EXHIBIT 4.1
STRUCTURED EQUITY LINE FLEXIBLE FINANCING(SM) AGREEMENT dated
as of December 23, 1997 (the "Agreement"), between Cripple Creek
Securities, L.L.C. (the "Investor"), a limited liability company
organized and existing under the laws of the State of Delaware,
and Immunomedics, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Company").
W I T N E S S E T H :
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue to the
Investor, and the Investor shall purchase from the Company, from
time to time as provided herein, shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), for a
maximum aggregate Purchase Price of $30,000,000 (the "Maximum
Offering Amount"); and
WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) promulgated by the Securities and
Exchange Commission ("SEC") under the United States Securities Act
of 1933, as amended (the "Securities Act"), and/or upon such other
exemption from the registration requirements of the Securities Act
as may be available with respect to any or all of the investments
in Common Stock to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
I.
CERTAIN DEFINITIONS
1.1 Defined Terms. As used in this Agreement (including
the recitals above), the following terms shall have the following
meanings specified or indicated (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
"Additional Investment Amount" shall have the meaning set
forth in Section 2.1(b)(ii) hereof.
"Additional Purchase Date" shall mean, with respect to any
Investment Period for which the Company has delivered an
Additional Purchase Notice to the Investor, any Trading Day during
such Investment Period on which the Investor notifies the Company
by delivery of an Investor Notice of the Investor's election to
purchase all or a portion of the Additional Investment Amount in
respect of such Investment Period.
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"Additional Purchase Notice" shall have the meaning set forth
in Section 2.1(b)(ii) hereof.
"Additional Warrant" shall have the meaning set forth in
Section 2.7(b) hereof.
"Additional Warrant Registration Statement" shall have the
meaning set forth in Section 3.2(a) hereof.
"Additional Warrant Share Amount" shall have the meaning set
forth in Section 2.7(b) hereof.
"Adverse Event" shall mean, as of the specified date, any of
the following events or circumstances which exist and either have
not been cured by such date in accordance with this Agreement or
waived by the Investor in writing: (i) one or more events
described in Section 2.6 occurs; (ii) a dispute arises between the
Investor and the Company pursuant to Section 3.3; and (iii) a
condition set forth in Article III is required to be satisfied and
is not satisfied.
"Affiliate" shall have the meaning ascribed to it in the
Securities Act.
"Balance Sheet" shall mean the unaudited consolidated balance
sheet of the Company as of September 30, 1997.
"Balance Sheet Date" shall mean September 30, 1997.
"Bankruptcy Code" shall mean title 11 of the United States
Code, as amended.
"Benefit Plan" shall have the meaning set forth in Section
5.12 hereof.
"Blue Sky Laws" shall mean the United States state securities
and takeover laws.
"Cancellation Notice" shall mean a notice delivered by the
Company in its sole and absolute discretion to the Investor with
respect to an Investment Period notifying the Investor that the
Company shall not sell and the Investor shall not purchase Common
Stock represented by the Minimum Investment Amount and the
Additional Investment Amount for such Investment Period.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of
corporate stock or any and all equivalent ownership interests in a
Person (other than a corporation).
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"Closing" shall mean the consummation of each purchase and
sale of Common Stock pursuant to Section 2.1 hereof.
"Closing Date" shall mean, with respect to each purchase and
sale of Common Stock, subject to the conditions contained herein,
the second Trading Day following the date of receipt of the
Investor's notice to the Company of its election to purchase
Common Stock from the Company (as extended pursuant to this
Agreement).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commitment Period" shall mean the period commencing on the
date that the first Investment Period begins and expiring on the
earliest to occur of (a) the election by the Company or the
Investor to terminate the Investor's obligation to purchase Common
Stock pursuant to Section 10.4 herein, (b) the date on which the
Investor shall have made one or more purchases of Common Stock
pursuant to this Agreement in an aggregate Purchase Price of
$30,000,000 or such lesser maximum purchase amount as determined
pursuant to Section 2.2(a), (c) the date this Agreement is
terminated pursuant to Section 2.6, and (d) the date occurring
thirty-six (36) months (subject to extension as provided by
Section 2.2(b)) from the date of commencement of such period;
provided, however, that the Company and the Investor may agree in
writing to extend the Commitment Period to such other date as they
may agree.
"Common Stock" shall have the meaning set forth in the
recitals above.
"Company Assets" shall have the meaning set forth in Section
5.16 hereof.
"Condition Satisfaction Date" shall have the meaning set
forth in Section 3.2 hereof.
"Effective Date" shall mean December 23, 1997, or such later
date as the Company shall have (i) delivered fully executed
versions of the Warrant, the opinion(s) of counsel and the
Registration Rights Agreement, and any other documents required to
be delivered pursuant to the terms of this Agreement, and
(ii) agreed by such date to the final form of Exhibits to this
Agreement.
"8% Limit" shall have the meaning specified in Section 2.2(a)
hereof.
"Environmental Laws" shall mean all federal, state, local and
foreign laws and regulations relating to pollution or the
environment (including, without limitation, ambient air, surface
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water, ground water, land surface or subsurface strata),
including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental
Concern.
"Equity Offering" shall mean the issuance or sale by the
Company, (a) in a registered public offering or (b) in a
transaction exempt from or not subject to the registration
requirements of the Securities Act, of any shares of Common Stock
or securities which are convertible into or exchangeable for the
Company's Common Stock or any warrants, options or other rights to
subscribe for or purchase its Common Stock or any such convertible
or exchangeable securities (other than securities issued or
issuable to any present or future employee, officer, director or
consultant of the Company pursuant to any stock or option or
similar equity-based compensation plans or otherwise
(collectively, the "Compensation Plans")), upon the conversion or
exchange of convertible or exchangeable securities or upon the
exercise of warrants (excluding the Warrant and the Additional
Warrants), or other rights, or upon the issuance of any shares of
Common Stock issued upon exercise of options, conversion or
exchange of convertible or exchangeable securities, warrants or
other rights outstanding on the date of execution and delivery of
this Agreement (other than the Additional Warrants) and listed in
the SEC Documents on file with the SEC (other than the Warrant and
the Additional Warrants) and other than (i) shares of Common Stock
which may be issued upon exercise of options granted under the
Compensation Plans, (ii) shares of Common Stock which may be
issued upon exercise of the Warrant and the Additional Warrants,
and (iii) shares of Common Stock or securities which are
convertible into or exchangeable for Common Stock or any warrants,
options or other rights to subscribe for or purchase Common Stock
or any such convertible or exchangeable securities issued in
strategic corporate partnering transactions that do not result in
any acquisition or other change in control of the Company.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Floor Price" shall have the meaning set forth in Section
2.2(b) hereof.
"Floor Price Notice" shall mean, with respect to any
Investment Period, a written notice delivered by the Company to
the Investor on, or as of, the tenth (10th) day preceding the
commencement of an Investment Period which sets forth the minimum
dollar amount per share that the Stock Price shall be for such
Investment Period, provided that in the event a Floor Price Notice
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is not received with respect to a certain Investment Period, the
Floor Price set for the preceding Investment Period will continue
to be the Floor Price.
"Food and Drug Act" shall mean the Federal Food, Drug and
Cosmetic Act, 21 U.S.C. Sections 301 et seq. and the rules and
regulations promulgated thereunder.
"4.9% Limit" shall have the meaning specified in Section
2.1(c) hereof.
"Governmental Entity" shall mean any federal, state, local or
foreign legislative body, court, government, department or
instrumentality, or governmental, administrative or regulatory
authority or agency.
"Investment Amount" shall mean the amount invested by the
Investor with respect to any Mandatory Purchase Date, Additional
Purchase Date or Optional Purchase Date, as the case may be, as
notified by the Investor to the Company in accordance with Section
2.5, which Investment Amount shall be at least $50,000 and shall
be in multiples of $50,000 in excess thereof.
"Investment Period" shall mean each successive three-month
period (subject to extension as provided by Section 2.2(b))
commencing on (a) in the case of the first Investment Period, the
first Trading Day of the succeeding calendar month following the
month within which the Registration Statement is declared
effective, provided that, in the event the Registration Statement
is declared effective within the last ten (10) days of a
particular month, the first Investment Period shall commence on
the first Trading Day of the second month thereafter, and (b) in
the case of subsequent Investment Periods, commencing on the first
Trading Day subsequent to the expiration of the immediately
preceding Investment Period.
"Investor Notice" shall have the meaning set forth in Section
2.5(d)(ii) hereof.
"Knowledge of the Company" shall mean the actual knowledge,
without independent inquiry, of any of the executive officers of
the Company or its Significant Subsidiaries.
"Knowledge of the Investor" shall mean the actual knowledge,
without independent inquiry, of any of the executive officers of
the Investor or its Affiliates.
"Liens" shall have the meaning set forth in Section 5.16
hereof.
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"Mandatory Purchase Date" shall mean, with respect to any
Investment Period for which the Company has delivered a Mandatory
Purchase Notice to the Investor, any Trading Day during such
Investment Period on which the Investor notifies the Company by
delivery of an Investor Notice of its election to purchase all or
a portion of the Minimum Investment Amount in respect of such
Investment Period.
"Mandatory Purchase Notice" shall have the meaning set forth
in Section 2.1(b)(i) hereof.
"Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial
condition of the Company which is material and adverse to the
Company or to the Company and any other entities controlled by the
Company, taken as a whole, and/or any condition or situation which
could in the Company's reasonable judgment prohibit, impair or
otherwise interfere with the ability of the Company to enter into
and perform its obligations under this Agreement, the Registration
Rights Agreement, the Warrant or the Additional Warrants.
"Materials of Environmental Concern" shall mean hazardous
substances as defined under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. section # 9601 et seq.
and hazardous wastes as defined under the Resource Conservation
and Recovery Act, 42 U.S.C. section # 6901, et seq. and petroleum and
petroleum products and such other chemicals, materials or
substances as are listed as "hazardous wastes", "hazardous
materials", "toxic substances", or words of similar import under
any similar federal, state, local or foreign laws.
"Maximum Offering Amount" shall have the meaning set forth in
the introductory paragraphs hereof.
"Minimum Investment Amount" shall have the meaning set forth
in Section 2.1(b)(i) hereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Optional Purchase Date" shall mean any Trading Day during
the Commitment Period that the Investor in its sole discretion
elects by delivery of an Optional Purchase Notice to purchase
Common Stock from the Company.
"Optional Purchase Notice" shall have the meaning set forth
in Section 2.5(c) hereof.
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"Person" shall mean an individual, partnership, corporation,
limited liability company, trust or unincorporated organization,
or a government or agency or subdivision thereof.
"Principal Market" shall mean the New York Stock Exchange,
the American Stock Exchange, or the Nasdaq National Market Large
Caps, whichever is at the time the principal trading exchange or
market for the Common Stock.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
Prospectus supplement, including post-effective amendments, and
all material incorporated by reference in such Prospectus.
"Purchase" shall have the meaning set forth in Section 2.7(b)
hereof.
"Purchase Price" shall have the meaning set forth in Section
2.3 hereof.
"Registration Rights Agreement" shall have the meaning set
forth in Section 2.7(c) hereof.
"Registration Statement" shall have the meaning set forth in
Section 3.2(a) hereof.
"SEC Documents" shall have the meaning set forth in Section
5.9 hereof.
"Securities Act" shall have the meaning set forth in the
recitals above.
"Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, together with the rules and regulations
promulgated thereunder.
"Significant Subsidiaries" shall have the meaning specified
in Regulation S-X promulgated under the Securities Exchange Act.
"Stock Price" shall have the meaning set forth in Section 2.3
hereof.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, trust, association or
other business entity of which 50% or more of the outstanding
Capital Stock or other interests entitled to vote in the election
of the board of directors of such corporation (irrespective of
whether, at the time, Capital Stock of any other class or classes
of such corporation shall have or might have voting power by
reason of the happening of any contingency), managers, trustees or
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other controlling persons, or an equivalent controlling interest
therein, of such Person is, at the time, directly or indirectly,
owned by such Person and/or one or more Subsidiaries of such
Person.
"Tax Return" shall mean any report, return, information
statement or other information required to be supplied to any
federal, state, local or foreign taxing authority, or any election
permitted to be made, in connection with Taxes.
"Taxes" shall mean all taxes, charges, fees, levies, duties
or other assessments, including without limitation all net income,
gross income, gross receipts, franchise, value added, sales, use,
property, ad valorem, transfer, withholding, profits, license,
employee, payroll, social security, unemployment, excise,
estimated, severance and any other taxes, duties, withholdings,
fees, assessments or charges of any kind whatsoever, including any
interest, penalties or additional amounts attributable thereto,
imposed by any federal, state, local or foreign taxing authority.
"Trading Day" shall mean any day during which the New York
Stock Exchange shall be open for business and on which trading of
the Common Stock on the Principal Market shall not have been
suspended or limited.
"Value of Open Market Trading" shall mean, with respect to
any Trading Day, the product of the reported trading volume of the
Common Stock on the Principal Market, multiplied by the weighted
average trading price (by trading volume) of the Common Stock on
such day (each as determined in accordance with Section 12.4
hereof); provided, however, that in the event that the Company
consummates a registered public offering of Common Stock (whether
primary or secondary), the Trading Day on which such transaction
is consummated shall be excluded from any calculation under this
Agreement based upon the Value of Open Market Trading, and
provided further, that any block trades of 20,000 shares or more
of Common Stock shall not be included in the calculation when
determining reported trading volume and weighted average trading
price.
"Warrant" shall have the meaning set forth in Section 2.7(a)
hereof.
"Warrant Exercise Price" shall have the meaning set forth in
Section 2.7(a) hereof.
"Warrant Registration Statement" shall have the meaning set
forth in Section 3.2(a) hereof.
"Warrant Shares" shall have the meaning set forth in Section
2.1(c) hereof.
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II.
PURCHASE AND SALE OF COMMON STOCK
2.1 Investments.
(a) Subject to the terms and conditions set forth
herein (i) during any Investment Period, the Company may in its
sole and absolute discretion from time to time elect to issue and
sell to the Investor, and the Investor shall be obligated to
purchase from the Company, on any or all of such Mandatory
Purchase Dates or Additional Purchase Dates as the Investor shall
elect, shares of Common Stock at the Purchase Price determined
pursuant to Section 2.3 for an aggregate purchase price of up to
$2,500,000 (as determined in accordance with Section 2.1(b) and
(c)), and (ii) during any Investment Period, the Investor may in
its sole and absolute discretion from time to time direct the
Company to issue to the Investor, and the Company shall be
obligated to issue and sell to the Investor, shares of Common
Stock at the Purchase Price determined pursuant to Section 2.3 for
an aggregate Purchase Price of up to $1,000,000, such that the
total aggregate amount of Purchases that may be effected pursuant
to Mandatory Purchase Notices, Additional Purchase Notices and
Optional Purchase Notices in any Investment Period shall be
$3,500,000.
(b) (i) Subject to the terms and conditions of
this Agreement, on, or as of, the tenth (10th) day preceding the
commencement of an Investment Period, the Company may deliver a
written notice to the Investor (each such notice hereinafter
referred to as a "Mandatory Purchase Notice") which shall require
the Investor to purchase shares of Common Stock from the Company
during such Investment Period for an aggregate Purchase Price of
$1,000,000, subject to the limitations imposed by Section 2.2(a)
and (b) (the "Minimum Investment Amount"), provided that, on the
date of delivery of the Mandatory Purchase Notice and on the
Trading Day immediately preceding the commencement of such
Investment Period there is no Adverse Event. A Mandatory Purchase
Notice shall be irrevocable. Subject to the terms and conditions
of this Agreement, upon delivery of such Mandatory Purchase
Notice, the Investor shall be obligated to purchase on Closing
Dates in respect of each such Mandatory Purchase Date or Mandatory
Purchase Dates as the Investor elects during the Investment Period
to which such Mandatory Purchase Notice relates, shares of Common
Stock for an aggregate Purchase Price equal to the Minimum
Investment Amount. On each such Mandatory Purchase Date, the
Investor shall deliver to the Company an Investor Notice which
shall set forth the Investment Amount.
(ii) Subject to the terms and conditions of
this Agreement, on, or as of, any day on which the Company
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delivers to the Investor a Mandatory Purchase Notice pursuant to
Section 2.1(b)(i), the Company may deliver a written notice to the
Investor (each such notice hereinafter referred to as an
"Additional Purchase Notice") requiring the Investor to purchase
shares of Common Stock from the Company (in addition to the
Minimum Investment Amount) during such Investment Period for an
aggregate Purchase Price of up to $1,500,000 (which shall be at
least $50,000 and multiples of $50,000 in excess thereof), subject
to the limitations imposed by Section 2.2(a) and (b) (the
"Additional Investment Amount"), provided that, on the date of
delivery of the Additional Purchase Notice and the Trading Day
immediately preceding the commencement of such Investment Period
there is no Adverse Event. An Additional Purchase Notice shall be
irrevocable. The Company may not deliver an Additional Purchase
Notice with respect to any Investment Period unless it has also
delivered a Mandatory Purchase Notice with respect to such
Investment Period. Subject to the terms and conditions of this
Agreement, upon receipt of such Additional Purchase Notice, the
Investor shall be obligated to purchase on Closing Dates in
respect of each such Additional Purchase Date or Additional
Purchase Dates as the Investor elects during the Investment Period
to which such Additional Purchase Notice relates, shares of Common
Stock for an aggregate Purchase Price equal to the Additional
Investment Amount. On each such Additional Purchase Date or
Additional Purchase Dates, the Investor shall deliver to the
Company an Investor Notice which shall set forth the Investment
Amount.
(iii) Subject to the terms and conditions of
this Agreement, the Investor shall have the right, but not the
obligation, at any time and from time to time during any
Investment Period to purchase Common Stock from the Company for an
aggregate Purchase Price of up to $1,500,000, (which shall be at
least $50,000 and multiples of $50,000 in excess thereof), subject
to the limitations imposed by Section 2.2(b), by delivering an
Optional Purchase Notice or Optional Purchase Notices to the
Company, provided that, on the Trading Day immediately preceding
the date of delivery of an Optional Purchase Notice there is no
Adverse Event. An Optional Purchase Notice shall be irrevocable.
Each Optional Purchase Notice shall set forth the Investment
Amount with respect to the Optional Purchase Date to which it
relates. The Investor may not deliver an Optional Purchase Notice
or Optional Purchase Notices with respect to any Investment Period
if it has received from the Company a Cancellation Notice
concerning any obligation of the Investor with respect to the
Minimum Investment Amount and the Additional Investment Amount for
such Investment Period.
(iv) Any Purchase made pursuant to an Optional
Purchase Notice shall, at the Investor's option and in its sole
and absolute discretion, be credited towards the Investor's
Minimum Investment Amount for which a Mandatory Purchase Notice
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has been given. The Investor will notify the Company of its
intent to credit all or a portion of a Purchase made pursuant to
an Optional Purchase Notice at any time prior to the end of an
Investment Period with respect to which the Investor elects to
apply such credit. Each Optional Purchase Notice shall set forth
the Investment Amount with respect to the Optional Purchase Date
to which it relates.
(c) Notwithstanding anything herein to the contrary,
the Investor shall not be required or entitled to purchase shares
of Common Stock on any Closing Date to the extent such Purchase,
when aggregated with all other shares of Common Stock then owned
by the Investor, and with the shares of Common Stock beneficially
or deemed beneficially owned by the Investor pursuant hereto, the
Warrant and the Additional Warrants (if then issued and
outstanding) ("Warrant Shares") theretofore issued to the Investor
pursuant to Section 2.7, would result in the Investor or any
affiliate of the Investor beneficially owning more than 4.9% of
all the issued and outstanding Common Stock on such Closing Date,
as determined in accordance herewith and Section 13(d) of the
Exchange Act (the "4.9% Limit").
(d) On each Closing Date, the Company shall sell to
the Investor the number of shares of Common Stock determined by
dividing the Investment Amount by the Purchase Price (rounded to
the nearest whole number of shares); provided, however, that the
Investor shall not be required to purchase from the Company shares
of Common Stock pursuant to the terms of this Agreement for an
aggregate Purchase Price in excess of the Maximum Offering Amount.
(e) On or before the thirtieth (30th) day preceding
the commencement of an Investment Period, the Company agrees to
deliver to the Investor written notice (which notice shall not be
considered legally binding for the purposes of this Agreement)
indicating the Company's intentions with respect to the Mandatory
Purchase Notice and Additional Purchase Notice, if any, for the
next succeeding Investment Period, provided that, in no event
shall such notice be considered by the parties hereto a substitute
for a Mandatory Purchase Notice or Additional Purchase Notice as
required by this Agreement.
2.2 Limitation on Investment Amount.
(a) Notwithstanding the obligation of the Investor
to purchase shares of Common Stock pursuant to Section 2.1(b)(i)
and (ii), the aggregate amount of Purchases made by the Investor
during an Investment Period pursuant to a Mandatory Purchase
Notice or an Additional Purchase Notice or any combination thereof
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shall not exceed the lesser of (i) the amount set forth in the
Mandatory Purchase Notice or Additional Purchase Notice or any
combination thereof, which shall not exceed $1,000,000 and
$1,500,000, respectively, (ii) an amount equal to the product
(rounded up to the next increment of $10,000) of (A) 8% of the
average daily Value of Open Market Trading of the Common Stock on
the Principal Market for each Trading Day during the Investment
Period immediately preceding the Investment Period with respect to
which a Mandatory Purchase Notice or an Additional Purchase Notice
(or combination thereof) is given times (B) the number of Trading
Days in such immediately preceding Investment Period, and (iii) an
amount equal to the product (rounded up to the next increment of
$10,000) of (A) 8% of the average daily Value of Open Market
Trading of the Common Stock on the Principal Market for each
Trading Day on which the low trading price is at or above the
Floor Price, during the Investment Period with respect to which a
Mandatory Purchase Notice or an Additional Purchase Notice (or a
combination thereof) was given times (B) the number of Trading
Days in such Investment Period (the lower of the amounts referred
to in clauses (A) and (B), the "8% Limit"); provided however, that
the foregoing limitations shall not apply to Purchases made
pursuant to Optional Purchase Notices.
Upon the Closing of a Purchase and sale of Common Stock in an
amount limited by the provisions of this Section 2.2(a), pursuant
to a Mandatory Purchase Notice or an Additional Purchase Notice
(or combination thereof in any Investment Period), the obligation
of the Investor with respect to the Minimum Investment Amount or
Additional Investment Amount, as the case may be, for such
Investment Period shall be satisfied.
(b) Notwithstanding anything to the contrary
contained herein, the Investor shall not acquire any shares of
Common Stock during any Investment Period pursuant to a Mandatory
Purchase Notice, an Additional Purchase Notice or an Optional
Purchase Notice if the Stock Price during all three (3) of the
Trading Days ending on the Trading Day prior to a Mandatory
Purchase Date, an Additional Purchase Date or an Optional Purchase
Date shall be below the floor price (per share) set by the Company
from time to time pursuant to a Floor Price Notice relating to a
particular Investment Period (the "Floor Price"). Until changed
pursuant to a Floor Price Notice, the initial Floor Price shall be
$4.00 per share. Such Investment Period and the Commitment Period
shall be extended by 1 1/2 Trading Days (rounded up to the next full
Trading Day) for each Trading Day within such Investment Period
during which the Stock Price is below the Floor Price; provided,
however, that if during any Investment Period during which the
Investor is obligated to purchase Common Stock pursuant to a
Mandatory Purchase Notice or an Additional Purchase Notice, the
Stock Price shall be below the Floor Price for more than twenty
(20) Trading Days (which need not be consecutive), (i) the
Investment Period and the Commitment Period shall be extended by
thirty (30) Trading Days only, provided, however, that the
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Commitment Period shall only be extended as described in the
definition of "Commitment Period", (ii) the Investor shall not be
required to purchase any shares of Common Stock during the
remainder of the Investment Period (as so extended), regardless of
its obligation to purchase Common Stock at the commencement of the
Investment Period and the number of shares of Common Stock
actually purchased during such Investment Period, and (iii) the
Investor shall have the option to purchase shares of Common Stock
on any Trading Day (such Purchase to constitute an Optional
Purchase) within the remainder of the Investment Period provided
that, on such Trading Day the Stock Price shall not be below the
Floor Price.
2.3 Determination of Purchase Price. The purchase price
per share of the Company's Common Stock (the "Purchase Price")
shall be 98% of the low trading price of the Common Stock on the
Principal Market during the three (3) Trading Days ending on the
Trading Day prior to a Mandatory Purchase Date, an Additional
Purchase Date or an Optional Purchase Date, as the case may be,
provided, however, that if the low trading price is below the
Floor Price on any of such three (3) Trading Days, such Trading
Day shall not be considered in determining the Purchase Price, and
the Purchase Price shall be determined solely by reference to the
remaining Trading Days in such three (3) Trading Day period (the
"Stock Price").
2.4 Closings. On each Closing Date, (i) the Company
shall deliver to the Investor one or more certificates
representing the number of shares of Common Stock to be purchased
by the Investor pursuant to Section 2.1 registered in the name of
the Investor or, at the Investor's option, deposit such
certificate(s) into such Investor account or accounts previously
designated by the Investor, and (ii) the Investor shall deliver to
the Company the Investment Amount (less any amounts withheld
pursuant to Section 11.2) by federal funds wire transfer or
transfer of New York Clearing House funds to the accounts
previously designated by the Company prior to the relevant Closing
Date. In addition, on or prior to the Closing Date, each of the
Company and the Investor shall deliver all documents, instruments
and writings required to be delivered or reasonably requested by
either of them pursuant to this Agreement in order to implement
and effect the transactions contemplated herein.
2.5 Mechanics of Notification.
(a) Delivery of Mandatory Purchase Notice.
(i) On, or as of, the tenth (10th) day
immediately preceding the commencement of an Investment Period,
the Chief Executive Officer or the Chief Financial Officer (or
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such other person as designated by either in writing) of the
Company may deliver a Mandatory Purchase Notice to the Investor
which shall require the Investor to purchase shares of Common
Stock from the Company for an aggregate Purchase Price of
$1,000,000, subject to the limitations imposed herein. If the
Investor in its sole and absolute discretion so elects, the
Company may not deliver a Mandatory Purchase Notice to the
Investor if there is an Adverse Event on the date on which a
Mandatory Purchase Notice is given. In addition, if the Investor
in its sole and absolute discretion so elects, if an Adverse Event
occurs after such date but prior to a Purchase by the Investor of
the Minimum Investment Amount, such Mandatory Purchase Notice
shall be null, void and of no further force or effect.
(ii) In the event the Company intends not to
obligate the Investor to purchase Common Stock represented by the
Minimum Investment Amount during an Investment Period, on, or as
of, the tenth (10th) day preceding the commencement of such
Investment Period, the Company shall deliver a Cancellation Notice
with respect to the corresponding Minimum Investment Amount to the
Investor. Such Cancellation Notice shall be irrevocable.
(iii) In the event the Company fails to
deliver a Mandatory Purchase Notice or a Cancellation Notice
pursuant to clause (a)(i) or (a)(ii) above on, or as of, the tenth
(10th) day preceding the commencement of an Investment Period, the
Company shall be deemed to have delivered a Mandatory Purchase
Notice with respect to such Investment Period.
(b) Delivery of an Additional Purchase Notice.
(i) On, or as of, any day on which the Company
delivers to the Investor a Mandatory Purchase Notice, the Chief
Executive Officer or the Chief Financial Officer (or such other
person as designated by either in writing) of the Company may
deliver an Additional Purchase Notice to the Investor stating the
Additional Investment Amount, subject to the limitations contained
herein, which the Investor shall be required to purchase during
such Investment Period (in addition to shares of Common Stock
which the Investor is required to purchase pursuant to the
delivery by the Company to the Investor of a Mandatory Purchase
Notice). An Additional Purchase Notice may not be delivered if a
Mandatory Purchase Notice is not delivered with respect to the
same Investment Period. The Company may not deliver an Additional
Purchase Notice to the Investor if there is an Adverse Event on
the date on which an Additional Purchase Notice is given, and in
addition, should an Adverse Event occur after such date but prior
to a Purchase by the Investor of the Additional Investment Amount,
such Additional Purchase Notice shall be null, void and of no
further force or effect.
---14---
(ii) In the event the Company intends not to
require the Investor to purchase Common Stock during an Investment
Period pursuant to an Additional Purchase Notice, on the day on
which the Company delivers to the Investor a Mandatory Purchase
Notice or a Cancellation Notice with respect to the corresponding
Minimum Investment Amount, as the case may be, the Company shall
deliver to the Investor a Cancellation Notice with respect to the
corresponding Additional Investment Amount. Such Cancellation
Notice shall be irrevocable.
(iii) In the event the Company fails to
deliver a Cancellation Notice regarding an Investment Period with
respect to the corresponding Additional Investment Amount,
pursuant to clause (b)(ii) above, on the day on which the Company
delivers to the Investor a Mandatory Purchase Notice or a
Cancellation Notice with respect to the corresponding Minimum
Investment Amount, as the case may be, the Company shall be deemed
to have delivered a Cancellation Notice with respect to such
Additional Investment Amount for such Investment Period.
(c) Delivery of Optional Purchase Notice. At any
time and from time to time during the Commitment Period, the
Investor may deliver a written notice to the Company (each such
notice hereinafter referred to as an "Optional Purchase Notice")
setting forth the Investment Amount, subject to the limitations
set forth in Sections 2.1 and 3.2(l) herein, which the Investor
intends to purchase from the Company. The Investor may not
deliver an Optional Purchase Notice to the Company if there is an
Adverse Event on the date on which an Optional Purchase Notice is
given, and in addition, should an Adverse Event occur after such
date but prior to the closing of the transaction on the Closing
Date associated with such Optional Purchase Notice, such Optional
Purchase Notice shall be null, void and of no further force or
effect.
(d) Date of Delivery of a Mandatory Purchase Notice,
an Additional Purchase Notice or an Optional Purchase Notice.
(i) A Mandatory Purchase Notice, an Additional
Purchase Notice and a Cancellation Notice (each, a "Company
Notice") and any other notice sent by the Company to the Investor
shall be deemed to be delivered on the Trading Day it is received
by the Investor, if such notice is received prior to 5:00 P.M. New
York time, or shall be deemed to be delivered on the immediately
succeeding Trading Day if it is received after 5:00 P.M. New York
time or on any day which is not a Trading Day (in which case the
provisions of Sections 2.1(b) and 2.2(b) must be satisfied as of
such immediately succeeding Trading Day).
---15---
(ii) An Optional Purchase Notice and any other
notice sent by the Investor to the Company notifying the Company
of the Investor's election to purchase Common Stock (each an
"Investor Notice") and any other notice sent by the Investor to
the Company shall be deemed to be delivered on the Trading Day it
is received by the Company if such notice is received prior to
5:00 P.M New York time, or shall be deemed to be delivered on the
immediately succeeding Trading Day if it is received by the
Company after 5:00 P.M. New York time (in which case the
provisions of Sections 2.1(b) and 2.2(b) must be satisfied as of
such immediately succeeding Trading Day).
2.6 Termination or Suspension of Investment Obligation.
(a) If the Investor in its sole and absolute
discretion so elects, the Investor shall not be required to
purchase any shares of Common Stock from the Company on any
Closing Date nor, if the Investor in its sole and absolute
discretion so elects, shall any Mandatory Purchase Notice,
Additional Purchase Notice or Optional Purchase Notice be
delivered at any time during the Commitment Period when there
shall exist any one or more of the following: (i) the withdrawal
of the effectiveness of the Registration Statement, (ii) the
withdrawal of the effectiveness of the Warrant Registration
Statement or the Additional Warrant Registration Statement or any
other suspension of the use of the Warrant Registration Statement
or related Prospectus or the Additional Warrant Registration
Statement or related Prospectus pursuant to the Registration
Rights Agreement, (iii) the Company's failure to satisfy the
requirements of Section 3.2 or (iv) any failure or interruption in
the compliance by the Company with the covenants provided in
Article VI. In the event that the Company shall have delivered a
Mandatory Purchase Notice or Additional Purchase Notice with
respect to an Investment Period and one or more of the events
listed in clauses (i) through (iv) above exist at the time such
Mandatory Purchase Notice or Additional Purchase Notice is given
and has not been cured by the Trading Day preceding the
commencement of the Investment Period to which such notice
relates, the Mandatory Purchase Notice or Additional Purchase
Notice shall be void and of no effect. In the event that the
Company shall have delivered a Mandatory Purchase Notice or
Additional Purchase Notice with respect to an Investment Period
and one or more of the events listed in clauses (i) through (iv)
above occur during the Investment Period, the obligation of the
Investor to purchase shares of Common Stock during such Investment
Period shall, if the Investor in its sole and absolute discretion
so elects, be reduced (but in no event shall such reduction result
in a negative number) by subtracting an amount calculated by
multiplying the amount which the Investor would otherwise be
obligated to purchase by a fraction, the numerator of which shall
be 1-1/2 times the number of Trading Days within such Investment
---16---
Period that such event or events exist and the denominator of
which shall be the number of Trading Days within such Investment
Period (without adjustment for the Stock Price being below the
Floor Price pursuant to Section 2.2(b)) from the Investor's
obligation during such Investment Period. If such event remains
uncured for a period of greater than five (5) Trading Days or
exists during the last five (5) Trading Days of the Investment
Period, the remaining obligation of the Investor to purchase
shares of Common Stock pursuant to a Mandatory Purchase Notice or
an Additional Purchase Notice shall, if the Investor in its sole
and absolute discretion so elects, be canceled for the remainder
of the Investment Period. If such event exists on the last day
preceding an Investment Period on which the Company may deliver a
Mandatory Purchase Notice with respect to such Investment Period,
the Company shall have five (5) Trading Days in which to cure, and
if cured within such period, the commencement of the Investment
Period shall be postponed for such number of days during such
period as the event remained uncured, but in no event shall such
Investment Period be postponed for a period in excess of five (5)
Trading Days.
(b) The obligation of the Investor to purchase
shares of Common Stock under this Agreement may, if the Investor
in its sole and absolute discretion so elects, be terminated
(including with respect to a Closing Date which has not yet
occurred) in the event that (i) the Registration Statement shall
not have been declared effective by the SEC within the time period
described in Section 3.2(a), (ii) there shall occur any stop order
or suspension of the effectiveness of the Registration Statement,
the Warrant Registration Statement or the Additional Registration
Statement or any withdrawal of the effectiveness of the
Registration Statement, the Warrant Registration Statement or the
Additional Registration Statement for any reason other than as a
result of subsequent corporate developments which would require
such Registration Statement, the Warrant Registration Statement or
the Additional Registration Statement to be amended to reflect
such event in order to maintain its compliance with the disclosure
requirements of the Securities Act, or (iii) the Company shall at
any time fail to comply with the requirements of Sections 6.2,
6.3, 6.4, 6.5 or 6.6 and the Company shall fail to cure such
noncompliance within (A) five (5) Trading Days after receipt of
notice from the Investor of its election to terminate this
Agreement, provided that the Investor has been notified by the
Company of such noncompliance within two (2) Trading Days of the
occurrence of such noncompliance or, if the noncompliance relates
to a failure of the Company to comply with the provisions of
Section 6.5, the Investor otherwise becomes aware of such
noncompliance or (B) otherwise within five (5) Trading Days of the
occurrence of such noncompliance; provided, however, that
notwithstanding the foregoing, the Investor may, in its sole and
absolute discretion, terminate this Agreement if the Company shall
fail to maintain the listing of the Common Stock on a Principal
---17---
Market, or if trading of the Common Stock on a Principal Market
shall have been suspended for a period of five (5) consecutive
Trading Days.
2.7 Commitment Fee.
(a) On the Effective Date, the Company will issue to
the Investor a warrant exercisable by the Investor in its sole and
absolute discretion from time to time within four (4) years from
the date of issuance (the "Warrant") to purchase 50,000 shares of
Common Stock at an exercise price per share equal to 180% of the
closing sale price of the Common Stock on the Principal Market on
the Trading Day immediately preceding the Effective Date (the
"Warrant Exercise Price"). The Warrant shall provide that it
shall not be exercisable on any date to the extent that Section
2.1(c) would otherwise limit the ability of the Investor to
purchase shares of Common Stock as a result of a Mandatory
Purchase Notice or Additional Purchase Notice. The Warrant shall
be delivered by the Company to the Investor upon execution of this
Agreement by the parties hereto.
(b) (i) Upon each and every purchase by the Investor
of Common Stock, whether pursuant to delivery of Mandatory
Purchase Notices alone or through a combination of Mandatory
Purchase Notices, Additional Purchase Notices and Optional
Purchase Notices (each, a "Purchase"), the Investor shall receive
the right to purchase Common Stock pursuant to a warrant issued by
the Company to the Investor five (5) business days following the
end of each calendar year (each, an "Additional Warrant" and,
collectively, the "Additional Warrants") during the Commitment
Period for a number of shares equal to the Additional Warrant
Share Amount for such calendar year.
(ii) Each Additional Warrant shall entitle the holder thereof
to purchase Common Stock from time to time within four (4) years
from the date of issuance at an exercise price per share equal to
180% of the weighted average of the Purchase Prices at which
shares of Common Stock were purchased at the Closings of all
Purchases by the Investor during such calendar year.
(iii) "Additional Warrant Share Amount" shall mean, for any
given calendar year, a number of shares equal to 5,000 times a
fraction, where the denominator is $500,000 and the numerator is
the aggregate Purchase Price of Common Stock purchased at the
Closings of all Purchases by the Investor in such calendar year
(rounded to the nearest $100,000 increment); provided that no more
than 125,000 Additional Warrants shall be issued pursuant to this
Section 2.7(b).
---18---
(iv) Each Additional Warrant shall provide that it shall not
be exercisable on any date to the extent that Section 2.1(c) would
otherwise limit the ability of the Investor to purchase shares of
Common Stock as a result of a Mandatory Purchase Notice or an
Additional Purchase Notice.
(c) The resale by the Investor of Common Stock
issuable upon exercise of the Warrant as well as the Additional
Warrant shall be subject to a registration rights agreement (the
"Registration Rights Agreement") entered into between the Company
and the Investor on the date of execution of this Agreement. Each
of the Warrant and each Additional Warrant shall be substantially
in the form of Exhibit A-1 and A-2 hereto, respectively.
III.
CONDITIONS TO DELIVERY OF MANDATORY
PURCHASE NOTICES, ADDITIONAL PURCHASE NOTICES, OPTIONAL PURCHASE
NOTICES AND CONDITIONS TO CLOSING
3.1 Conditions Precedent to the Obligation of the Company
to Issue and Sell Common Stock. The obligation hereunder of the
Company to issue and sell Common Stock to the Investor incident to
each Closing is subject to the satisfaction, at or before each
such Closing, of each of the conditions set forth below, which
conditions cannot be waived without the prior written consent of
the Company and the Investor.
(a) Accuracy of the Investor's Representation and
Warranties. The representations and warranties of the Investor
set forth in this Agreement shall be true and correct in all
material respects as of the date of each such Closing as though
made at each such time.
(b) Performance by the Investor. The Investor shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which, in the
reasonable opinion of the Company and its legal counsel, prohibits
or adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced which may
have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
---19---
3.2 Conditions Precedent to the Right of the Company to
Deliver a Mandatory Purchase Notice or an Additional Purchase
Notice, the Obligation of the Investor to Purchase Common Stock
and the Right of the Investor to Deliver an Optional Purchase
Notice. The right of the Company to deliver a Mandatory Purchase
Notice or an Additional Purchase Notice, the obligation of the
Investor hereunder to acquire and pay for Common Stock incident to
a Closing and the right of the Investor to deliver an Optional
Purchase Notice is subject to the satisfaction, on the date of
delivery of a Mandatory Purchase Notice, Additional Purchase
Notice or Optional Purchase Notice, as the case may be, and on the
applicable Closing Date (each a "Condition Satisfaction Date") of
each of the following conditions, which conditions cannot be
waived without the prior written consent of the Company and the
Investor.
(a) Registration of the Common Stock with the SEC.
The Company shall have filed with the SEC (i) a registration
statement on Form S-3 (the "Registration Statement") for the
registration of the resale by the Investor of Common Stock to be
acquired pursuant to this Agreement (not including Common Stock to
be issued upon exercise of the Warrant and Additional Warrants)
under the Securities Act, which Registration Statement shall have
been filed with the SEC as early as practicable, but in no event
later than thirty (30) days of execution of this Agreement and
which Registration Statement shall have been declared effective by
the SEC no later than ninety (90) days from the filing of the
Registration Statement, (ii) in accordance with the Registration
Rights Agreement a registration statement on Form S-3 for the
registration of the resale by the Investor of Common Stock to be
issued upon exercise of the Warrant (the "Warrant Registration
Statement"), which Warrant Registration Statement shall have been
filed within thirty (30) days of execution of this Agreement and
shall have been declared effective by the SEC no later than ninety
(90) days from the filing of the Registration Statement, (iii)
within thirty (30) days of the issuance of an Additional Warrant,
in accordance with the Registration Rights Agreement, a
registration statement on Form S-3 for the registration of the
resale by the investor of Common Stock to be issued upon exercise
of each Additional Warrant (each, an "Additional Warrant
Registration Statement"), which Additional Warrant Registration
Statement shall have been declared effective by the SEC no later
than ninety (90) days from the filing of Additional Warrant
Registration Statement. Furthermore, the Company shall have filed
(i) with the applicable states securities commissions such blue
sky filings as shall have been requested by the Investor, provided
that in connection therewith, the Company shall not be required to
file a general consent to service of process in any jurisdiction,
and (ii) any required filings with the NASD or exchange or market
where the Common Stock is traded.
---20---
(b) Effective Registration Statement. The
Registration Statement shall be in effect and shall remain
effective on each Condition Satisfaction Date and (i) neither the
Company nor the Investor shall have received notice that the SEC
has issued or intends to issue a stop order with respect to the
Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so,
and (ii) no other suspension of the use of the Registration
Statement or Prospectus shall exist pursuant to the Registration
Rights Agreement.
(c) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company as
set forth in this Agreement and the Registration Rights Agreement
shall be true and correct in all material respects as of each
Condition Satisfaction Date as though made at each such time
(except for representations and warranties made as of a specific
date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including each
Condition Satisfaction Date.
(d) Performance by the Company. The Company shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed,
satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.
(e) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits
or adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced which may
have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(f) Adverse Changes. Since September 30, 1997, the
date through which the most recent quarterly report of the Company
on Form 10-Q has been prepared and filed with the SEC, a copy of
which is included in the SEC Documents, no event which had or is
reasonably likely to have a Material Adverse Effect has occurred,
except as disclosed in the SEC Documents subsequent to such date.
(g) No Suspension of Trading In or Delisting of
Common Stock. The trading of the Common Stock shall not have been
suspended by the SEC, the Principal Market or the NASD and the
Common Stock shall have been approved for listing or quotation on
---21---
and shall not have been delisted from the Principal Market. The
issuance of shares of Common Stock with respect to the applicable
Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market.
(h) Legal Opinions. The Company shall have caused
to be delivered to the Investor, (i) within five (5) Trading Days
following the effective date of the Registration Statement, the
Warrant Registration Statement and the Additional Warrant
Registration Statement, as applicable, (ii) as of a date within
five (5) Trading Days after the date of the Company's filing of
its most recent quarterly report on Form 10-Q (or the date by
which such report is required to be filed), (iii) as of a date
within five (5) Trading Days after the date on which the Company
announces, whether on a preliminary or definitive basis, its
fourth quarter or full-year financial results, (iv) to the extent
provided by Section 3.3, and (v) as of a date within five (5)
Trading Days of a Mandatory Purchase Notice or an Additional
Purchase Notice, as the case may be, an opinion of the Company's
independent counsel containing the opinions and statements set
forth in Exhibit B hereto, addressed to the Investor stating,
inter alia, that no facts have come to such counsel's attention
that would cause it to believe that any of the Registration
Statement, the Warrant Registration Statement and the Additional
Warrant Registration Statement, as applicable (as each may be
amended, if applicable), contains an untrue statement of material
fact or omits a material fact required to make the statements
contained therein, not misleading or that the underlying
Prospectus (if applicable, as so amended or supplemented) contains
an untrue statement of material fact or omits a material fact
required to make the statements contained therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that in the event that such an opinion cannot be
delivered by the Company's independent counsel to the Investor,
the Company shall promptly notify the Investor and promptly revise
each of the Registration Statement, the Warrant Registration
Statement and the Additional Warrant Registration Statement, as
applicable, and the Investor shall not deliver an Optional
Purchase Notice, and the Company shall not deliver a Mandatory
Purchase Notice or an Additional Purchase Notice or, if an
Optional Purchase Notice, a Mandatory Purchase Notice or an
Additional Purchase Notice shall have been delivered in good faith
without knowledge by the Investor or the Company that an opinion
of independent counsel cannot be delivered as required, shall
postpone such Closing Date for a period of up to five (5) Trading
Days until such an opinion is delivered to the Investor (or such
Closing shall otherwise be canceled). In the event of such a
postponement, the Purchase Price of the Common Stock to be issued
at such Closing as determined pursuant of Section 2.3 shall be the
---22---
lower of such Purchase Price as calculated as of the originally
scheduled Closing Date or as of the actual Closing Date. The
Company's independent counsel shall also deliver to the Investor
on the Effective Date opinions in form and substance satisfactory
to the Investor addressing, among other things, corporate matters
and the exemption from registration under the Securities Act of
the issuance of the Common Stock by the Company to the Investor
under this Agreement.
(i) Accountant's Letter.
(i) The Company shall engage its independent
auditors to perform the procedures in accordance with the
provisions of Statement on Auditing Standards No. 71, as amended,
as agreed to by the parties hereto, and reports thereon as shall
have been reasonably requested by the Investor with respect to
certain financial information contained in the Registration
Statement and shall have delivered to the Investor a report
addressed to the Investor, (x) within five (5) Trading Days
following the effective date of the Registration Statement and (y)
within ten (10) Trading Days following the filing with the SEC of
each SEC Document containing unaudited financial statements of the
Company which is deemed to be incorporated by reference in the
Registration Statement.
(ii) In the event that the Investor shall have
requested delivery of an "agreed upon procedures" report pursuant
to Section 3.3, the Company shall engage its independent auditors
to perform certain agreed upon procedures and report thereon as
shall have been reasonably requested by the Investor with respect
to certain financial information of the Company and the Company
shall deliver to the Investor a copy of such report addressed to
the Investor. In the event that the report required by this
Section 3.2(i) cannot be delivered by the Company's independent
auditors, the Company shall, if necessary, promptly revise the
Registration Statement and the Investor shall not deliver an
Optional Purchase Notice, and the Company shall not deliver a
Mandatory Purchase Notice or an Additional Purchase Notice or, if
an Optional Purchase Notice shall have been delivered in good
faith without knowledge by the Investor that a report of the
Company's independent auditors cannot be delivered as required or,
if a Mandatory Purchase Notice or an Additional Purchase Notice
shall have been delivered in good faith without knowledge by the
Company that a report of its independent auditors cannot be
delivered as required, postpone such Closing Date for a period of
up to five (5) Trading Days until such a report is delivered (or
such Closing shall otherwise be canceled). In the event of such a
postponement, the Purchase Price of the Common Stock to be issued
at such Closing as determined pursuant to Section 2.3 shall be the
lower of such Purchase Price as calculated as of the originally
scheduled Closing Date and as of the actual Closing Date.
---23---
(j) Officer's Certificate. The Company shall have
delivered to the Investor, on each Closing Date, a certificate in
form and substance reasonably acceptable to the Investor, executed
by an executive officer of the Company and to the effect that all
the conditions to such Closing shall have been satisfied as at the
date of each such certificate.
(k) Due Diligence. No dispute between the Company
and the Investor shall exist pursuant to Section 3.3 as to the
adequacy of the disclosure contained in the Registration
Statement.
(l) Beneficial Ownership Limitation. On each
Closing Date, (i) the Investor shall not be required or entitled
to purchase shares of Common Stock to the extent such purchase
would result in the Investor's or any affiliate of the Investor's
Common Stock holdings to exceed the 4.9% Limit, and (ii) the
Investor shall have received and been reasonably satisfied with
such other certificates and documents as shall have been
reasonably requested by the Investor in order for the Investor to
confirm the Company's satisfaction of the conditions set forth in
this Section 3.2. For purposes of clause (i) of this Section
3.2(l), in the event that the amount of Common Stock outstanding
as determined in accordance with Section 13(d) of the Exchange Act
and the regulations promulgated thereunder is greater on a Closing
Date than on the date upon which the Optional Purchase Notice,
Mandatory Purchase Notice or the Additional Purchase Notice
associated with such Closing Date is given, the amount of Common
Stock outstanding on such Closing Date shall govern for purposes
of determining whether the Investor, when aggregating all
Purchases of Common Stock made pursuant to this Agreement and, if
any, Warrant Shares, would own more than 4.9% of the Common Stock
following such Closing Date.
3.3 Due Diligence Review. The Company shall make
available for inspection and review by the Investor, advisors to
and representatives of the Investor (who may or may not be
affiliated with the Investor and who are reasonably acceptable to
the Company), any underwriter participating in any disposition of
Common Stock on behalf of the Investor pursuant to the
Registration Statement, the Warrant Registration Statement or the
Additional Warrant Registration Statement or amendments or
supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Documents and other filings
with the SEC, and all other corporate documents and properties of
the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees
to supply all such information reasonably requested by the
Investor or any such representative, advisor or underwriter in
connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from
time to time after the filing and effectiveness of the
---24---
Registration Statement for the sole purpose of enabling the
Investor and such representatives, advisors and underwriters and
their respective accountants and attorneys to conduct initial and
ongoing due diligence with respect to the Company and the accuracy
of the Registration Statement.
The Company shall not disclose nonpublic information to the
Investor, advisors to or representatives of the Investor unless
prior to disclosure of such information the Company identifies
such information as being nonpublic information and provides the
Investor, such advisors and representatives with the opportunity
to accept or refuse to accept such nonpublic information for
review. The Company may, as a condition to disclosing any
nonpublic information hereunder, require the Investor's advisors
and representatives to enter into a confidentiality agreement
(including an agreement with such advisors and representatives
prohibiting them from trading in Common Stock during such period
of time as they are in possession of nonpublic information) in
form reasonably satisfactory to the Company and the Investor.
Nothing herein shall require the Company to disclose
nonpublic information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate nonpublic information to any investors who purchase
stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove
provided, immediately notify the advisors and representatives of
the Investor and, if any, underwriters, of any event or the
existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware,
constituting nonpublic information (whether or not requested of
the Company specifically or generally during the course of due
diligence by and such persons or entities), which, if not
disclosed in the Prospectus included in the Registration
Statement, would cause such Prospectus to include a material
misstatement or to omit a material fact required to be stated
therein in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Nothing
contained in this Section 3.3 shall be construed to mean that such
persons or entities other than the Investor (without the written
consent of the Investor prior to disclosure of such information)
may not obtain nonpublic information in the course of conducting
due diligence in accordance with the terms of this Agreement;
provided, however, that in no event shall the Investor's advisors
or representatives disclose to the Investor the nature of the
specific event or circumstances constituting any nonpublic
information discovered by such advisors or representatives in the
course of their due diligence without the written consent of the
Investor prior to disclosure of such information. The Investor's
advisors or representatives shall make complete disclosure to the
---25---
Investor's independent counsel of all events or circumstances
constituting nonpublic information discovered by such advisors or
representatives in the course of their due diligence upon which
such advisors or representatives form the opinion that the
Registration Statement contains an untrue statement of a material
fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements
contained therein, in the light of the circumstances in which they
were made, not misleading. Upon receipt of such disclosure, the
Investor's independent counsel shall consult with the Company's
independent counsel in order to address the concern raised as to
the existence of a material misstatement or omission and to
discuss appropriate disclosure with respect thereto; provided,
however, that such consultation shall not constitute the advice of
the Company's independent counsel to the Investor as to the
accuracy of the Registration Statement and related Prospectus. In
the event after such consultation the Investor's independent
counsel reasonably believes that the Registration Statement
contains an untrue statement or a material fact or omits a
material fact required to be stated in the Registration Statement
or necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading, (a) the
Company shall file with the SEC an amendment to the Registration
Statement responsive to such alleged untrue statement or omission
and provide the Investor, as promptly as practicable, with copies
of the Registration Statement and related Prospectus, as so
amended, (b) if the Company disputes the existence of any such
material misstatement or omission, (i) the Company's independent
counsel shall provide the Investor's independent counsel with an
opinion stating that nothing has come to their attention that
would lead them to believe that the Registration Statement or the
related Prospectus, as of the date of such opinion, contains an
untrue statement of a material fact or omits a material fact
required to be stated in the Registration Statement or the related
Prospectus or necessary to make the statements contained therein,
in light of the circumstances in which they were made, not
misleading and (ii) in the event the dispute relates to the
adequacy of financial disclosure and the Investor shall reasonably
request, the Company's independent auditors shall provide to the
Company a letter outlining the performance of such "agreed upon
procedures" as shall be reasonably requested by the Investor and
the Company shall provide the Investor with a copy of such letter,
or (c) if the Company disputes the existence of any such material
misstatement or omission, and the dispute relates to the timing of
disclosure of a material event and the Company's independent
counsel is unable to provide the opinion referenced in clause
(b)(i) above to the Investor, then this Agreement shall be
suspended for a period of up to thirty (30) days, at the end of
which, if the dispute still exists between the Company's
independent counsel and the Investor's independent counsel, the
Company shall either (i) amend the Registration Statement as
---26---
provided above, (ii) provide to the Investor the Company's
independent counsel opinion and a copy of the letter of the
Company's independent auditors referenced above, or (iii) the
obligation of the Investor to purchase shares of Common Stock
pursuant to this Agreement shall terminate. The Investor hereby
agrees to hold harmless the Company's independent auditors from
any liability that may arise out of the delivery of an "agreed
upon procedures" letter pursuant to clause (b)(ii) above.
IV.
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company as
follows:
4.1 No Present Arrangement. The Investor is entering
into this Agreement for its own account and the Investor has no
present arrangement (whether or not legally binding) at any time
to sell the Common Stock to or through any person or entity;
provided, however, that by making the representations herein, the
Investor does not agree to hold the Common Stock for any minimum
or other specific term and reserves the right to dispose of the
Common Stock at any time in accordance with federal and state
securities laws applicable to such disposition.
4.2 Sophisticated Investor. The Investor is a
sophisticated investor (as described in Rule 506(b)(2)(ii) of
Regulation D) and an accredited investor (as defined in Rule 501
of Regulation D), and Investor has such experience in business and
financial matters that it is capable of evaluating the merits and
risks of an investment in Common Stock. The Investor acknowledges
that an investment in the Common Stock is speculative and involves
a high degree of risk.
4.3 Authority. The Investor has full power and authority
as a limited liability company to execute and deliver this
Agreement and to consummate the transactions contemplated hereby
in accordance with the terms hereof. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Investor. No
other proceedings on the part of Investor are necessary to approve
and authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby in accordance
with the terms hereof. This Agreement has been validly executed
and delivered by the Investor and is a valid and binding agreement
of the Investor enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar
---27---
laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of
general application.
4.4 No Brokers. The Investor has taken no action which
would give rise to any claim by any person for brokerage
commission, finder's fees or similar payments by the Company
relating to this Agreement or the transactions contemplated
hereby.
4.5 Not an Affiliate. The Investor is not an officer,
director or "affiliate" (as that term is defined in Rule 405 of
the Securities Act) of the Company.
4.6 Organization and Standing. The Investor is a limited
liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has all
requisite power and authority as a limited liability company to
carry on its business as now being conducted, and is duly
qualified to do business and in good standing in each jurisdiction
in which the nature of the business conducted by it makes such
qualifications necessary, except where the failure to be so
qualified or in good standing would not reasonably be expected to
have a material adverse effect. Investor has made available to
the Company or its agents complete and correct copies of
Investor's Articles of Organization and Operating Agreement as in
effect on the date hereof.
4.7 Absence of Conflicts. The execution and delivery of
this Agreement and any other document or instrument executed in
connection herewith, and the consummation of the transactions
contemplated thereby, and compliance with the requirements
thereof, will not violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Investor, or
the provision of any indenture, instrument or agreement to which
the Investor is a party or is subject, or by which the Investor or
any of its assets is bound, or conflict with or constitute a
material default thereunder, or result in the creation or
imposition of any lien pursuant to the terms of any such
indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by the Investor to any third party, or require
the approval of any third party (which has not been obtained)
pursuant to any material contract, agreement, instrument,
relationship or legal obligation to which the Investor is subject
or to which any of its assets, operations or management may be
subject.
4.8 Disclosure: Access to Information. The Investor has
received all documents, records, books and other information
pertaining to the Investor's investment in the Company that have
been requested by the Investor. The Investor further acknowledges
that it understands that the Company is subject to the periodic
---28---
reporting requirements of the Exchange Act, and the Investor has
reviewed or received copies of any such reports that have been
requested by it.
4.9 Manner of Sale. At no time was the Investor
presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form of
general solicitation or advertising.
4.10 Financial Capability. The Investor presently has the
financial capacity and the necessary capital to perform its
obligations hereunder.
4.11 No NASD Proceedings. To the Knowledge of the Investor,
there are no disciplinary proceedings involving the Investor or
any of its employees pending before the NASD.
V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor as
follows:
5.1 Corporate Organization. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing
and, if applicable, in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate
power and authority to own or lease and operate its properties and
to carry on its business as now being conducted, and is duly
qualified to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing would not reasonably be expected to have a Material
Adverse Effect. The Company has made available to the Investor or
its agents complete and correct copies of the Certificate of
Incorporation, as amended, and by-laws of the Company as in effect
on the date hereof.
5.2 Capitalization.
(a) Except as disclosed in the SEC Documents, the
authorized Capital Stock of the Company consists of (i) 70,000,000
shares of Common Stock and (ii) 10,000,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock"). As of
September 30, 1997, there were (i) 36,363,002 shares of Common
Stock issued and outstanding all of which are duly authorized and
validly issued, fully paid and nonassessable and (ii) 3,123,625
shares of Common Stock reserved for issuance pursuant to stock
options granted or which may be granted under the Compensation
---29---
Plans. Except as disclosed in the SEC Documents, the Company has
not issued any Common Stock since June 30, 1996, except pursuant
to the exercise of stock options and the conversion of the
Preferred Stock, nor has the Company since such date repurchased
or redeemed or acquired any such shares. No shares of Capital
Stock of the Company are entitled to preemptive rights.
(b) Except as disclosed in the SEC Documents and as
set forth in Section 5.2(a) above, the Company does not have
outstanding any Capital Stock or securities convertible into or
exchangeable for any shares of Capital Stock or any options,
warrants or other rights, agreements, arrangements or commitments
of any character to which the Company is a party or otherwise
obligating the Company to issue or sell or entitling any Person to
acquire from the Company, and the Company is not a party to any
agreement, arrangement or commitment obligating it to repurchase,
redeem or otherwise acquire, any shares of its Capital Stock or
securities convertible into or exchangeable for any of its Capital
Stock.
(c) Upon issuance of the Common Stock, and payment
of the Purchase Price therefor, pursuant to a Purchase and sale in
accordance with the terms of this Agreement, the Company will
transfer to the Investor good and valid title to the Common Stock,
free and clear of any Lien, other than Liens, if any, created by
the Investor and such Common Stock will be duly authorized, fully
paid and nonassessable.
5.3 Subsidiaries.
(a) Except as disclosed in the SEC Documents, the
Company does not have any Subsidiaries other than Immunomedics,
Europe, a Netherlands Company and Immunomedics, Ltd., an Israeli
Corporation. Except as set forth in the SEC Documents, each
Subsidiary is wholly-owned by the Company.
(b) Except as disclosed in the SEC Documents, (i)
all the outstanding stock or other equity or ownership interests
of each Subsidiary is owned free and clear of all Liens and is
validly issued and (ii) there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
to which any Subsidiary is a party or otherwise obligating any
Subsidiary to issue or sell, or entitling any Person to acquire
from any Subsidiary, and no Subsidiary is a party to any
agreement, arrangement or commitment obligating it to repurchase,
redeem or otherwise acquire, any shares of the Capital Stock or
any securities convertible into or exchangeable for the Capital
Stock of any such Subsidiary.
---30---
5.4 Authorization. The Company has full corporate power
and authority to execute and deliver this Agreement, the
Registration Rights Agreement, the Warrant and the Additional
Warrants, to issue the Common Stock pursuant to this Agreement,
the Warrant and the Additional Warrants and to consummate the
transactions contemplated hereby and thereby in accordance with
the terms hereof and thereof. The execution and delivery of this
Agreement, the Registration Rights Agreement, the Warrant and the
Additional Warrants, and the issuance of the Common Stock issuable
upon a Closing and pursuant to the Warrant and the Additional
Warrants and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of
Directors of the Company. No other corporate proceedings on the
part of the Company are necessary to approve and authorize the
execution and delivery of this Agreement, the Registration Rights
Agreement, the Warrants and the Additional Warrants, the issuance
of the Common Stock issuable upon a Closing and pursuant to the
Warrant and the Additional Warrants and the consummation of the
transactions contemplated hereby and thereby in accordance with
the terms hereof and thereof. This Agreement, the Registration
Rights Agreement and the Warrant have been duly executed and
delivered by the Company, and each Additional Warrant will be duly
executed and delivered by the Company, and the Common Stock
issuable in accordance with the terms of this Agreement or upon
exercise of the Warrant and each Additional Warrant will be duly
and validly issued, fully paid and nonassessable, and each of this
Agreement, the Registration Rights Agreement, the Warrant and each
Additional Warrant when executed and delivered constitute valid
and binding obligations of the Company enforceable against the
Company in accordance with their terms, except to the extent
limited by (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity.
5.5 No Violation; Consents.
(a) Assuming the making or receipt of all filings,
notices, registrations, consents, approvals, permits and
authorizations described in the following paragraph, the execution
and delivery of this Agreement, the Registration Rights Agreement,
the Warrant and the Additional Warrants, the issuance of the
Common Stock, the consummation of the transactions contemplated
hereby, by the Registration Rights Agreement, the Warrant and the
Additional Warrants, the compliance by the Company with any of the
provisions hereof or of the Registration Rights Agreement, the
Warrant and the Additional Warrants, will not (i) conflict with,
violate or result in any breach of the Certificate of
Incorporation, as amended, or by-laws of the Company or its
Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
---31---
default or give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any Lien on or
against any of the properties of the Company or any of its
Subsidiaries pursuant to any of the terms or conditions of any
note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) violate any statute,
law, rule, regulation, writ, injunction, judgment, order or decree
of any Governmental Entity, binding on the Company or any of its
Subsidiaries or any of their properties or assets, excluding from
the foregoing clauses (i) and (ii) conflicts, violations,
breaches, defaults, rights of termination, cancellation or
acceleration, and liens which, individually or in the aggregate,
would not have a Material Adverse Effect, would not prevent or
materially delay consummation of the transactions contemplated
hereby and would not affect the validity of the issuance of the
Common Stock.
(b) Except for (i) applicable requirements, if any,
under Blue Sky Laws, (ii) the filing of additional listing
applications with Nasdaq, and (iii) the filing of the Registration
Statement, Warrant Registration Statement and Additional Warrant
Registration Statement, no filing, consent, approval, permit,
authorization, notice, registration or other action of or with any
Governmental Entity is required to be made or obtained by or with
respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrant and the Additional
Warrants by the Company, the issuance of the Common Stock or the
consummation by the Company of the transactions contemplated
hereby and thereby.
5.6 Compliance With Applicable Law. The businesses of
the Company are not being conducted in violation of any law,
ordinance, rule, regulation, judgment, decree or order of any
Governmental Entity, except for possible violations which,
individually or in the aggregate, would not have a Material
Adverse Effect. The Company and each of its Subsidiaries possess
all domestic and foreign governmental licenses, permits,
authorizations and approvals and have made all registrations and
given all notifications required under federal, state, local or
foreign law to carry on in all respects their businesses as
currently conducted, except as otherwise disclosed in writing by
the Company to the Investor on or prior to the date hereof, and
except where the failure to have any such licenses, permits,
authorizations or approvals, individually or in the aggregate,
would not have a Material Adverse Effect. Except as disclosed in
the SEC Documents, no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company, threatened, other
---32---
than those the outcome of which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
5.7 Compliance With Food and Drug Act.
(a) FDA Permits. Except as set forth in the SEC
Documents, the Company and each of its Subsidiaries have all
material licenses, permits, consents, approvals and authorizations
that are required under the Food and Drug Act and any similar
foreign law, rule or regulation (collectively, the "FDA Permits")
in connection with the conduct of the businesses of the Company
and each of its Subsidiaries as presently conducted. The Company
has obtained and owns or has the right to use the FDA Permits in
accordance with the terms thereof. Each FDA Permit is valid and
in full force and effect. The FDA Permits are currently effective
and sufficient for the operation of the Company's businesses as
currently conducted. All information supplied by or on behalf of
the Company and each of its Subsidiaries to obtain or maintain
each FDA Permit was, as of the date given, true and complete in
all material respects. The Company and each of its Subsidiaries
has complied in all material respects with all conditions and
requirements imposed by the FDA Permits and neither the Company
nor any of its Subsidiaries has received any notice of
cancellation, suspension or termination of any of the FDA Permits
and to the Knowledge of the Company no Governmental Entity intends
to cancel, suspend or terminate any of the FDA Permits or that
valid grounds for such cancellation, suspension or termination
exist.
(b) Food and Drug Act. (i) The Company and each of
its Subsidiaries are in compliance in all material respects with
all applicable requirements of the Food and Drug Act and any
similar foreign law, rule or regulation, (ii) the Company's and
each of its Subsidiaries' existing inventory of products held for
sale, and all products manufactured by the Company, any of its
Subsidiaries or any of the Company's Affiliates and sold within
the two (2) years preceding the date hereof, have been produced in
compliance in all material respects with all applicable
requirements of the Food and Drug Act and any similar foreign law,
rule or regulation, including, without limitation, all "current
good manufacturing practices" and similar requirements thereunder
and (iii) to the Knowledge of the Company there is no event,
condition, circumstance, activity, practice, incident, action or
plan of the Company or any Subsidiary which is likely to interfere
with or prevent the Company's or any of its Subsidiaries continued
compliance with all applicable requirements of the Food and Drug
Act or any similar foreign law, rule or regulation, or which may
give rise to any common law or legal liability of the Company or
any Subsidiary under, or otherwise form the basis of any Lien or
any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Entity based on or
---33---
related to, the Food and Drug Act or any similar foreign law, rule
or regulation, other than those the outcome of which, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
5.8 Litigation. Except as disclosed in the SEC
Documents, there is no claim, action or proceeding (including any
condemnation proceeding) pending or, to the Knowledge of the
Company, threatened against or relating to the Company or any of
its Subsidiaries by or before any Governmental Entity or
arbitrator that if adversely determined, individually or in the
aggregate, would have a Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its
Subsidiaries that has had, or would reasonably be expected in the
future to have, a Material Adverse Effect or which reasonably
could be expected to materially adversely affect the transactions
contemplated by this Agreement.
5.9 SEC Documents, Financial Statements.
(a) The Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act and the Company has
filed all reports, schedules, forms, statements and other
documents, together with all exhibits, financial statements and
schedules thereto required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act,
including material filed pursuant to Section 13(a) or 15(d), (all
of the foregoing, whether heretofore or hereafter filed with the
SEC since January 1, 1996, and the Registration Statement, when
declared effective, being hereinafter referred to as the "SEC
Documents"). The Common Stock is currently listed or quoted on
the Principal Market, which is, as of the date hereof the Nasdaq
National Market. The Company has delivered or made available to
the Investor true and complete copies of the SEC Documents through
September 30, 1997. The Company has not provided to the Investor
any material information which, according to applicable law, rule
or regulation, should have been disclosed publicly by the Company
but which has not been so disclosed, other than with respect to
the transactions contemplated by this Agreement. As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Exchange Act or
the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such SEC
Documents, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated herein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. As of the date of delivery by the
---34---
Investor of the Prospectus contained in the Registration Statement
in connection with sales of Common Stock by the Investor, such
Prospectus will comply in all material respects with the
requirements of the Securities Act and the rules and regulations
of the SEC promulgated thereunder, and other federal, state and
local laws, rules and regulations applicable to such Prospectus.
The financial statements of the Company included (or incorporated
by reference) in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable
rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or
(ii) in the case of unaudited interim statements, to the extent
they 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 operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(b) During the three (3) years preceding the date
hereof, the SEC has not issued a order preventing or suspending
the use of any prospectus relating to the offering of any shares
of Common Stock or instituted proceedings for that purpose.
5.10 No Undisclosed or Contingent Liabilities. Neither
the Company nor any of its Subsidiaries has any claims,
liabilities or obligations of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to
become due) that would be required to be reflected or reserved
against on a consolidated balance sheet of the Company and its
consolidated Subsidiaries under GAAP, except for claims,
liabilities or obligations (i) reflected or reserved against on
the Balance Sheet, (ii) disclosed in the Company's most recent
Form 10-K or any SEC Document filed subsequent to such Form 10-K
or (iii) incurred by the Company or any of its Subsidiaries since
September 30, 1997 in the ordinary course of business and
consistent with past practice and that, individually or in the
aggregate, would not have a Material Adverse Effect.
5.11 Taxes. Except as set forth in the SEC Documents, the
Company and its Subsidiaries have timely filed all necessary Tax
Returns and notices and have paid all federal, state, county,
local and foreign taxes of any nature whatsoever for all the tax
years through June 30, 1996 indicated on such Tax Returns as being
due and payable, to the extent such taxes have become due (other
than taxes which are being challenged in good faith by the Company
---35---
and have been adequately reserved for by the Company). Except as
set forth in the SEC Documents, there are no tax deficiencies
which would reasonably be expected to have a Material Adverse
Effect; the Company and its Subsidiaries have paid all Taxes which
have become due, whether pursuant to any assessments, or
otherwise, and there is no further liability (whether or not
disclosed on such returns) or assessments for any such Taxes, and
no interest or penalties accrues or accruing with respect thereto,
except as may be set forth or adequately reserved for in the
financial statements included in the SEC Documents; the amounts
currently set up as provisions for Taxes or otherwise by the
Company and its Subsidiaries on their books and records are
sufficient in all material respects for the payment of all their
unpaid federal, foreign, state, county and local taxes accrued
through the dates as of which they speak, and for which the
Company and its Subsidiaries may be liable in their own right, or
as transferee of the assets of, as successor to any other
corporation, association, partnership, joint venture or other
entity.
5.12 Employee Benefit Plans. All employee benefit plans
and other benefit arrangements covering the employees of the
Company and its Subsidiaries (the "Benefit Plans") have been
operated and administered in all material respects in compliance
with their terms and applicable law, and there are no claims,
liabilities or obligations of any kind whatsoever relating to the
Benefit Plans which individually or in the aggregate would have a
Material Adverse Effect, except for any such claims, liabilities
or obligations described in the SEC Documents.
5.13 Absence of Certain Changes. Except as set forth in
any SEC Document filed by the Company, the business of the Company
and its Subsidiaries has been conducted in the ordinary course
consistent with past practices and there has not been:
(i) any event, occurrence, development or
state of circumstances or facts which, individually or in the
aggregate, has had or would reasonably be expected to have a
Material Adverse Effect;
(ii) any declaration, setting aside or payment
of any dividend or other distribution with respect to any shares
of Capital Stock of the Company, other than the normal quarterly
dividend of the Company, or any repurchase, redemption or other
acquisition by the Company or any Subsidiary of any outstanding
shares of Capital Stock or other securities of, or other ownership
interests in, the Company or any Subsidiary;
(iii) any amendment of any material term of
any outstanding security of the Company or any Subsidiary;
---36---
(iv) any incurrence, assumption or guarantee
by the Company or any Subsidiary of any indebtedness for borrowed
money, other than working lines of credit or borrowings under
existing lines of credit;
(v) any creation or assumption by the Company
or any Subsidiary of any Lien on any material asset other than in
the ordinary course of business consistent with past practice;
(vi) any making of any loan, advance or
capital contributions to or investment in any Person in excess of
$100,000 other than loans, advances or capital contributions to or
investments in wholly-owned Subsidiaries made in the ordinary
course of business consistent with past practice;
(vii) any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the
business or assets of the Company or any Subsidiary which,
individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect;
(viii) any transaction or commitment made, or
any contract or agreement entered into, by the Company or any
Subsidiary relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by
the Company or any Subsidiary of any contract or other right, in
either case, material to the Company and the Subsidiaries, taken
as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practice and
those contemplated by this Agreement; or
(ix) any change in any method of accounting or
accounting practice by the Company or any Subsidiary.
5.14 Environmental Matters.
(a) Except as set forth in the SEC Documents, the
Company and its Subsidiaries have obtained all permits, licenses
and other authorizations, and have made all registrations and
given all notifications, that are required with respect to the
operation of their respective businesses under all applicable
Environmental Laws other than those permits, licenses, other
authorizations, registrations and notifications the failure of
which to obtain or make, individually or in the aggregate, would
not have a Material Adverse Effect.
(b) Except as set forth in the SEC Documents, the
Company and its Subsidiaries are in compliance in all material
respects with all terms and conditions of the required permits,
licenses and other authorizations referred to in subsection (a) of
---37---
this Section 5.14, and also in compliance in all material respects
with any other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, injunction,
settlement agreement, notice or demand letter issued, entered,
promulgated or approved thereunder, other than where the failure
to be in such compliance, individually or in the aggregate, would
not have a Material Adverse Effect.
(c) Except as set forth in the SEC Documents, there
is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter (collectively "Actions") pending or, to
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries relating in any way to Environmental Laws
or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated
or approved thereunder other than Actions that, if determined
adversely to the Company or such Subsidiaries, would not
reasonably be expected to have a Material Adverse Effect.
5.15 Material Contracts.
(a) Except as disclosed in the SEC Documents,
neither the Company nor any Subsidiary is a party to or bound by
any agreement or arrangement material to the Company and its
Subsidiaries taken as a whole ("Material Contracts").
(b) Except as disclosed in the SEC Documents, each
Material Contract is in full force and effect and constitutes a
legal, valid and binding obligation of the Company or the
Subsidiary party thereto and, to the Knowledge of the Company,
each other party thereto, and is enforceable against the Company
or its Subsidiaries and, to the Knowledge of the Company, each
other party thereto in accordance with its terms, except to the
extent that such enforceability is limited by (i) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or
other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity,
and neither the Company nor any of its Subsidiaries, nor, to the
knowledge of the Company, any other party thereto is in conflict
therewith or in violation or breach thereof or default thereunder,
except for such conflicts, violations, breaches and defaults
which, individually or in the aggregate, would not have a Material
Adverse Effect.
5.16 Properties; Encumbrances. Subject to the next
succeeding sentence, or as disclosed in the SEC Documents, each of
the Company and its Subsidiaries has good and valid title, and in
the case of real property, insurable title, to all material
---38---
properties and assets which it purports to own (real, personal and
mixed, tangible and intangible, including all forms of goodwill,
rights, intellectual property and intellectual property rights)
(collectively, the "Company Assets"), including, without
limitation, all the material properties and assets reflected on
the Balance Sheet (except for (i) real and personal property sold
since the date of the Balance Sheet or which was obsolete or no
longer useful in connection with the businesses of the Company and
its Subsidiaries and (ii) capital leases reflected on the Balance
Sheet), and all material properties and assets purchased by the
Company and its Subsidiaries since the date of the Balance Sheet.
All Company Assets are free and clear of all liens, mortgages,
claims, interests, charges, security interests or other
encumbrances or adverse interests of any nature whatsoever and
other title or interest retention arrangements ("Liens"), except
(A) as reflected on the Balance Sheet, (B) as set forth on
Schedule 3.16, (C) statutory Liens of carriers, warehousemen,
mechanics, workmen and materialmen for liabilities and obligations
incurred in the ordinary course of business consistent with past
practice that are not yet delinquent or being contested in good
faith, (D) such defects, irregularities, encumbrances and other
imperfections of title as normally exist with respect to property
similar in character and that, individually or in the aggregate
together with all other such exceptions, do not have a Material
Adverse Effect, (E) Liens for Taxes and (F) Liens that do not
interfere with the present use of the property subject to the
Lien.
5.17 Insurance. Except as set forth in the SEC Documents,
all current primary, excess and umbrella policies of insurance
owned or held by or on behalf of or providing insurance coverage
to the Company or any of its Subsidiaries are in full force and
effect. Except as set forth in the SEC Documents, with respect to
all such insurance policies providing insurance coverage to the
Company or any of its Subsidiaries, no premiums are in arrears and
no notice of cancellation or termination has been received with
respect to any such policy, other than notices of cancellation or
termination routinely sent at the end of a policy term. The
Company believes that the insurance coverage of the Company and
its Subsidiaries is consistent with the coverage generally
maintained by corporations of similar size and engaged in similar
lines of business except that the Company generally self-insures
against potential product liability exposure with respect to its
marketed products.
5.18 Employee Claims; Labor Matters. Except as disclosed
in the SEC Documents, there are no claims or actions pending or,
to the Knowledge of the Company, threatened between the Company or
any of its Subsidiaries and any of their respective employees,
unions, or former employees that would, or would be reasonably
likely to, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth in the SEC Documents, the
Company and each of its Subsidiaries is in compliance in all
material respects with the terms of any collective bargaining
agreements covering employees of the Company or any Subsidiary,
except for matters of noncompliance which, individually or in the
aggregate, would not be expected to have a Material Adverse
Effect.
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5.19 Material Disclosure. Except as set forth in the SEC
Documents, to the Knowledge of the Company, there is no fact,
transaction or development which the Company has not disclosed to
the Investor in writing (including pursuant to the SEC Documents
filed prior to the date hereof) which would reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect. This Agreement (including any Exhibit or
Schedule hereto) and any written statements, documents or
certificates furnished to the Investor by the Company or its
Subsidiaries prior to the date hereof in connection with the
transactions contemplated hereby, taken as a whole, do not and
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated herein or therein
or necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
5.20 Intellectual Property. The Company and its
Subsidiaries own or possess adequate patent rights or licenses or
other rights to use patent rights, inventions, trademarks, service
marks, trade names and copyrights necessary to conduct the general
business now operated by them and neither the Company nor any of
its Subsidiaries has received any notice of infringement or
conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trademarks, service marks,
trade names or copyrights which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
5.21 No General Solicitation in Regard to this
Transaction. Neither the Company nor any of its Subsidiaries or
affiliates nor any distributor or any person acting on its or
their behalf has conducted any general solicitation (as that term
is used in Rule 502(c) of Regulation D) with respect to any of the
Common Stock offered hereby, nor have they made any offers or
sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the
Common Stock offered hereby under the Securities Act.
5.22 No Undisclosed Events or Circumstances. Since
September 30, 1997, no event or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their
respective businesses, properties, prospects, operations or
financial condition, which, under applicable law, rule or
regulation, requires public disclosure or announcement prior to
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the date hereof by the Company but which has not been disclosed in
the SEC Documents or otherwise publicly disclosed in Company press
releases.
5.23 No Integrated Offering. Neither the Company, nor any
of its Subsidiaries or 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, other
than pursuant to this Agreement, under circumstances that would
require registration under the Securities Act of the shares of
Common Stock to be issued under this Agreement.
5.24 No Brokers. The Company has taken no action which
would give rise to any claim by any Person for brokerage
commissions, finder's fees or similar payments by the Investor
relating to this Agreement for the transactions contemplated
hereby.
5.25 No Violation of Covenants. No event of default has
occurred and is continuing (or event which with the lapse of time
or notice or both would constitute such an event) which has not
otherwise been waived under any of the revolving credit facilities
or under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument for money borrowed or any other
material agreement to which the Company or any of its Subsidiaries
is bound, or to which any of the property or assets of the Company
or any of its Subsidiaries is subject.
VI.
COVENANTS OF THE COMPANY
6.1 Registration Rights. The Registration Rights
Agreement shall remain in full force and effect in accordance with
its terms and the Company shall comply in all respects with the
terms thereof.
6.2 Reservation of Common Stock. Except as disclosed in
the SEC Documents, the Company will reserve in each Investment
Period 625,000 shares of Common Stock, and the Company shall
continue to reserve and keep available at all times in each
Investment Period, free of preemptive rights, shares of Common
Stock for the purpose of enabling the Company to satisfy any
obligation to issue shares of its Common Stock incident to the
Closings in such Investment Period and incident to the exercise of
the Warrant and the Additional Warrants issued hereunder; such
amount of shares of Common Stock to be reserved to be calculated
based upon the minimum Purchase Price therefor under the terms of
this Agreement, and assuming the full exercise of the Warrant and
---41---
the Additional Warrants. The number of shares so reserved from
time to time, as theretofore increased or reduced as hereinafter
provided, may be reduced by the number of shares actually
delivered hereunder and the number of shares so reserved shall be
increased to reflect (a) potential increases in the Common Stock
which the Company may thereafter be so obligated to issue by
reason of adjustments to the Purchase Price therefor and the
issuance of the Warrant and each Additional Warrant and (b) stock
splits and stock dividends and distributions.
6.3 Listing of Common Stock. During the term of this
Agreement, the Company hereby agrees to maintain the listing of
the Common Stock on a Principal Market, and as soon as practicable
but in any event prior to the commencement of the Commitment
Period to list the additional shares of Common Stock issuable
under this Agreement (including Common Stock issuable upon
exercise of the Warrant and the Additional Warrants). The Company
further agrees that, if the Company applies to have the Common
Stock traded on any other Principal Market, it will include in
such application the Common Stock issuable under this Agreement
(including Common Stock issuable upon exercise of the Warrant and
the Additional Warrants), and will take such other action as is
necessary or desirable to cause the Common Stock to be listed on
such other Principal Market as promptly as possible. If the
Principal Market is the Nasdaq National Market Large Caps, the
Company shall maintain sufficient net tangible assets to satisfy
the requirements of the NASD for the listing of the Common Stock
on the Nasdaq National Market Large Caps. The Company shall
undertake its best efforts to obtain the shareholder approval
referenced in Section 3.2(g) required for the issuance of Common
Stock under this Agreement within such time period as shall not at
any time preclude the Investor from providing an Optional Purchase
Notice during the Commitment Period, or the Company from providing
a Mandatory Purchase Notice or an Additional Purchase Notice for
the maximum Investment Amount during any Investment Period.
6.4 Exchange Act Registration. During the term of this
Agreement, the Company will cause its Common Stock to continue to
be registered under Section 12(g) of the Exchange Act, will comply
in all respects with its reporting and filing obligations under
the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the
rules thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under
the Exchange Act. If required, the Company will take all action
to continue the listing and trading of its Common Stock on the
Principal Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws
or rules of the NASD and the Principal Market.
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6.5 Legends. The certificates evidencing the Common
Stock to be issued to the Investor at each Closing and upon the
exercise of the Warrant and the Additional Warrants (and otherwise
as provided by Section 7.1) shall be free of legends or stop
transfer or other restrictions.
6.6 Corporate Existence. During the term of this
Agreement, the Company will take all steps necessary to preserve
and continue the corporate existence of the Company.
6.7 Additional SEC Documents. During the term of this
Agreement, the Company will furnish to the Investor, as and when
the originals thereof are submitted to the SEC for filing, copies
of all SEC Documents so furnished or submitted to the SEC.
6.8 "Blackout Period". During the term of this
Agreement, the Company will immediately notify the Investor upon
the occurrence of any of the following events in respect of a
registration statement or related Prospectus in respect of an
offering of securities required to be registered under this
Agreement or the Registration Rights Agreement: (a) receipt of
any request for additional information by the SEC or any other
federal or state governmental authority during the period of
effectiveness of the registration statement for amendments or
supplements to the registration statement or related Prospectus;
(b) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of the registration statement or the initiation of
any proceedings for that purpose; (c) receipt of any notification
with respect to the suspension of the qualification or exemption
from qualification of any of such registrable securities for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (d) the happening of any event which
makes any statement made in the registration statement or related
Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect
or which requires the making of any changes in the registration
statement, related Prospectus or documents so that, in the case of
the registration statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related
Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and (e) the Company's reasonable determination that a
post-effective amendment to the registration statement would be
appropriate, in which event the Company will promptly make
available to the Investor any such supplement or amendment to the
related Prospectus. The Company shall not deliver to the Investor
---43---
any Mandatory Purchase Notice or Additional Purchase Notice and
the Investor shall not deliver to the Company any Optional
Purchase Notice during the continuation of any of the foregoing
events.
VII.
LEGENDS AND DELIVERY OF CERTIFICATES,
COMPLIANCE AND INVESTOR COVENANTS
7.1 Legends and Delivery of Certificates. Each of the
Warrant and the Additional Warrants and, unless otherwise provided
below, the Common Stock will bear the following legend (the
"Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
In the event shares of Common Stock are issued incident to a
Closing or upon exercise of the Warrant or an Additional Warrant
in circumstances pursuant to which shares of Common Stock are
either required to bear the Legend or are not to bear the Legend,
such certificates (bearing or not bearing the Legend, as
appropriate) shall be issued and delivered to the Investor or as
otherwise directed by the Investor on the applicable Closing Date
or within two Trading Days of the surrender of the Warrant or
Additional Warrant for exercise (together with all other
documentation required to be delivered to effect such exercise),
as applicable, in each case against payment therefor.
The Company shall cause the transfer agent for the Common
Stock to issue and deliver to the Investor or as otherwise
directed by the Investor, shares of Common Stock not bearing the
Legend, during the following periods and under the following
circumstances and without the need for any further advice or
instruction or documentation to the transfer agent by or from the
Investor:
(a) At any time from and after the effective date
of the applicable registration statement: (i) incident to any
Closing or the issuance of any shares of Common Stock; (ii)
incident to the exercise of the Warrant and any Additional
Warrant; and (iii) upon any surrender of one or more certificates
evidencing Common Stock and which bear the Legend, to the extent
accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered;
provided that in connection with such event the Investor confirms
---44---
to the transfer agent that it intends to sell such Common Stock to
a third party which is not an affiliate of the Company or the
Investor, and the Investor agrees to redeliver such Common Stock
to the transfer agent to add the Legend in the event the Common
Stock is not sold; and
(b) At any time from and after the Closing Date,
upon any surrender of one or more certificates evidencing Common
Stock and which bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the
Legend to replace those surrendered and containing or also
accompanied by representations that (i) the then holder thereof is
permitted to dispose of such Common Stock pursuant to Rule 144(k)
under the Securities Act, (ii) such holder intends to effect the
sale or other disposition of such Common Stock whether or not
pursuant to the Registration Statement, to a purchaser or
purchasers who will not be subject to the registration
requirements of the Securities Act or (iii) such holder is not
then subject to such requirements; provided that in the case of
surrenders described in clauses (ii) and (iii) thereof, the holder
provides an opinion of counsel in form and substance reasonably
satisfactory to the Company.
7.2 No Other Legend or Stock Transfer Restrictions. No
Legend has been or shall be placed on the share certificates
representing the Common Stock and no instructions or stop
transfers or other restrictions on transfer have been or shall be
given to the Company's transfer agent with respect thereto other
than as expressly set forth in this Article VII.
7.3 Investor's Compliance. Nothing in this Article VII
shall affect in any way the Investor's obligations under any
agreement to comply with all applicable securities laws upon
resale of the Common Stock.
7.4 Covenants of the Investor.
(a) The Investor shall not make any offers or sales
of the Common Stock other than pursuant to a registration
statement under the Securities Act or pursuant to an exemption
from the registration requirements thereof. The Investor will
comply with applicable prospectus delivery requirements under the
Securities Act.
(b) The Investor shall not, whether directly,
indirectly or through an affiliate, sell shares of Common Stock
short except on a neutral tick or uptick. The Investor shall use
commercially reasonable efforts not to create an intraday low in
the Common Stock.
---45---
VIII.
OTHER ISSUANCES OF COMMON STOCK
8.1 Equity Offering Adjustment to Purchase Price. In the
event that the Company makes an Equity Offering during an
Investment Period and a Mandatory Purchase Notice, Additional
Purchase Notice or Optional Purchase Notice has been delivered
with respect to such Investment Period, then notwithstanding
anything herein to the contrary, the purchase price per share of
Common Stock for any Investment Amount made during such Investment
Period prior to the consummation of the Equity Offering shall be
the lower of (a) the lowest effective purchase price per share of
Common Stock received by the Company in any such Equity Offering,
and (b) the price per share of Common Stock determined hereunder
with respect to Purchases of Common Stock effected by the Investor
(whether pursuant to a Mandatory Purchase Notice, an Additional
Purchase Notice or an Optional Purchase Notice) during such
Investment Period.
8.2 Other Adjustments to Purchase Price and Floor Price.
The daily low trading price of the Common Stock for any Trading
Day used to calculate the Purchase Price and the Floor Price shall
be adjusted proportionally to reflect any stock splits, stock
dividends, reclassifications, combinations and similar
transactions involving the Company's Common Stock.
IX.
CHOICE OF LAW AND VENUE, WAIVER OF JURY TRIAL
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW OR CHOICE OF LAW. The parties hereby agree that
all actions or proceedings arising directly or indirectly from or
in connection with this Agreement shall, at the option of either
party, be litigated only in the United States District Court for
the Southern District of New York located in New York County, New
York, unless such District Court declines jurisdiction, in which
case such actions or proceedings shall be litigated only in the
state court located in New York County, New York. The parties
consent to the jurisdiction and venue of the foregoing court and
consent that any process or notice of motion or other application
to said court or a judge thereof may be served inside or outside
the State of New York or the Southern District of New York by
registered mail, return receipt requested, directed to the party
for which it is intended at its address set forth in this
Agreement (and service so made shall be deemed complete five (5)
Trading Days after the same has been posted as aforesaid) or by
personal service or in such other manner as may be permissible
---46---
under the rules of said court. The parties hereto hereby
irrevocably waive any and all right to a trial by jury with
respect to any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
X.
ASSIGNMENT, ENTIRE AGREEMENT, AMENDMENT, TERMINATION
10.1 Assignment. Neither this Agreement nor any rights of
the Investor or the Company hereunder may be assigned by either
party to any other person. Notwithstanding the foregoing, the
Investor's rights and obligations under this Agreement may be
assigned at any time, in whole, with the consent of the Company
(which consent shall not be unreasonably withheld) to any
affiliate of the Investor (a "Permitted Transferee"). The rights
and obligation of the Investor under this Agreement shall inure to
the benefit of, and be enforceable by and against, any such
Permitted Transferee.
10.2 Entire Agreement, Amendment. This Agreement, the
Registration Rights Agreement, and the other documents delivered
pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof
and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or
covenants except as specifically set forth in this Agreement or
therein. Except as expressly provided in this Agreement, neither
this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed
by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
10.3 Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the
name of the Investor without its express written consent, unless
and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
Except as may be required by law, the Company shall consult with
the Investor before issuing any press release or otherwise making
any public statements with respect to this Agreement and shall not
issue any such press release or make any such public statement
prior to such consultation.
10.4 Termination. (a) The Company may, in its sole
discretion, terminate this Agreement and Investor's obligation to
purchase any Investment Amount for the remainder of the Commitment
Period, without liability to the Investor (except to the extent
provided in Article XI hereof).
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(b) Investor may terminate this Agreement as a result of
(i) a breach (which is not cured in accordance with this
Agreement) by the Company of any material representation,
warranty, covenant or other obligation in this Agreement or the
Registration Rights Agreement or (ii) if the Investor determines,
in its sole discretion, at any time that the adoption of, or
change in, or any change in the interpretation or application of,
any law, regulation, rule, guideline or treaty (including, but not
limited to, changes of capital adequacy) makes or will make it
impractical or impossible for the Investor to fulfill its
commitment pursuant to this Agreement.
XI.
NOTICES, ETC., COST AND EXPENSES, INDEMNIFICATION
11.1 Notices, Etc.. All notices, demands, requests,
consents, approvals or other communications required or permitted
to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served or
deposited in the mail, registered or certified, return receipt
requested, postage prepaid, or delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most
recently by written notice: (a) if to the Company, to:
Immunomedics, Inc., 000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, XX 00000;
Attention: Xxxxx Xxxxxxxxxx, Facsimile No.: (000) 000-0000, with
copies (which shall not constitute notice) to: Xxxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxxxx and Kuh LLP, 000 Xxxxx Xxxxxx, 00xx xxxxx, Xxx
Xxxx, XX 00000; Attention: Xxxxxx X. Xxxxx, Esq., Facsimile No.:
(000) 000-0000; and (b) if to the Investor, to Cripple Creek
Securities L.L.C., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxxx X. Xxxxxxx, Facsimile No.: (000) 000-0000 with
copies (which shall not constitute notice) to: Xxxxxx & Xxxxxx,
000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000, Attn. X.
Xxxxxxxxx Xxxxxx, Facsimile No.: (000) 000-0000. Subject to
Section 2.5(d), notice shall be deemed given on the date of
service or transmission if personally served or transmitted by
telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given on the third business day following
the date mailed or on the second business day following delivery
of such notice by a reputable air courier service.
11.2 Costs and Expenses. The Company shall be responsible
for the Investor's (a) legal fees and related expenses incurred in
entering into this Agreement up to a maximum amount of $25,000,
---48---
which shall be payable upon execution and delivery of this
Agreement, and (b) costs and expenses in connection with the
performance of its obligations hereunder up to a maximum amount of
$40,000 initially, and $6,000 quarterly thereafter. The Company
agrees to pay the Investor within thirty (30) days following the
Investor's request therefor. In the event payment is not received
within such thirty (30) day period, Investor shall have the right
to deduct any such amounts owed by the Company to the Investor
from any amounts owed by the Investor to the Company pursuant to
Section 2.4(ii) herein.
The Company shall also be responsible for any subsequent
costs and expenses incurred by the Investor in connection with
matters set forth in the third paragraph of Section 3.3 (including
without limitation legal fees and fees of advisors and
representatives of the Investor), which amounts may be netted by
the Investor against the amount of any payment relating to the
issuance of shares of Common Stock to the Investor in connection
with any Closing.
11.3 Indemnification.
(a) Indemnification of Investor. The Company
agrees to indemnify and hold harmless the Investor and each
person, if any, who controls the Investor within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
as follows:
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of
any untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including any
Prospectus, or in any offering circular or other document, as
applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make
the statement therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained
in any Prospectus (or any amendment or supplement thereto), or in
any offering circular or other document, as applicable, or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the extent
of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or
body, based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that (subject
to Section 11.3(d) below) any such settlement is effected with the
written consent of the Company; and
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(iii) against any and all expenses whatsoever,
as incurred (including the fees and disbursements of counsel),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above; provided,
however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with
written information furnished to the Company by the Investor
expressly for use in the Registration Statement (or any amendment
thereto), including any Prospectus (or any amendment or supplement
thereto), or in any offering circular or other document, as
applicable.
(b) Indemnification of Company. The Investor
agrees to indemnify and hold harmless the Company, its directors,
each of its officers who signed the Registration Statement, 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 against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto), including
any Prospectus (or any amendment or supplement thereto), or in any
offering circular or other document, as applicable, in reliance
upon and in conformity with written information furnished to the
Company by the Investor expressly for use in the Registration
Statement (or any amendment or supplement thereto) or in any
offering circular or other document, as applicable.
(c) Action against Parties; Notification. Each
indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder,
but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent
it is not materially prejudiced as a result thereof and in any
event shall not relieve it from any liability which it may have
otherwise than on account of his indemnity agreement. In case any
such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof.
Notwithstanding the foregoing, the indemnified party or parties
---50---
shall have the right to employ its own counsel in any such case
but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action
at the expense of the indemnifying party, (ii) the indemnifying
party shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to
those available to one or all of the indemnifying party parties
(in which case the indemnifying parties shall not have the right
to direct the defense of such action on behalf of the indemnified
parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying party. In
no event shall the indemnifying party be liable for fees and
expenses of more than one counsel (in addition to one local
counsel) separate from their own counsel for the indemnified
parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party
shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry or any
judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section
11.3 or Section 11.4 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii)
does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of an any
indemnified party.
(d) Settlement without Consent if Failure to
Reimburse. If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party
for the fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature
contemplated by Section 11.3(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
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11.4 Contribution. If the indemnification provided for in
Section 11.3 hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of
any losses, liabilities, claims, damages or expenses referred to
herein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred (a) in
such proportion as is appropriate to reflect the relative benefits
received by the Company on the one and the Investor on the other
hand from the offering of the Common Stock pursuant to this
Agreement or (b) if the allocation provided by clause (a) is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause
(a) above but also the relative fault of the Company on the one
hand and of the Investor on the other and in connection with the
statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Investor on the other hand in connection with the offering
of the Common Stock pursuant to this Agreement shall be deemed to
be in the same respective portions as the total proceeds from the
offering of the Common Stock pursuant to this Agreement received
by the Company from the Investor and the total profits received by
the Investor upon the sale of such Common Stock bear to the
aggregate public offering price.
The relative fault of the Company on the one hand and the
Investor on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the
Company or by the Investor and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Investor agree that it would not be just
and equitable if contribution pursuant to this Section 11.4 were
determined on a pro-rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to above in this Section 11.4. The
aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in
this Section 11.4 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon
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any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 11.4, the
Investor shall not be required to contribute any amount in excess
of the amount by which the total price at which the Common Stock
purchased by it and resold to the public exceeds the amount of any
damages which the Investor has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation.
For purposes of this Section 11.4, each person, if any, who
controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as such Investor, and each director of
the Company, each officer of the Company who signed the
Registration Statement, 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 shall have the same rights to
contribution as the Company.
11.5 General Indemnification. Each party shall indemnify
the other against any loss, cost or damages (including reasonable
attorney's fees and expenses) incurred as a result of such
parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
XII.
MISCELLANEOUS
12.1 Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute one
instrument.
12.2 Survival: Severability. (a) The representations,
warranties, covenants and agreements of the parties hereto shall
survive each Closing hereunder. The indemnity and contribution
agreements contained in Sections 11.3 and 11.4 hereof shall
survive and remain operative and in full force and effect
regardless of (i) any termination of this Agreement or of the
Commitment Period, (ii) any investigation made by or on behalf of
any indemnified party or by or on behalf of the Company, and (iii)
the consummation of the sale or successive resales of the Common
Stock. In the event that any provision of this Agreement becomes
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or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that such severability
shall be ineffective if it materially changes the economic benefit
of this Agreement to any party.
12.3 Title and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
12.4 Reporting Entity for the Common Stock. The reporting
entity relied upon for the determination of the trading price or
trading volume of the Common Stock on any given Trading Day for
the purposes of this Agreement shall be Bloomberg or any other
reputable pricing service chosen by the Investor and reasonably
acceptable to the Company.
12.5 Effectiveness of the Agreement. This Agreement shall
be effective as of the Effective Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the date hereof.
CRIPPLE CREEK SECURITIES L.L.C. IMMUNOMEDICS, INC.
By: By:
Name: Name:
Title: Title:
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