Except as set forth on Schedule 4(c), no shares of capital
stock of the Company (including the Shares and the Warrant Shares) or any of the
subsidiaries are subject to preemptive rights or any other similar rights of the
shareholders of the Company or any liens or encumbrances. Except for the
Securities and as disclosed in Schedule 4(c), as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever to which the Company or any of
the subsidiaries is a party relating to the issuance by the Company or any of
its subsidiaries of securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or such subsidiaries, and (ii) there are no agreements or arrangements under
which the Company or any of its subsidiaries is obligated to register the sale
of any of its or their securities under the Securities Act (except the
Registration Rights Agreement). Except as set forth on Schedule 4(c), there are
no securities or instruments containing antidilution or similar provisions that
may be triggered by the issuance of the Securities in accordance with the terms
of this Agreement, the Warrants or the Registration Rights Agreement and the
holders of the securities and instruments listed on such Schedule 4(c) have
waived any rights they may have under such antidilution or similar provisions in
connection with the issuance of the Securities in accordance with the terms of
this Agreement, the Warrants or the Registration Rights Agreement. The Company
has made available to each Purchaser true and correct copies of the Company's
Articles of Incorporation as in effect on the date hereof ("ARTICLES OF
INCORPORATION"), the Company's By-laws as in effect on the date hereof (the
"BY-LAWS") and all other instruments and agreements governing securities
convertible into or exercisable or exchangeable for capital stock of the
Company, except for stock options granted under any benefit plan of the Company.
d. Issuance of Shares. The Shares are duly authorized and when issued
and paid for in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and encumbrances
(other than those imposed through acts or omissions of the Purchaser thereof),
and will not be subject to preemptive rights or other similar rights of
shareholders of the Company and will not impose personal liability upon the
holder thereof. The Warrant Shares are duly authorized and reserved for
issuance, and, upon exercise of the Warrants in accordance with the terms
thereof, will be validly issued, fully paid and non-assessable and free from all
taxes and liens, claims and encumbrances (other than those imposed through acts
or omissions of the Purchaser thereof), and will not be subject to preemptive
rights or other similar rights of shareholders of the Company and will not
impose personal liability upon the holder thereof.
e. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Warrants 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 Shares and the Warrant Shares and the issuance of the Warrants)
will not (i) conflict with or result in a violation of the Articles of
Incorporation or By-laws or (ii) conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including (assuming the accuracy of the
representations and warranties of the Purchasers) the United States federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected (except, with respect to clause (ii), for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation, By-laws and other organizational
documents and neither the Company nor any of its subsidiaries is in default (and
no event has occurred which, with notice or lapse of time or both, would put the
Company or any of its subsidiaries in default) under, nor has there occurred any
event giving others (with notice or lapse of time or both) any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, except for actual or possible violations, defaults or rights as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for actual or possible violations, if any, the sanctions for which either singly
or in the aggregate would not have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, the Company is not required to
obtain any consent, approval, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or self
regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement (including without limitation the issuance and
sale of the Shares and Warrants as provided hereby), the Warrants (including
without limitation the issuance of the Warrant Shares) or the Registration
Rights Agreement, in each case in accordance with the terms hereof or thereof.
The Company is not in violation of the listing requirements of The Nasdaq Stock
Market and does not reasonably anticipate that the Common Stock will be delisted
by The Nasdaq Stock Market in the foreseeable future based on its rules (and
interpretations thereof) as currently in effect.
f. SEC Documents; Financial Statements. Since January 1, 2000, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and has filed all
registration statements and other documents required to be filed by it with the
SEC pursuant to the Securities Act (all of the foregoing filed prior to the date
hereof, and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to herein as the "SEC DOCUMENTS"). The Company has made available to
each Purchaser true and complete copies of the SEC Documents, except for the
exhibits and schedules thereto and the documents incorporated therein. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act or the Securities Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Any statements made in any such SEC Documents that are or
were required to be updated or amended under applicable law have been so updated
or amended. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC applicable with respect thereto. Such financial statements have been
prepared in accordance with United States 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 not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit adjustments). Except as set
forth in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to the date of such SEC Documents and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
SEC Documents, which liabilities and obligations referred to in clauses (i) and
(ii), individually or in the aggregate, would not have a Material Adverse
Effect.
g. Absence of Certain Changes. Except as disclosed in the SEC
Documents, since December 31, 2000, there has been no change or development
which individually or in the aggregate has had or could have a Material Adverse
Effect.
h. Absence of Litigation. Except as disclosed in Schedule 5(h) or the
SEC Documents, 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, threatened
against or affecting the Company, or any of its subsidiaries, or any of their
directors or officers in their capacities as such which would have a Material
Adverse Effect.
i. Intellectual Property. The Company and each of its subsidiaries
owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) and other similar rights and proprietary knowledge (collectively,
"INTANGIBLES") necessary for the conduct of its business as now being conducted
and as proposed to be conducted. Neither the Company nor any of its
subsidiaries has received written notice that it is infringing upon or in
conflict with any third party Intangibles. Neither the Company nor any of its
subsidiaries has entered into any consent, indemnification, forbearance to xxx
or settlement agreements with respect to the validity of the Company's or such
subsidiary's ownership or right to use its Intangibles. The Intangibles are
valid and enforceable, and no registration relating thereto has lapsed, expired
or been abandoned or canceled or is the subject of cancellation or other
adversarial proceedings, and all applications therefor are pending and in good
standing. The Company has complied with its contractual obligations relating to
the protection of the Intangibles used pursuant to licenses. To the Company's
knowledge, no person is infringing on or violating the Intangibles owned or used
by the Company.
j. Environment. Except as disclosed in the SEC Documents (i) there is
no environmental liability, nor factors likely to give rise to any environmental
liability, affecting any of the properties of the Company or any of its
subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect and (ii) neither the Company nor any of the subsidiaries has
violated any environmental law applicable to it now or previously in effect,
other than such violations or infringements that, individually or in the
aggregate, have not had and will not have a Material Adverse Effect.
k. Title. The Company and each of its subsidiaries has good title in
fee simple to all real property and good title to all personal property owned by
it which is material to its business, free and clear of all liens, encumbrances
and defects except for such defects in title that, individually or in the
aggregate, could not have a Material Adverse Effect. Any real property and
facilities held under lease by the Company or any of its subsidiaries are held
by the Company or such subsidiary under valid, subsisting and enforceable leases
with such exceptions which have not had and will not have a Material Adverse
Effect.
l. Insurance. The Company and its subsidiaries maintain such insurance
relating to their business, operations, assets, key-employees and officers and
directors as is appropriate to their business, assets and operations, in such
amounts and against such risks as are customarily carried and insured against by
owners of comparable businesses, assets and operations, and such insurance
coverages will be continued in full force and effect to and including the
Closing Date other than those insurance coverages in respect of which the
failure to continue in full force and effect could not reasonably be expected to
have a Material Adverse Effect.
m. Acknowledgment Regarding the Purchasers' Purchase of the Securities.
The Company acknowledges and agrees that no Purchaser is acting as a financial
advisor or is acting as a fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, and the
relationship between the Company and the Purchasers is "arms length" and that
any statement made by any Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is merely incidental to such Purchaser's purchase
of Securities and has not been relied upon by the Company, its officers or
directors in any way. The Company further represents to the Purchaser that the
Company's decision to enter into this Agreement has been based solely on an
independent evaluation by the Company and its representatives.
n. No Brokers. The Company has not engaged any person to which or to
whom brokerage commissions, finder's fees, financial advisory fees or similar
payments are or will become due in connection with this Agreement or the
transactions contemplated hereby except for WFVK and Xxxxxxx Securities Inc.,
whose commissions and fees will be paid by the Company.
o. Tax Status. The Company and each of its subsidiaries has made or
filed all material federal, state and local income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company or the applicable subsidiary has
set aside on its books provisions adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no material unpaid taxes claimed to be due by the
taxing authority of any jurisdiction. The Company has not executed a waiver
with respect to any statute of limitations relating to the assessment or
collection of any federal, state or local tax. None of the Company's tax
returns have been or is being audited by any taxing authority.
p. No General Solicitation. Neither the Company nor any person
participating on the Company's behalf in the transactions contemplated hereby
has conducted any "general solicitation" or "general advertising" as such terms
are used in Regulation D, with respect to any of the Securities being offered
hereby.
q. Securities Laws. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security
under circumstances that would require registration of the Securities being
offered hereby under the Securities Act or cause this offering of Securities to
be integrated with any prior offering of securities of the Company for purposes
of the Securities Act. The offer, sale and delivery of shares of Common Stock
upon exercise of the Warrants will be exempt from the registration requirements
of Section 5 of the Securities Act. Assuming the truth and accuracy of the
representations and warranties of the Purchasers set forth in Section 3 of this
Agreement, the Purchasers will not be statutory underwriters within the meaning
of Section 2(a) 11 of the Securities Act.
r. Form S-3 Eligibility. The Company is currently eligible to register
the resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act. There exist no facts or circumstances (including without
limitation any required approvals or waivers of any circumstances that may delay
or prevent the obtaining of accountant's consents) that would prohibit or delay
the preparation and filing of a registration statement on Form S-3 with respect
to the Registrable Securities (as defined in the Registration Rights Agreement).
s. Disclosure. All information relating to or concerning the Company
and its subsidiaries set forth in this Agreement or provided to the Purchaser
pursuant to Section 3(b) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or its subsidiaries or their businesses,
properties, operations, prospects or financial conditions, which has not been
publicly disclosed but, under applicable law, rule or regulation, would be
required to be disclosed by the Company in a registration statement filed on the
date hereof by the Company under the Securities Act with respect to a primary
issuance of the Company's securities. The Company has not disclosed or
provided, and without such Purchaser's consent thereto, will not hereafter
disclose or provide to any Purchaser, any information that (i) if disclosed,
would, or could reasonably be expected to have, a material effect on the price
of the Common Stock or (ii) according to applicable law, rule or regulation,
should have been disclosed publicly by the Company but which has not been
disclosed.
5. COVENANTS.
a. Satisfaction of Conditions. The parties shall use their best
efforts to satisfy in a timely manner each of the conditions set forth in
Section 6 and Section 7 of this Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Purchasers
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to each Purchaser on or prior to the
Closing Date.
c. Reporting Status. So long as a Purchaser beneficially owns any
Securities or has the right to acquire any Securities pursuant to this
Agreement, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and shall not terminate its status as an
issuer required to file reports under the Exchange Act even if the Exchange Act
or the rules and regulations thereunder would permit such termination.
d. Use of Proceeds. The Company shall use the net proceeds from the
sale of the Shares and the Warrants for the purposes set forth on Schedule 5(d),
but in no event shall the Company use such net proceeds to repurchase any
outstanding securities of the Company.
e. Expenses. At the Closing, the Company shall reimburse WFVK for the
out-of-pocket expenses reasonably incurred by WFVK and its affiliates and
advisors in connection with the negotiation, preparation, execution and delivery
of this Agreement, the Registration Rights Agreement, the Warrants and the other
agreements to be executed in connection herewith, including, expenses incurred
in conducting WFVK's and its affiliates' and advisors' reasonable due diligence
and WFVK's and its affiliates' reasonable attorneys' fees and expenses up to a
maximum of $30,000.
f. Financial Information. For a period of three (3) years following
the Closing, the Company agrees to send to each Purchaser (i) within ten days
after the filing with the SEC, to the extent not available through the SEC's
XXXXX system, a copy of its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q, its proxy and information statements and any Current Reports on Form
8-K and (ii) within one day after release, copies of all press releases issued
by the Company or any of its subsidiaries, if any.
g. Reservation of Shares. The Company has and 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 Shares as provided in
Section 2 hereof, and the full exercise of the Warrants and the issuance of the
Warrant Shares in connection therewith and as otherwise required hereby and by
the Warrants in accordance with the Registration Rights Agreement. The Company
shall not reduce the number of shares of Common Stock reserved for issuance
under this Agreement (except as a result of the issuance of the Shares
hereunder), the Warrants (except as a result of the issuance of the Warrant
Shares upon the exercise of the Warrants) or the Registration Rights Agreement,
without the consent of the Purchasers.
h. Listing. On the Closing Date, the Company shall have applied for
the listing of the Shares and Warrant Shares, in each case, upon each national
securities exchange and automated quotation system, if any, upon which shares of
Common Stock are then listed or quoted and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Shares from time
to time issuable hereunder and all Warrant Shares from time to time issuable
upon exercise of the Warrants. The Company shall use its best efforts to
include its shares of Common Stock in The Nasdaq Stock Market at the earliest
practical date and, in any event, by the date the first registration statement
covering the resale of the Shares is declared effective by the Securities and
Exchange Commission and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of The Nasdaq
Stock Market.
i. Additional Financings. The Company agrees that during the period
beginning on the date hereof and ending on the date which is one hundred eighty
(180) days following the Closing Date (the "LOCK-UP PERIOD"), the Company will
not, without the prior written consent of the Purchasers or their designees,
contract with any party to obtain additional financing (an "ADDITIONAL
FINANCING"). If the Purchasers consent to such Additional Financing, the
Company will not conduct any Additional Financing during the Lock-Up Period
unless it shall have first delivered to the Purchaser, at least ten (10)
Business Days prior to the closing of such Additional Financing, written notice
describing the proposed Additional Financing, including the terms and conditions
thereof, and providing the Purchasers and their affiliates an option during the
ten (10) Business Day period following delivery of such notice to purchase any
or all of the securities being offered in the Additional Financing on the same
terms as contemplated by such Additional Financing. Such option shall be
exercised by each applicable Purchaser giving written notice to the Company
within such period of its agreement to buy a specified amount of the offered
securities. Closing of such sale shall be contemporaneous with the closing of
the offering with investors other than the Purchasers (or, if there are no other
such investors, on a date specified by the Company), provided that the Company
shall provide written notice to each applicable Purchaser at least five (5)
Business Days prior to any such closing. To the extent that the Purchasers, in
the aggregate, elect to purchase more than all of such securities, the amount
that each Purchaser shall be entitled to purchase shall be pro rated based on
the Purchaser's Pro Rata Percentage. To the extent that the terms of an
Additional Financing are changed in a manner that is at least partially
favorable to prospective investors, the Company shall notify the Purchasers of
all changes in such terms and the Purchasers shall have another ten (10)
Business Day option to purchase on the revised terms and otherwise in accordance
with the provisions hereof. The limitations referred to in this Section 5(i)
shall not apply to (i) any transaction involving issuances of securities as
consideration in a merger, consolidation or acquisition of assets, or in
connection with any strategic partnership, collaboration or joint venture (the
primary purpose of which is not to raise capital), or as consideration for the
acquisition of a business, product or license by the Company, (ii) the issuance
of securities pursuant to widely distributed underwritten public offering, (iii)
the issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof as
set forth in Schedule 4(c)or issued pursuant to this Agreement,(iv) the issuance
of warrants or shares of Common Stock upon exercise thereof to WFVK or its
assigns at the Closing in consideration of its services to the Company as
placement agent for the financing contemplated by this Agreement, (v) the grant
of additional options or warrants, or the issuance of additional securities,
under any duly authorized Company stock option, stock purchase or restricted
stock plan for the benefit of the Company's employees, consultants or directors;
or (vi) any financing with no equity or equity-linked securities made to the
Company by a financial institution engaged in the business of lending money such
as a bank, trust company, insurance company or other institutional lender.
j. No Integrated Offerings. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause this offering of Securities to be integrated with any
other offering of securities by the Company for any purposes, including for
purposes of any shareholder approval provision applicable to the Company or its
securities.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell Shares and
Warrants to a Purchaser at the Closing hereunder is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions thereto;
provided, however, 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 applicable Purchaser shall have executed the signature page to
this Agreement and the Registration Rights Agreement, and delivered the same to
the Company.
b. The applicable Purchaser shall have delivered such Purchaser's
Investment Amount in accordance with Section 2(b) above.
c. The representations and warranties of the applicable Purchaser shall
be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which representations and warranties shall be true and
correct as of such date), and the applicable Purchaser shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the applicable Purchaser at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE SHARES AND
WARRANTS.
-
The obligation of each Purchaser hereunder to purchase Shares and Warrants
to be purchased by it hereunder is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in such Purchaser's sole discretion:
a. The Company shall have executed the signature pages to this
Agreement and the Registration Rights Agreement, and delivered the same to the
Purchaser.
b. The Company shall have delivered to the Purchaser duly executed
certificates representing the number of Shares and duly executed Warrants as
provided in Section 2(b) above.
c. The Shares shall be authorized for quotation on The Nasdaq Stock
Market and trading in the Common Stock or The Nasdaq Stock Market generally
shall not have been suspended or be under threat of suspension by the SEC or any
governing body of The Nasdaq Stock Market.
d. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. The Purchaser shall have received a certificate, executed
on behalf of the Company by its Chief Financial Officer, dated as of the Closing
Date, to the foregoing effect and attaching true and correct copies of the
resolutions adopted by the Company's Board of Directors authorizing the
execution, delivery and performance by the Company of its obligations under this
Agreement, the Warrants and the Registration Rights Agreement.
e. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
f. The Purchaser shall have received an opinion of the Company's
counsel, dated as of the Closing Date, relating to the matters set forth in
Exhibit C attached hereto.
g. From the date of this Agreement through the Closing Date, there
shall not have occurred any Material Adverse Effect.
h. The Company shall have provided advance notice to The Nasdaq Stock
Market of the issuance of the Shares if so required by the rules applicable
thereto.
8. GOVERNING LAW MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Each of the parties agrees
that service of process upon such party mailed by first class mail to the
address set forth in Section 8(f) shall be deemed in every respect effective
service of process upon such party in any such suit or proceeding. Nothing
herein shall affect the right of any Purchaser to serve process in any other
manner permitted by law. Each of the parties, agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution 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; Waiver. 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 the Purchasers
make 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 Company and, by the Purchasers as
provided in Section 8(n) hereof. Any waiver by the Purchasers, on the one hand,
or the Company, on the other hand, of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision of or any breach of any other provision of this
Agreement. The failure of the Purchasers, on the one hand, or the Company, on
the other hand to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
Genus, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
If to the Purchaser, to the address set forth under the Purchaser's name on the
Execution Page hereto executed by such Purchaser, with a copy to:
Xxxxx Fargo Xxx Xxxxxx
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Managing Director
Each party hereto may from time to time change its address or facsimile number
for notices under this Section 8 by giving at least ten (10) days' prior written
notice of such changed address or facsimile number, in the case of the
Purchasers to the Company, and in the case of the Company to all of the
Purchasers.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers.
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
agreements and covenants of the Company shall survive the Closing
notwithstanding any due diligence investigation conducted by or on behalf of the
Purchasers. Moreover, none of the representations and warranties made by the
Company herein shall act as a waiver of any rights or remedies a Purchaser may
have under applicable federal or state securities laws. The Company agrees to
indemnify and hold harmless each Purchaser and each of such Purchaser's
officers, directors, employees, partners, members, agents and affiliates for
loss or damage relating to the Securities purchased hereunder arising as a
result of or related to any breach by the Company of any of its representations
or covenants set forth herein, including advancement of expenses as they are
incurred.
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. In the event that the Closing Date shall not have
occurred on or before May 31, 2001, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date.
Notwithstanding any termination of this Agreement, any party not in breach of
this Agreement shall preserve all rights and remedies it may have against
another party hereto for a breach of this Agreement prior to or relating to the
termination hereof.
l. Joint Participation in Drafting. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Registration
Rights Agreement and the Warrants. As such, the language used herein and therein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party to this Agreement, the Registration Rights Agreement or the Warrants.
m. Equitable Relief. Each party acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the other parties by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, each party acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach or
threatened breach by such party of the provisions of this Agreement, that the
other parties shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required.
n. Determinations. Except as otherwise expressly provided herein, all
consents, approvals and other determinations to be made by the Purchasers
pursuant to this Agreement and all waivers and amendments to or of any
provisions in this Agreement prior to the Closing Date to be binding upon a
Purchasers shall be made by such Purchaser and except as otherwise expressly
provided herein, all consents, approvals and other determinations (other than
amendments to the terms and provisions of this Agreement) to be made by the
Purchasers pursuant to this Agreement and all waivers and amendments to or of
any provisions in this Agreement after the Closing Date shall be made by
Purchasers (excluding Purchasers who are affiliates of the Company) that have
invested more than fifty percent (50%) of the aggregate Investment Amounts
invested by all Purchasers (excluding Purchasers who are affiliates of the
Company).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
GENUS, INC.
By:
Name: Xxxxxxx Xxxxx
--------------
Title: Chairman, President and CEO
------------------------------
THE PURCHASER:
[____________________________]
By:
Name:
Title:
Investment Amount: $___________
Residence: __________________
_________________________________
_________________________________
Address: ________________________
_________________________________
_________________________________
Telephone No.:( )____________
Telecopy No.: ( )____________
Attention: ______________________
with copies of all notices to:
_________________________________
_________________________________
_________________________________
Telephone No.:( )____________
Telecopy No.: ( )____________
Attention: ______________________
EXHIBIT A
TO SECURITIES PURCHASE AGREEMENT
VOID AFTER 5:00 P.M., CALIFORNIA TIME,
ON MAY 13, 2006
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Date: May 14, 2001
GENUS, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received,__________________________, or
its registered assigns, is entitled to purchase from GENUS, INC., a corporation
organized under the laws of the State of California (the "COMPANY"), at any time
or from time to time during the period specified in Section 2 hereof,
_________________ [INSERT A NUMBER THAT IS 50% OF THE NUMBER OF SHARES PURCHASED
BY THE HOLDER ON THE CLOSING DATE PURSUANT TO THE SECURITIES PURCHASE AGREEMENT]
fully paid and nonassessable shares of the Company's common stock, no par value
(the "COMMON STOCK"), at an exercise price per share (the "EXERCISE PRICE") of
$3.50. The number of shares of Common Stock purchasable hereunder (the "WARRANT
SHARES") and the Exercise Price are subject to adjustment as provided in Section
5 hereof. The term "WARRANTS" means this Warrant and the other Warrants of the
Company issued pursuant to that certain Securities Purchase Agreement, dated as
of May 14, 2001, by and among the Company and the other signatories thereto (the
"SECURITIES PURCHASE AGREEMENT"). Capitalized terms used but not defined herein
shall have the meanings given them in the Securities Purchase Agreement.
This Warrant is subject to the following terms, provisions and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, including, without limitation, the limitations
contained in Section 8 hereof, this Warrant may be exercised at any time
during the Exercise Period (as defined below) by the holder hereof, in whole or
in part, by the surrender of this Warrant, together with a completed exercise
agreement in the form attached hereto (the "EXERCISE AGREEMENT"), to the Company
by 5 p.m. California time on any Business Day at the Company's principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof) and upon (i) payment to the Company in
cash, by certified or official bank check or by wire transfer for the account of
the Company, of the applicable Exercise Price for the Warrant Shares specified
in the Exercise Agreement or (ii) delivery to the Company of written notice of
an election to effect a Cashless Exercise (as defined in Section 12(c) hereof)
for the Warrant Shares specified in the Exercise Agreement. The Warrant Shares
so purchased shall be deemed to be issued to the holder hereof or such holder's
designee, as the record owner of such shares, as of the close of business on the
date on which this Warrant shall have been surrendered and the completed
Exercise Agreement shall have been delivered and payment shall have been made
for such shares as set forth above or, if such day is not a Business Day, on the
next succeeding Business Day. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three
Business Days, after this Warrant shall have been so exercised (the "DELIVERY
PERIOD"). If the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as
the certificates therefor do not bear a legend and the holder is not obligated
to return such certificate for the placement of a legend thereon, the Company
shall cause its transfer agent to electronically transmit the Warrant Shares so
purchased to the holder by crediting the account of the holder or its nominee
with DTC through its Deposit Withdrawal Agent Commission system ("DTC
TRANSFER"). If the aforementioned conditions to a DTC Transfer are not
satisfied, the Company shall deliver to the holder physical certificates
representing the Warrant Shares so purchased. Further, the holder may instruct
the Company to deliver to the holder physical certificates representing the
Warrant Shares so purchased in lieu of delivering such shares by way of DTC
Transfer. Any certificates so delivered shall be in such denominations as may
be requested by the holder hereof, shall be registered in the name of such
holder or such other name as shall be designated by such holder and, following
the date on which the Warrant Shares may be sold by the holder pursuant to Rule
144(k) promulgated under the Securities Act (or a successor rule), shall not
bear any restrictive legend. Upon a sale of any Warrant Shares pursuant to an
effective registration statement, any restrictive legend on the certificates
representing such Warrant Shares shall be removed. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
2. Period of Exercise. Except as set forth in Section 3 below, this Warrant
may be exercised at any time or from time to time (an "EXERCISE DATE") during
the period (the "EXERCISE PERIOD") beginning on (a) the date hereof and ending
(b) at 5:00 p.m., California time, on the fifth annual anniversary of the date
of original issuance hereof.
3. Mandatory Exercise. On any Notification Date (as defined below), the
Company may request that the Purchaser exercise this Warrant in whole but not in
part (the "MANDATORY EXERCISE") within thirty calendar (30) days after the
date of the Mandatory Exercise Notice (as defined below) by delivering a written
notice to the holder at such address as such holder shall have provided to the
Company in writing pursuant to Section 10 hereof (the "MANDATORY EXERCISE
NOTICE"). The Mandatory Exercise Notice shall set forth the Exercise Price and
the Closing Price of a share of Common Stock on each of the ten (10) consecutive
Trading Days immediately preceding the date of the Mandatory Exercise Notice and
shall state that this Warrant be exercised in conformity with this Section 3
within thirty (30) calendar days. The last day of such thirty-day period is
hereinafter referred to as the "AUTOMATIC MANDATORY EXERCISE DATE" provided such
day is a Business Day, and if not, the first Business Day thereafter shall be
considered the Automatic Mandatory Exercise Date. To the extent the holder fails
to exercise this Warrant by 5:00 pm California time of the Automatic Mandatory
Exercise Date, then (i) the holder shall forfeit such holder's rights, title and
interest under this Warrant, (ii) this Warrant shall be deemed terminated and
(iii) the holder shall deliver to the Company this Warrant marked "cancelled."
Notwithstanding the foregoing, no Mandatory Exercise may occur unless: (a) at
all times from the Notification Date through the Automatic Mandatory Exercise
Date a Registration Statement covering all Registrable Securities (as those
terms are defined in that certain Registration Rights Agreement dated May 14,
2001 by and among the company and the other signatories thereto (the
"REGISTRATION RIGHTS AGREEMENT")): (i) is effective, (ii) does not require any
amendment or supplement and (iii) discloses directly or through incorporation by
reference all material facts relating to Company and the Registrable Securities,
(b) the Company has no reason to believe that, during the period beginning on
the Notification Date and ending ninety (90) days after the Automatic Mandatory
Exercise Date (the "INITIAL SELLING PERIOD"), there will be any need to suspend
sales pursuant to the Registration Statement as a result of the need to amend or
supplement the Registration Statement or otherwise; (c) the Company covenants
not to take any action during the Initial Selling Period that is reasonably
likely to result in the suspension of sales during the Initial Selling Period;
and (d) the Mandatory Exercise Notice contains (i) a certification from the
Company's chief executive officer and chief financial officer as to the matters
set forth in the immediately preceding subclause (a) (as of the Notification
Date; provided that the Company shall immediately notify the Purchaser if such
certification is no longer true at any time on or prior to the Automatic
Mandatory Exercise Date) and subclause (b); and (ii) the covenant of the Company
set forth in the immediately preceding subclause (c). For purposes of this
Section 3, "NOTIFICATION DATE" shall mean any Business Day during the Exercise
Period but after the Trigger Date (as defined below) which Business Day is
immediately preceded by ten (10) consecutive Trading Days on each of which the
Closing Price for the Common Stock was greater than 150% of the Exercise Price;
and "TRIGGER DATE" shall mean the date the Registration Statement covering all
Registrable Securities (as those terms are defined in the Registration Rights
Agreement) is declared effective by the Securities and Exchange Commission.
4. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid
and nonassessable and free from all taxes, liens, claims and encumbrances.
(b) Reservation of Shares. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a suf-ficient number of shares of
Common Stock to provide for the exercise in full of this Warrant (without
giving effect to the limitations on exercise set forth in Section 8(g)
hereof).
(c) Listing. The Company shall use its best efforts to secure the
listing of the shares of Common Stock issuable upon exercise of or
otherwise pursuant to this Warrant upon each national securities exchange
or automated quotation system, if any, upon which shares of Common Stock
are then listed or become listed (subject to official notice of issuance
upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all shares of
Common Stock from time to time issuable upon the exercise of or otherwise
pursuant to this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and
shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of or otherwise pursuant to this Warrant
if and so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by amendment of
its charter or through any re-organi-zation, transfer of assets,
consolidation, mer-ger, dissolution, issuance or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant. Without limiting the generality of
the foregoing, the Company (i) will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition
of all or substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or
obtain exemption for the Warrant Shares for, sale to the holder of this
Warrant upon the exercise hereof under applicable securities or "blue sky"
laws of the states of the United States, and shall provide evidence of any
such action so taken to the holder of this Warrant prior to such date;
provided, however, that the Company shall not be required to qualify as a
foreign corporation or file a general consent to service of process in any
such jurisdiction.
5. Antidilution Provisions. During the Exercise Period, the Exercise Price
and the number of Warrant Shares issuable upon the exercise of the Warrants,
shall be subject to adjustment from time to time as provided in this Section 5.
In the event that any adjustment of the Exercise Price as required herein
results in a fraction of a cent, such Exercise Price shall be rounded up or down
to the nearest cent; provided that, in no event shall the Exercise Price per
share be reduced below $.01.
(a) Subdivision or Combination of Common Stock. If the Company, at any
time during the Exercise Period, subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise)
its shares of Common Stock into a greater number of shares, then, after the
date of record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If
the Company, at any time during the Exercise Period, combines (by reverse
stock split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of shares,
then, after the date of record for effecting such combination, the Exercise
Price in effect immediately prior to such combination will be
proportionately increased.
(b) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 5, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
increased or decreased to equal the quotient obtained by dividing (i) the
product of (A) the Exercise Price in effect immediately prior to such
adjustment, multiplied by (B) the number of shares of Common Stock issuable
upon exercise of this Warrant immediately prior to such adjustment, by (ii)
the adjusted Exercise Price.
(c) Consolidation, Merger or Sale. In case of any consolidation of the
Company with, or merger of the Company into, any other entity, or in case
of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company at any time during the Exercise Period, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be
made whereby the holder of this Warrant will have the right to acquire and
receive upon exercise of this Warrant in lieu of the shares of Common Stock
immediately theretofore acquirable upon the exercise of this Warrant, such
shares of stock, securities, cash or assets as may be issued or payable
with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this
Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to
insure that the provisions of this Section 5 will thereafter be applicable
as nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant. The Company will
not effect any consolidation, merger or sale or conveyance unless prior to
the consummation thereof, the successor entity (if other than the Company)
assumes by written instrument the obligations under this Warrant and the
obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the
holder may be entitled to acquire. Notwithstanding the foregoing, in the
event of any consolidation of the Company with, or merger of the Company
into, any other entity, or the sale or conveyance of all or substantially
all of the assets of the Company, at any time during the Exercise Period,
the holder of the Warrant shall, at its option, have the right to receive,
in connection with such transaction, cash consideration equal to the fair
value of this Warrant as determined in accordance with customary valuation
methodology used in the investment banking industry.
(d) Distribution of Assets. In case the Company shall declare or make
any distribution of its assets (other than cash) (or rights to acquire its
assets (other than cash)) to holders of Common Stock as a partial
liquidating dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to the Company's
shareholders of shares (or rights to acquire shares) of capital stock of a
subsidiary) (a "DISTRIBUTION"), at any time during the Exercise Period,
then, upon exercise of this Warrant for the purchase of any or all of the
shares of Common Stock subject hereto, the holder of this Warrant shall be
entitled to receive its pro-rata amount of such assets (or such rights) as
would have been payable to the holder had such holder been the holder of
such shares of Common Stock on the record date for the determination of
shareholders entitled to such Distribution.
(e) Issuances or Sales at less than Exercise Price.
(i) If at any time after May 14, 2001 the Company shall issue or
sell any shares of Common Stock (except (A) as consideration in a
merger, consolidation or acquisition of assets, or in connection with
any strategic partnership, collaboration or joint venture (the primary
purpose of which is not to raise capital), or as consideration for the
acquisition of a business, product or license by the Company, (B)
pursuant to widely distributed underwritten public offering, (C) upon
exercise or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof as set forth
in Schedule 4(c) of the Securities Purchase Agreement or issued
pursuant to such Securities Purchase Agreement, (D) upon exercise
thereof to WFVK or its assigns at the Closing in consideration of its
services to the Company as placement agent for the financing
contemplated by the Securities Purchase Agreement, (E) under any duly
authorized Company stock option, stock purchase or restricted stock
plan for the benefit of the Company's employees, consultants or
directors), and (F) in connection with any financing made to the
Company by a financial institution engaged in the business of lending
money, such as a bank, trust company, insurance company or other
institutional lender, for a consideration per share less than the
Exercise Price in effect immediately prior to such issue or sale, then
immediately upon such issue or sale the Exercise Price then in effect
shall be reduced to a price equal to the consideration per share
received by the Company upon such issuance or sale.
(ii) For purposes of this Section 5(e), in the event the Company
shall issue any securities (except (A) as consideration in a merger,
consolidation or acquisition of assets, or in connection with any
strategic partnership, collaboration or joint venture (the primary
purpose of which is not to raise capital), or as consideration for the
acquisition of a business, product or license by the Company, (B)
pursuant to widely distributed underwritten public offering, (C) upon
exercise or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof as set forth
in Schedule 4(c) of the Securities Purchase Agreement or issued
pursuant to such Securities Purchase Agreement, (D) upon exercise
thereof to WFVK or its assigns at the Closing in consideration of its
services to the Company as placement agent for the financing
contemplated by the Securities Purchase Agreement, (E) under any duly
authorized Company stock option, stock purchase or restricted stock
plan for the benefit of the Company's employees, consultants or
directors), and (F) in connection with any financing made to the
Company by a financial institution engaged in the business of lending
money, such as a bank, trust company, insurance company or other
institutional lender, which by their terms are convertible into or
exchangeable for, or consist of any right or option to purchase,
shares of Common Stock (whether or not such rights of conversion,
exchange, or purchase are immediately exercisable) and the
consideration per share for which such shares of Common Stock are
deliverable upon conversion, exchange, or exercise of such securities,
determined as provided in Subsection 5(e)(iii) below, is less than the
Exercise Price in effect immediately prior to the issuance of such
securities, then the total maximum number of shares of Common Stock
issuable upon conversion, exchange, or exercise of such securities
shall be deemed to be outstanding and to have been issued for such
consideration per share. Except as provided below, no further
adjustment of the Exercise Price shall be made pursuant to this
Section upon the actual issue of such shares upon conversion,
exchange, or exercise of such securities. Upon the redemption or
repurchase of any such securities or the expiration or termination of
the right to convert into, exchange for, or exercise with respect to,
such shares, the Exercise Price shall be readjusted to such price as
would have been obtained had the adjustment in the Exercise Price made
upon the issuance of such securities been made upon the basis of the
issuance of only such number of such securities as were actually
converted into, exchanged for, or exercised with respect to, shares of
Common Stock. If the purchase price or conversion or exchange rate
provided for in any such security shall change or a different purchase
price or rate shall become effective at any time, then, upon such
change becoming effective, the Exercise Price then in effect shall be
readjusted to such price as would have been obtained had the
adjustment made upon the issuance of such securities been made upon
the basis of (i) the issuance of only the number of shares of Common
Stock theretofore actually delivered upon the conversion, exchange, or
exercise of such securities, and the total consideration received
therefor, and (ii) the issuance, at the time of such change, of any
such securities then still outstanding for the consideration,
determined on the basis of the new price or rate, for which shares of
Common Stock are deliverable upon conversion, exchange, or exercise of
such securities. No readjustment provided for in this Subsection
5(e)(ii) shall, when taken together with any other readjustments
attributable to the same securities, increase any Exercise Price by an
amount in excess of the total of all decreases therein made prior to
the date of such readjustment pursuant to adjustments made upon
issuance of or subsequent changes with respect to such securities.
(iii) For the purposes of any computation respecting
consideration received pursuant to this Section 5(e):
(A) In the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of cash received, provided
that in no case shall any deduction be made for any commissions,
discounts, or expenses incurred by the Company for any underwriting of
the issue or otherwise in connection therewith;
(B) In the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Company,
irrespective of the accounting treatment thereof; and
(C) In the case of the issuance of securities convertible into,
exchangeable for, or consisting of any right or option to purchase,
shares of Common Stock, the aggregate consideration received for such
shares shall be equal to the consideration received by the Company for
any such securities, plus the additional minimum consideration, if
any, to be received by the Company upon the conversion, exchange, or
exercise thereof (the consideration in each case to be determined in
the same manner as provided in (A) and (B) above).
(f) Notice of Adjustment. Upon the occurrence of any event which requires
any adjustment of the Exercise Price, then, and in each such case, the Company
shall give notice thereof to the holder of this Warrant, which notice shall
state the Exercise Price resulting from such adjustment and the increase or
decrease in the number of Warrant Shares issuable upon exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Such calculation shall be certified by the
chief financial officer of the Company.
(g) Minimum Adjustment of the Exercise Price . No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(h) No Fractional Shares. No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(i) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution
(other than dividends or distributions payable in cash out of retained
earnings consistent with the Company's past practices with respect to
declaring dividends and making distributions) to the holders of the Common
Stock;
(ii) the Company shall offer for subscription pro rata to the holders
of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganiza-tion of the Company, or
reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substan-tially all of its assets
to, another corporation or entity; or
(iv) there shall be a voluntary or involun-tary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such divi-dend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable upon such
reorganization, re-classification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least fifteen (15) days prior to the record date or the date on which the
Company's books are closed in respect thereto. Failure to give any such notice
or any defect therein shall not affect the validity of the proceedings referred
to in clauses (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing,
the Company may publicly disclose the substance of any notice delivered
hereunder prior to delivery of such notice to the holder of this Warrant.
(j) Certain Events. If, at any time during the Exercise Period, any event
occurs of the type contemplated by the adjustment provisions of this Section 5
but not expressly provided for by such provisions, the Company will give notice
of such event as provided in Section 5(e) hereof, and the Company's Board of
Directors will make an appropriate adjustment in the Exercise Price and the
number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the holder shall be neither enhanced nor diminished by such
event.
(k) Certain Definitions.
(i) "BUSINESS DAY" means any day, other than a Saturday or Sunday or a
day on which banking institutions in the State of California or New York
are authorized or obligated by law, regulation or executive order to close.
(ii) "CLOSING PRICE" shall mean for the Common Stock as of any date,
the closing bid price of such security on the principal United States
securities exchange or trading market on which such security is listed or
traded as reported by the Research Service of Nasdaq Trading and Market
Services (or a comparable reporting service of national reputation selected
by the holder and reasonably acceptable to the Company if the Research
Service of Nasdaq Trading and Market Services is not then reporting closing
bid prices of such security) (collectively, "NTMS"), or if the foregoing
does not apply, the last reported sale price of such security in the
over-the-counter market on the electronic bulletin board for such security
as reported by NTMS, or, if no sale price is reported for such security by
NTMS, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc., in
each case for such date or, if such date was not a Trading Day (as defined
below) for such security, on the next preceding day which was a Trading
Day. If the Closing Price cannot be calculated for a share of Common Stock
as of either of such dates on any of the foregoing bases, the Closing Price
of such security on such date shall be the fair market value as determined
by an investment banking firm selected by the holder and reasonably
acceptable to the Company, with the costs of such appraisal to be borne by
the Company. The manner of determining the Closing Price of the Common
Stock set forth in the foregoing definition shall apply with respect to any
other security in respect of which a determination as to market value must
be made.
(iii) "COMMON STOCK," for purposes of this Section 5, includes the
Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that
the shares purchasable pursuant to this Warrant shall include only Common
Stock in respect of which this Warrant is exercisable, or shares resulting
from any subdivision or combination of such Common Stock, or in the case of
any reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 5(c) hereof, the stock or other securities
or property provided for in such Section.
(iv) "MARKET PRICE" shall mean, with respect to any date of
determination, the average Closing Price during the ten (10) Trading Days
ending on the Trading Day immediately preceding such date of determination,
appropriately adjusted to reflect any stock dividend, stock split or
similar transaction during either such relevant period. The manner of
determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of
which a determination as to market value must be made hereunder.
(v) "TRADING DAY" shall mean a Business Day on which at least 10,000
shares of Common Stock are traded on the principal United States securities
exchange or trading market on which such security is listed or traded as
reported by NTMS.
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
7. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
8. Transfer, Exchange, Redemption and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights granted to
the holder hereof are transferable in whole or in part, at any one time,
upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of the
Company referred to in Section 8(e) below, provided, however, that any
transfer or assignment shall be subject to the conditions set forth in
Sections 8(f), 8(g) and 9 hereof and to the provisions of Sections 4(e) and
4(f) of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all
purposes, and the Company shall not be affected by any notice to the
con-trary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office
or agency of the Company referred to in Section 8(e) below, for new
Warrants of like tenor of different denominations representing in the
aggregate the right to purchase the number of shares of Common Stock which
may be purchased hereunder, each of such new Warrant to represent the right
to purchase such number of shares as shall be designated by the holder
hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation
of this Warrant and, in the case of any such loss, theft, or destruction,
upon delivery of an indemnity agreement reason-ably satisfactory in form
and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any trans-fer, exchange, or replacement as
provided in this Section 8, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities transfer
taxes) and all other expenses (other than legal expenses, if any, incurred
by the holder or transferees) and charges payable in connection with the
preparation, execution, and delivery of Warrants pursuant to this Section
8. The Company shall indemnify and reimburse the holder of this Warrant for
all losses and damages arising as a result of or related to any breach by
the Company of the terms of this Warrant, including costs and expenses
(including legal fees) incurred by such holder in connection with the
enforcement of its rights hereunder.
(e) Warrant Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise,
the Warrant Shares issuable hereunder), shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the
Com-pany may require, as a condition of allowing such exercise, transfer,
or exchange, (i) that the holder or transferee of this Warrant, as the case
may be, furnish to the Company a written opinion of counsel (which opinion
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that such exercise, transfer, or
exchange may be made without registration under the Securities Act and
under applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form
and sub-stance reasonably acceptable to the Company and (iii) that the
transferee be an "ACCREDITED INVESTOR" as defined in Rule 501(a)
promulgated under the Securities Act; provided that no such opinion,
letter, or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.
9. [Reserved]
10. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) are entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.
11. Notices. Any notices required or permitted to be given under the terms
of this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by courier, or by
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Genus, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxxxxx
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 10, and, for any notice under Section 3,
with a copy to:
Xxxxx Fargo Xxx Xxxxxx
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Managing Director
12. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York. Each of the Company and the
holder further agrees that service of process upon the Company or the holder
mailed by certified or registered mail to the address set forth in Section 10
shall be deemed in every respect effective service of process upon the Company
or the holder in any such suit or proceeding. Nothing herein shall affect the
holder's or the Company's right to serve process in any other manner permitted
by law. Each of the Company and the holder agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
13. Limitations on Holder's Right to Exercise. In the event that upon
either (a) the surrender of this Warrant, together with a completed Exercise
Agreement, or (b) the delivery of the Mandatory Exercise Notice, the Company
would be obligated to issue an amount of shares of Common Stock which, when
aggregated with all shares of Common Stock issued upon exercise of all Warrants,
would exceed 19.99% of the number of shares of Common Stock outstanding on May
14, 2001 (such amount to be proportionately and equitably adjusted from time to
time in the event of stock dividends, subdivisions, combinations,
reclassifications, capital reorganizations and similar events relating to the
Common Stock) (the "Exchange Cap"), and such issuance would constitute a breach
of the Company's obligations under the rules or regulations of Nasdaq as they
apply to the Company, or any other principal securities exchange or market upon
which the Common Stock is or becomes traded (the "Cap Regulations"), the Company
shall not be obligated to issue any such shares of Common Stock in excess of the
Exchange Cap. Instead, the Company shall immediately give notice of these facts
to all holders of outstanding Warrants and shall, within twenty (20) days of the
occurrence of either (a) or (b) above, commence taking all steps reasonably
necessary to be in a position to issue shares pursuant to the exercise of this
Warrant without violating the Cap Regulations, which steps shall include (but
not be limited to) (i) the immediate preparation of all necessary proxy
solicitation materials for a meeting of the shareholders; (ii) best efforts to
obtain a waiver from the Cap Regulations for the issuances hereunder; and (iii)
the filing of such preliminary proxy solicitation materials with the Securities
and Exchange Commission within such twenty (20) day period. In the event that
shareholder approval is required for the Company to be in a position to issue
any shares pursuant to the exercise of this Warrant, the Company shall use its
best efforts to obtain such approval at the earliest practical date, including
without limitation using its best efforts to cause its management and board of
directors to vote shares that they beneficially own, and to recommend to the
Company's other shareholders to vote, in favor of such approval.
14. Miscellaneous.
(a) Amendments. Except as provided in Section 8(g) hereof, this Warrant and
any provision hereof may only be amended by an instrument in writing signed by
the Company and the holder hereof.
(b) Descriptive Headings. The descriptive head-ings of the several Sections
of this Warrant are in-serted for purposes of reference only, and shall not
affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. This Warrant may be exercised at any time or from
time to time during the Exercise Period, by presentation and surrender of this
Warrant to the Company at its principal executive offices with a written notice
of the holder's intention to effect a cashless exercise, including a calculation
of the number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "CASHLESS EXERCISE" ). In the event of a
Cashless Exercise in lieu of paying the Exercise Price in cash, the holder shall
surrender this Warrant for that number of shares of Common Stock determined by
multiplying (i) the number of Warrant Shares to which it would otherwise be
entitled by (ii) a fraction, the numerator of which shall be the difference
between the then current Market Price per share of the Common Stock and the
Exercise Price, and the denominator of which shall be the Market Price per share
of Common Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer.
GENUS, INC.
By: _________________________________
Name:
Title:
FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)
To: Genus, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: ________________
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of GENUS, INC., a corporation organized
under the laws of the State of California (the "COMPANY"), and either:
___ tenders herewith payment of the Exercise Price in full, in the amount of
$_____________, in cash, by certified or official bank check or by wire
transfer for the account of the Company; or
___ elects pursuant to Section 12(c) of the Warrant to convert such Warrant
into Common Stock on a cashless exercise basis.
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.
___ The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this Exercise
Agreement to the account of the undersigned or its nominee (which is
_________________) with DTC through its Deposit Withdrawal Agent Commission
System ("DTC TRANSFER").
___ In lieu of receiving the shares of Common Stock issuable pursuant to this
Exercise Agreement by way of DTC Transfer, the undersigned hereby requests
that the Company cause its transfer agent to issue and deliver to the
undersigned physical certificates representing such shares of Common Stock.
___ The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the
Holder and delivered to the undersigned at the address set forth below:
Dated:_________________ _____________________________________
Signature of Holder
_____________________________________
Name of Holder (Print)
Address:
_____________________________________
_____________________________________
_____________________________________
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the attached Warrant, with respect to
the number of shares of Common Stock covered thereby issuable pursuant to the
attached Warrant set forth hereinbelow, to:
Name of Assignee Address No of Shares
------------------ ------- --------------
, and hereby irrevocably constitutes and appoints
_____________________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named corporation, with full power of
substitution in the premises.
Dated: _____________________, ____
In the presence of
__________________
Name: ____________________________
Signature: _______________________
Title of Signing Officer or Agent (if any):
________________________
Address: ________________________
________________________
Note: The above signature should correspond exactly with the name on the
face of the within Warrant.
EXHIBIT B
TO SECURITIES PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of May 14, 2001,
by and among GENUS, INC., a corporation organized under the laws of the State of
California (the "COMPANY"), and the undersigned (the "INITIAL INVESTORS").
WHEREAS:
A. The Company and the Initial Investors have entered into a Securities
Purchase Agreement dated the date hereof (the "SECURITIES PURCHASE AGREEMENT;"
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement). In
connection with the Securities Purchase Agreement, the Company has agreed, upon
the terms and subject to the conditions contained therein, to issue and sell to
the Initial Investors (i) shares of the Company's common stock, no par value
(the "COMMON STOCK"), and (ii) warrants to purchase Common Stock (the
"WARRANTS"). The shares of Common Stock issued on the Closing Date under the
Securities Purchase Agreement are referred to herein as the "SHARES" and the
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as the "WARRANT SHARES."
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investors, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
(i) "INVESTORS" means the Initial Investors and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 9 hereof; provided, however, that the term "Investors"
shall not include any of the Initial Investors and any transferees or assignees
who agree to become bound by the provisions of this Agreement in accordance with
Section 9 hereof that cease to own or hold any of the Registrable Securities.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means (i) the Shares, (ii) the Warrant
Shares, (iii) any shares of Common Stock issued or issuable as a result of the
operation of the anti-dilution provisions of the Warrants and (iv) any shares of
capital stock issued or issuable, from time to time (with any adjustments), as a
distribution on or in exchange for or otherwise with respect to any of the
foregoing.
(iv) "REGISTRATION STATEMENT" means one or more registration statements
of the Company under the Securities Act registering all of the Registrable
Securities, including the Initial Registration Statement, any Uncovered Shares
Amendments and Uncovered Shares Registration Statements (each, as defined
below).
2. REGISTRATION.
a. Mandatory Registration. The Company shall file with the United
States Securities and Exchange Commission ("SEC"), on the date which is on or
before thirty-five (35) calendar days after the Closing Date (the "FILING
DEADLINE") a Registration Statement on Form S-3 (or, if Form S-3 is not then
available, on such form of Registration Statement as is then available to effect
a registration of all of the Registrable Securities, subject to the consent of
the Initial Investors as to the use of such form (as determined pursuant to
Section 11(j) hereof)) covering the resale of at least 3,699,042 shares of
Common Stock, which Registration Statement, to the extent allowable under the
Securities Act and the rules promulgated thereunder shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon exercise of the Warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transactions (the "INITIAL REGISTRATION STATEMENT"). The Registrable Securities
included in the Initial Registration Statement shall be registered on behalf of
the Investors as set forth in Section 11(k) hereof. The Initial Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to (and subject to the
review by) the Initial Investors and their counsel at least five (5) Business
Days prior to its filing or other submission. If for any reason (including, but
not limited to, a determination by the staff of the SEC that all or any portion
of the Warrant Shares or any other Registrable Securities cannot be included in
the Initial Registration Statement (an "SEC DETERMINATION")) the Initial
Registration Statement declared effective by the SEC does not include all of the
Registrable Securities (any such shares that are not included being the
"UNCOVERED SHARES"), the Company shall prepare and file with the SEC, as soon as
practicable, but in any event prior to the fifth (5th) Business Day after
becoming aware of the existence of any Uncovered Shares (such date referred to
herein as the "UNCOVERED SHARE FILING DEADLINE"), either (a) an amendment (the
"UNCOVERED SHARES AMENDMENT") to the Initial Registration Statement effecting a
registration of the Uncovered Shares or (b) a registration statement which
registers the Uncovered Shares (the "UNCOVERED SHARES REGISTRATION STATEMENT").
The Uncovered Shares Amendment or the Uncovered Shares Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to the Initial Investors and their
counsel for review and comment at least three (3) Business Days prior to its
filing or other submission. The Company shall use its best efforts to cause each
of the Initial Registration Statement and the Uncovered Shares Amendment or the
Uncovered Shares Registration Statement to become effective as soon as
practicable after the filing thereof.
b. [Reserved]
c. Payments by the Company. The Company shall use its best efforts to
cause each Registration Statement required to be filed pursuant to Section 2(a)
hereof to become effective as soon as practicable, but, as to the Initial
Registration Statement filed pursuant to Section 2(a), in no event later than
the ninety-fifth (95th) calendar day after the Closing Date (the "REGISTRATION
DEADLINE"), and as to any Uncovered Shares Amendment or Uncovered Shares
Registration Statement, in no event later than the forty-fifth (45th) day after
the Uncovered Share Filing Deadline (the "UNCOVERED SHARE REGISTRATION
DEADLINE"). If (i) the Registration Statement(s) covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) hereof
is not filed with the SEC by the Filing Deadline or the Uncovered Share Filing
Deadline, as applicable, or declared effective by the SEC on or before the
Registration Deadline or the Uncovered Share Registration Deadline, as
applicable, or if, after a Registration Statement has been declared effective by
the SEC, sales of all the Registrable Securities (including any Registrable
Securities required to be registered pursuant to Section 3(b) hereof) required
to be included therein (except, in the case of the Initial Registration
Statement, for Uncovered Shares which are the subject of an SEC Determination)
cannot be made pursuant to the Registration Statement (by reason of a stop
order, the Company's failure to update a Registration Statement, any reason
resulting in Uncovered Shares or any other reason outside the control of the
Investors) or (ii) the Common Stock is not listed or included for quotation on
the Nasdaq National Market or Small Cap Market (the "NASDAQ MARKETS"), the New
York Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") at
any time after the Registration Deadline, then the Company will make payments to
the Investors in such amounts and at such times as shall be determined pursuant
to this Section 2(c) as partial relief for the damages to the Investors by
reason of any such delay in or reduction of their ability to sell the
Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity).
The Company shall pay to each Investor an amount equal to (i) the
Investment Amount (as defined in the Securities Purchase Agreement) paid by such
Investor (or if such Investor is not an Initial Investor, the Investment Amount
paid by such Investor's transferor or assignor of such Shares and Warrants) for
the Shares and Warrants purchased by such Investor (or such Investor's
transferor or assignor) pursuant to the Securities Purchase Agreement (the
"AGGREGATE PURCHASE PRICE"), multiplied by (ii) one percent (1%) (with respect
to the period commencing on the Filing Deadline, the Uncovered Filing Deadline,
the Registration Deadline or the Uncovered Share Registration Deadline, as
applicable multiplied by (iii) the sum of (x) the quotient calculated by
dividing (A) the number of days after the Filing Deadline or Uncovered Share
Filing Deadline, as applicable, and prior to the date the Registration Statement
or Uncovered Share Amendment or Uncovered Share Registration Statement, as
applicable, in each case as required to be filed pursuant to Section 2(a), is
filed with the SEC by (B) thirty, plus (y) the quotient calculated by dividing
(A) the number of days after the Registration Deadline or Uncovered Share
Registration Deadline, as applicable, and prior to the date the Registration
Statement or Uncovered Share Amendment or Uncovered Share Registration
Statement, as applicable, in each case as filed pursuant to Section 2(a), is
declared effective by the SEC by (B) thirty, plus (z) the quotient calculated by
dividing (A) the sum of the number of additional days that (I) sales of any
Registrable Securities required to be included in a Registration Statement
(except, in the case of the Initial Registration Statement, for any Uncovered
Shares which are the subject of an SEC Determination) cannot be made pursuant to
a Registration Statement after such Registration Statement has been declared
effective, or (II) the Common Stock is not listed or included for quotation on
the Nasdaq Markets, the NYSE or AMEX by (B) thirty. For example, if the Initial
Registration Statement becomes effective thirty (30) days after the Registration
Deadline, the Company would pay $10,000 for each $1,000,000 of Aggregate
Purchase Price; and thereafter, for each additional period of thirty (30) days
that sales cannot be made pursuant to the Initial Registration Statement (except
as to Uncovered Shares which are subject to an SEC Determination), the Company
would pay $10,000 for each $1,000,000 of Aggregate Purchase Price. Such amounts
shall be paid in cash within five (5) days after the end of each period that
gives rise to such obligation, provided that, if any such period extends for
more than thirty (30) days, interim payments shall be made for each such thirty
(30) day period. If such payment is not made within such five (5) day period
the Investor thereafter shall be entitled to interest on the unpaid amount at a
rate equal to two percent (2%) per month until such amount is paid in full to
the Investor. If the Company is unable to pay all amounts due and payable with
respect to the penalties, the Company will pay the Investors such amounts pro
rata based upon the total amounts payable to each Investor as a percentage of
the total amounts payable to all Investors.
d. Piggy Back Registrations.
(i) If at any time prior to the expiration of the Registration Period
(as hereinafter defined) the Company shall file with the SEC a registration
statement relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock
option or other employee benefit plans), the Company shall send to each
Investor who is entitled to registration rights under this Section 2(d)
written notice of such determination and, if within twenty (20) days after
the date of such notice, such Investor shall so request in writing, the
Company shall include in such registration statement all or any part of the
Registrable Securities such Investor requests to be registered, provided,
however, that the number of Registrable Shares proposed to be sold by such
securities is equal to at least fifty percent (50%) of the total number of
Registrable Securities then held by such participating Investor, (iii) such
Investor agrees to sell those of its Registrable Securities to be included
in such registration in the same manner and on the same terms and
conditions as the other shares of Common Stock which the Company proposes
to register, and (iv) if the registration is to include shares of Common
Stock to be sold for the account of the Company or any party exercising
registration rights pursuant to any other agreement with the Company, the
proposed managing underwriter does not advise the Company that in its
opinion the inclusion of such Investor's Registrable Securities (without
any reduction in the number of shares to be sold for the account of the
Company or such party exercising registration rights) is likely to affect
materially and adversely the success of the offering or the price that
would be received for any shares of Common Stock offered, in which case the
rights of such Investor shall be as provided in Section 2(d)(ii) hereof.
(ii) If a registration pursuant to Section 2(d)(i) is done in
connection with any underwritten public offering for the account of the
Company the managing underwriter(s) thereof shall impose a limitation on
the number of shares of Common Stock which may be included in the
registration statement because, in such underwriter(s)' judgment, marketing
or other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
registration statement only such limited portion, if any of the Registrable
Securities with respect to which such Investor has requested inclusion
hereunder as the underwriter shall permit. Any exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include
Registrable Securities, in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however, that
the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the holders of which are not
entitled to inclusion of such securities in such registration statement or
are not entitled to pro rata inclusion with the Registrable Securities; and
provided further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made
pro rata with holders of other securities having the right to include such
securities in the registration statement other than holders of securities
entitled to inclusion of their securities in such registration statement by
reason of demand registration rights (except to the extent any existing
agreements otherwise provide). No right to registration of Registrable
Securities under this Section 2(d) shall be construed to limit any
registration required under Section 2(a) hereof. If an offering in
connection with which an Investor is entitled to registration under this
Section 2(d) is an underwritten offering, then each Investor whose
Registrable Securities are included in such registration statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.
e. Eligibility for Form S-3. The Company represents and warrants that
it is eligible to register the resale of Registrable Securities on a
registration statement on Form S-3 under the Securities Act, and that there
exist no facts or circumstances (including without limitation any required
approvals or waivers or any circumstances that may delay or prevent the
obtaining of accountant's consents) that would prohibit or delay the preparation
and filing of a registration statement on Form S-3 with respect to the
Registrable Securities. The Company shall file all reports required to be filed
by the Company with the SEC in a timely manner so as to maintain or, if
applicable, regain its eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC, on or before the
Filing Deadline or the Uncovered Share Filing Deadline, as applicable, the
applicable Registration Statement required by Section 2(a) and shall use its
best efforts to cause such Registration Statement to become effective as soon as
practicable after such filing (but in no event later than the Registration
Deadline or the Uncovered Share Registration Deadline, as applicable). The
Company shall keep such Registration Statement effective pursuant to Rule 415 at
all times until the earlier of (i) five (5) years following the date hereof or
(ii) the date that all Registrable Securities have been sold pursuant to an
effective registration statement or Rule 144 under the Securities Act (the
"REGISTRATION PERIOD"). In the event that the sale of Registrable Securities by
one or more Investors is determined by the SEC to constitute a primary offering,
upon the written request from time to time of any such Investor, the Company
shall as promptly as practicable: cause a Registration Statement to be amended
and/or one or more additional Registration Statements (which may be requested on
a sequential basis) to be filed (as specified by the applicable Investors) and
to be declared effective; and take all other actions reasonably requested by
such Investors to effectuate the offering of Registrable Securities. If the
Initial Registration Statement is not filed on Form S-3, the Company shall, as
soon as it is eligible to do so, file a post-effective amendment on Form S-3 to
the Initial Registration Statement to the extent permitted by the SEC or, if not
so permitted, file a new Registration Statement on Form S-3 to permit sales of
the Registrable Securities pursuant to Rule 429 under the Securities Act; and
the Company shall use its best efforts to cause such post-effective amendment or
Registration Statement to become effective as soon as possible. Each
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) filed pursuant to this Agreement (i) shall comply in all material
respects with the requirements of the Securities Act and the rules and
regulations of the SEC promulgated thereunder and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein not misleading.
The financial statements of the Company included in the Registration Statement
or incorporated by reference therein will comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements shall be prepared in accordance with U.S. 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 not include footnotes or may be condensed or summary statements) and shall
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to immaterial year-end
adjustments).
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto.
d. The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as each Investor who holds Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its certificate of incorporation or by-laws, which in each
case the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.
e. In the event the Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
f. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor in writing of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission and deliver such number
of copies of such supplement or amendment to each Investor as such Investor may
reasonably request.
g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable date (including in each case by amending or supplementing
such Registration Statement) and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).
h. The Company shall permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC.
i. At the request of the Initial Investors whose Registrable Securities
are included in a Registration Statement, the Company shall furnish, on the date
of effectiveness of the Registration Statement (i) an opinion, dated as of such
date, from counsel representing the Company addressed to the Investors and in
form, scope and substance as is customarily given in an underwritten public
offering, including that the Registration Statement and related prospectus
comply as to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations thereunder, and (ii) a
letter, dated as of such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Initial Investors and the underwriters, if any.
j. The Company shall make available for inspection by (i) any Investor
whose Registrable Securities are included in a Registration Statement, (ii) any
underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by the Investors, and (iv) one firm of attorneys retained by all
such underwriters (collectively, the "INSPECTORS") all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such due
diligence.
k. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, (iv) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement, or (v) such Investor consents to the form and
content of any such disclosure. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to such Investor prior to making such disclosure, and allow
the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
l. The Company shall use its best efforts to promptly either (i) secure
the designation and quotation, of all the Registrable Securities covered by the
Registration Statement on The Nasdaq Stock Market, or (ii) cause all the
Registrable Securities covered by the Registration Statement to be listed on the
NYSE or the AMEX or another national securities exchange and on each additional
national securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange.
m. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
n. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the managing underwriter
or underwriters, if any, or the Investors may reasonably request and registered
in such names as the managing underwriter or underwriters, if any, or the
Investors may request, and, within three (3) Business Days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) an opinion of such counsel in a form customary for such transactions.
o. The Company shall comply with applicable federal and state
securities laws and regulations related to a Registration Statement and offering
and sale of securities.
p. The Company shall take all such other actions as any Investor or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities.
q. From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company
(except (i) to the extent existing agreements may otherwise provide or (ii) in
the case of the Common Stock underlying the warrants to be issued to WFVK as
placement agent of the financing contemplated by the Securities Purchase
Agreement) to include any of their securities in any Registration Statement
under Section 2(a) hereof or any amendment or supplement thereto under Section
3(b) hereof without the consent of the holders of a majority in interest of the
Registrable Securities.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) Business
Days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of any information the Company requires
from each such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriter(s) of such offering and the Company and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election not to participate in such
underwritten distribution.
d. No Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below. Notwithstanding anything in this Section
4(d) to the contrary, this Section 4(d) is not intended to limit an Investor's
rights under Section 2(a) or 3(b) hereof.
5. EXPENSES OF REGISTRATION.
All reasonable expenses incurred by the Company or the Investors in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3 above (excluding brokers' fees, underwriting discounts and commissions,
and similar selling expenses), including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees and the fees and
disbursements of counsel for the Company, and the fees and disbursements of
counsel selected by the Investors, shall be borne by the Company. In addition,
the Company shall pay all of the Investors' costs and expenses (including
reasonable legal fees) incurred in connection with the enforcement of the rights
of the Investors hereunder.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities, and
(ii) the directors, officers, partners, members, employees and agents of such
Investor and each person who controls any Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), if any (each, an "INDEMNIFIED PERSON"), against
any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively, "VIOLATIONS"). Subject to the restrictions
set forth in Section 6(c) with respect to the number of legal counsel, the
Company shall reimburse the Investors and each other Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any
reasonable 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 6(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) 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; and (iii) with
respect to any prospectus, shall not inure to the benefit of any Indemnified
Person if the untrue statement or omission of material fact contained in such
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented, if such corrected prospectus was timely made available by the
Company pursuant to Section 3(c) hereof, and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a Violation and such Indemnified Person, notwithstanding such advice,
used it. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder or underwriter
within the meaning of the Securities Act or the Exchange Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) such Investor will
reimburse any legal or other expenses (promptly as such expenses are incurred
and are due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor; provided, further, however, that the Investor shall be
liable under this Agreement (including this Section 6(b) and Section 7) for only
that amount as does not exceed the net proceeds actually received by such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact by the
Investor contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented, and the Indemnified Party
failed to utilize such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 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 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right 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 such indemnifying party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the reasonable 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 conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding or the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the Indemnified Party
and the indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by Investors
holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investors if any of them holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. 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 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 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) Notwithstanding anything to the contrary herein, the indemnifying party
shall not be entitled to settle any claim, suit or proceeding unless in
connection with such settlement the indemnified party receives an unconditional
release with respect to the subject matter of such claim, suit or proceeding and
such settlement does not contain any admission of fault by the indemnified
party.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6, (ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
a. file with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the Securities Act and
the Exchange Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's obligations under
Section 5(c) of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents as is required for the
applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable by each Investor to any transferee of all or any portion of the
Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee
and (b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Securities Purchase
Agreement. In addition, and notwithstanding anything to the contrary contained
in this Agreement, the Securities Purchase Agreement or the Warrants, the
Securities (as defined in the Securities Purchase Agreement) may be pledged, and
all rights of the Investors under this Agreement or any other agreement or
document related to the transaction contemplated hereby may be assigned, without
further consent of the Company, to a bona fide pledgee in connection with an
Investor's margin or brokerage accounts.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), and Investors (excluding Investors who are affiliates of the
Company) who hold fifty percent (50%) in interest of the Registrable Securities
(excluding Registrable Securities held by affiliates of the Company) or, in the
case of a waiver, with the written consent of the party charged with the
enforcement of any such provision. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Genus, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxxxxx
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
If to an Investor, at such address as such Investor shall have provided in
writing to the Company or such other address as such Investor furnishes by
notice given in accordance with this Section 11(b), with a copy to:
Xxxxx Fargo Xxx Xxxxxx
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Managing Director
Each party hereto may from time to time change its address or facsimile
number for notices under this Section 11(b) by giving at least ten (10) days'
prior written notice of such changed address or facsimile number, in the case of
the Investors to the Company, and in the case of the Company to all of the
Investors.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. The Company further agrees that service
of process upon the Company mailed by first class mail to the address set forth
in Section 11(b) shall be deemed in every respect effective service of process
upon the Company in any such suit or proceeding. Nothing herein shall affect an
Investor's right to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
e. This Agreement, the Securities Purchase Agreement and the Warrants
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the
Securities Purchase Agreement and the Warrants supersede all prior agreements
and understandings among the parties hereto and thereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. 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.
j. All consents, approvals and other determinations to be made by the
Investors pursuant to this Agreement shall be made by the Investors holding more
than fifty percent (50%) of the Registrable Securities (determined as if all
Warrants then outstanding had been exercised by the payment of cash) then held
by all Investors.
k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be registered on behalf of each Investor pro rata based
on the number of Registrable Securities held by each Investor at the time of
such establishment or increase, as the case may be. In the event an Investor
shall sell or otherwise transfer any of such holder's Registrable Securities,
each transferee shall be deemed to have registered on its behalf a pro rata
portion of the number of Registrable Securities included on a Registration
Statement for such transferor. Any shares of Common Stock included on a
Registration Statement on behalf of any person or entity which does not hold any
Registrable Securities shall be deemed registered on behalf of the remaining
Investors, pro rata based on the number of shares of Registrable Securities then
held by such Investors. For the avoidance of doubt, (A) the number of
Registrable Securities held by an Investor shall be determined as if all
Warrants then outstanding and held by an Investor were exercised by the payment
of cash and (B) no provision of this subsection shall operate to reduce the
number of Registrable Securities registered on behalf of any Investor pursuant
to the first sentence of this subsection.
l. For purposes of this Agreement, the term "Business Day" means any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law, regulation or
executive order to close.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
GENUS, INC.
By:_____________________________
Name: _William Elder______________
Its:_Chairman, President and CEO____
INITIAL INVESTORS:
[Name of Purchasers]
By:_____________________________
Name: __________________________
Title:____________________________
