EXHIBIT 10.1
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PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
DATED AS OF
SEPTEMBER 26, 2003
BY AND AMONG
SPECTRUM PHARMACEUTICALS, INC., AS ISSUER AND SELLER
AND
EACH OF THE PARTIES LISTED ON SCHEDULE 1, AS PURCHASERS
WITH RESPECT TO
SERIES E CONVERTIBLE VOTING PREFERRED STOCK,
SERIES E-1 WARRANTS TO PURCHASE COMMON STOCK
AND SERIES E-2 WARRANTS TO PURCHASE COMMON STOCK
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TABLE OF EXHIBITS AND SCHEDULES
Exhibit A Form of Certificate of Designations of the Series E
Convertible Voting Preferred Stock
Exhibit B-1 Form of Series E-1 Warrant
Exhibit B-2 Form of Series E-2 Warrant
Exhibit B-3 Form of Series E-3 Placement Agent Warrant
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Opinion of Seller's Counsel
Exhibit E Form of Management Lock-up Agreement
Schedule 1 Purchasers
Schedule 3 Seller's Disclosure Schedule
Schedule 6.1(j) Officers of the Seller
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated
as of September 26, 2003, by and among Spectrum Pharmaceuticals, Inc., a
Delaware corporation (the "Seller"), and each of the persons listed on Schedule
1 hereto (individually, a "Purchaser" and collectively, the "Purchasers").
WITNESSETH:
WHEREAS, each of the Purchasers is willing to purchase from the Seller,
and the Seller desires to sell to the Purchasers, the numbers of shares set
forth on Schedule 1 attached hereto, which aggregate 2,000 shares of the
Seller's Series E Convertible Voting Preferred Stock, stated value $10,000 per
share, par value $0.001 per share (the "Preferred Stock"), Series E-1 Common
Stock Purchase Warrants (the "Series E-1 Warrants") entitling the holders
thereof to purchase an aggregate of 1,400,000 shares of the Seller's common
stock, $0.001 par value per share (the "Common Stock") and Series E-2 Common
Stock Purchase Warrants (the "Series E-2 Warrants") entitling the holders
thereof to purchase an aggregate of 1,400,000 shares of Common Stock, in each
case, at an exercise price of $6.50 per share (subject to adjustment as provided
therein) as more fully set forth herein (the Series E-1 Warrants and the Series
E-2 Warrants together, the "Warrants").
NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 PURCHASE AND SALE. On the terms and subject to the conditions
set forth in this Agreement, at the Closing (as defined in Section 2.2), the
Seller will sell and each of the Purchasers will purchase (i) the Preferred
Stock in the amounts set forth on Schedule 1 hereto, (ii) the numbers of Series
E-1 Warrants set forth on Schedule 1 hereto and (iii) the numbers of Series E-2
Warrants set forth on Schedule 1 hereto. The shares of Common Stock issuable
upon conversion of the Preferred Stock are referred to herein as the "Conversion
Shares," and the shares of Common Stock issuable upon exercise of the Warrants
are referred to herein as the "Warrant Shares." The Preferred Stock, the
Warrants, the Conversion Shares and the Warrant Shares are collectively referred
to as the "Securities." SCO Securities LLC and/or its designees are receiving
warrants as compensation for services rendered in connection with the
transaction set forth herein (the "Placement Agent Warrants") as provided on
Schedule 1 attached hereto. Such Placement Agent Warrants shall constitute
"Warrants" and SCO Securities LLC and/or its designees shall constitute a
"Purchaser" for all purposes hereunder. The Placement Agent Warrants shall
consist of the Series E-1 Placement Agent Warrants, which shall be in the form
of Exhibit B-1 (the "Series E-1 Placement Agent Warrants") and the Series E-3
Placement Agent Warrants which shall be in the form of Exhibit B-3 (the "Series
E-3 Placement Agent Warrants") which shall, in each case, be issued in the
denominations set forth on Schedule 1 attached hereto.
1.2 TERMS OF THE PREFERRED STOCK AND WARRANTS. The terms and
provisions of the Preferred Stock are set forth in the Certificate of
Designations of Series E Convertible Voting Preferred Stock, which shall be in
the form attached hereto as Exhibit A (the "Certificate of Designations"). The
terms and provisions of the Series E-1 Warrants are more fully set forth in
the Series E-1 Common Stock Purchase Warrant, which shall be in the form
attached hereto as Exhibit B-1. The terms and provisions of the Series E-2
Warrants are more fully set forth in the Series E-2 Common Stock Purchase
Warrant, which shall be in the form attached hereto as Exhibit B-2.
1.3 TRANSFERS; LEGENDS.
(a) (i) Except as required by federal securities laws and the
securities laws of any state or other jurisdiction, the Securities may be
transferred, in whole or in part, by any of the Purchasers at any time. Such
transfers may be effected by delivering written transfer instructions to the
Seller, and the Seller shall reflect such transfer on its books and records. Any
such transfer shall be made by a Purchaser in accordance with applicable law.
Any transferee shall agree to be bound by the terms of the Registration Rights
Agreement and this Agreement and shall have the rights of a Purchaser under
those agreements. The Seller shall reissue certificates evidencing the
Securities upon surrender of certificates evidencing the Securities being
transferred in accordance with this Section 1.3(a).
(ii) In connection with any transfer of Securities other
than pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or to the Seller, the Seller may
require the transferor thereof to furnish to the Seller an opinion of counsel
selected by the transferor, such counsel and the form and substance of which
opinion shall be reasonably satisfactory to the Seller and Seller's counsel, to
the effect that such transfer does not require registration under the Securities
Act; provided, however, that in the case of a transfer pursuant to Rule 144
under the Securities Act, no opinion shall be required if the transferor
provides the Company with a customary seller's representation letter, and if
such sale is not pursuant to subsection (k) of Rule 144, a customary broker's
representation letter and Form 144. Notwithstanding the foregoing, the Seller
hereby consents to and agrees to register on the books of the Seller and with
any transfer agent for the Securities, without any such legal opinion, any
transfer of Securities by a Purchaser to an Affiliate of such Purchaser,
provided that the transferee certifies to the Seller that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act and that it is
acquiring the Securities solely for investment purposes (subject to the
qualifications hereof) and not with a view to, or for, resale, distribution or
fractionalization thereof in whole or in part in violation of the Securities
Act.
(iii) An "Affiliate" means any Person (as such term is
defined below) that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser. A "Person" means any individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision of any thereof) or other entity of any kind.
(b) The certificates representing the Preferred Stock shall bear
the following legend:
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"THE SHARES REPRESENTED BY, OR ISSUABLE UPON CONVERSION OF SECURITIES EVIDENCED
BY, THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED."
ARTICLE II - PURCHASE PRICE AND CLOSING
2.1 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") to be paid by the Purchasers to the Seller to acquire the Preferred
Stock and the Warrants shall be the total amount set forth on Schedule 1 hereto.
2.2 THE CLOSING. The closing of the transactions contemplated
under this Agreement (the "Closing") shall take place as promptly as
practicable, but no later than two (2) business days following satisfaction or
waiver of the conditions set forth in Section 6.1 and 6.2 (other than those
conditions which by their terms are not to be satisfied or waived until the
Closing)(such date, the "Expiration Date"), at the offices of Xxxxxx & Xxxx LLP,
000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx. The date on which the Closing occurs
is the "Closing Date." All proceedings to be taken and all documents to be
executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
2.3 DELIVERIES.
(a) DELIVERIES BY THE SELLER. At the Closing, the Seller
shall deliver or cause to be delivered to each of the Purchasers the following:
1. (i) One or more certificates evidencing the
aggregate number of shares of the Preferred Stock,
duly authorized, issued, fully paid and
non-assessable, as is indicated on Schedule 1 for
such Purchaser, registered in the name of such
Purchaser, in such denominations as is indicated on
Schedule 1 for such Purchaser;
(ii) One or more Series E-1 Warrants in the form
of Exhibit B-1 hereto, registered in the name of such
Purchaser, in such denominations as is indicated on
Schedule 1 for such Purchaser, pursuant to which such
Purchaser shall be entitled to purchase an aggregate
of that number of shares of Common Stock as is
indicated on Schedule 1 for such Purchaser.
(iii) One or more Series E-2 Warrants in the form
of Exhibit B-2 hereto, registered in the name of such
Purchaser, in such denominations as is indicated on
Schedule 1 for such Purchaser, pursuant to which such
Purchaser shall be entitled to purchase an aggregate
of that number of shares of Common Stock as is
indicated on Schedule 1 for such Purchaser.
(iv) One or more Series E-1 Placement Agent
Warrants, in the form of Exhibit B-1 hereto,
registered in the name of SCO Securities LLC or its
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designees, in such denominations as is indicated on
Schedule 1 for SCO Securities LLC or its designees,
pursuant to which SCO Securities LLC or its designees
shall be entitled to purchase an aggregate of that
number of shares of Common Stock as is indicated on
Schedule 1.
(iv) One or more Series E-3 Placement Agent
Warrants, in the form of Exhibit B-3 hereto,
registered in the name of SCO Securities LLC or its
designees, in such denominations as is indicated on
Schedule 1 for SCO Securities LLC or its designees,
pursuant to which SCO Securities LLC or its designees
shall be entitled to purchase an aggregate of that
number of shares of Common Stock as is indicated on
Schedule 1.
2. The Registration Rights Agreement, in the form
attached hereto as Exhibit C (the "Registration
Rights Agreement"), duly executed by the Seller.
3. The legal opinion of Xxxxxx & Xxxxxxx LLP ("Seller's
Counsel"), counsel to the Seller, in substantially
the form attached hereto as Exhibit D.
4. A certificate of the Secretary of the Seller (the
"Secretary's Certificate"), certifying as follows:
(i) that the Certificate of Designations
authorizing the Preferred Stock has been
duly filed in the office of the Secretary of
State of the State of Delaware, and that
attached to the Secretary's Certificate is
true and complete copy of the Certificate of
Incorporation of the Seller together with
all amendments thereto and the Certificate
of Designations;
(ii) that a true and complete copy of the Bylaws
of the Seller, as amended to the Closing
Date, is attached to the Secretary's
Certificate;
(iii) that attached to the Secretary's Certificate
are true and complete copies of the
resolutions of the Board of Directors of the
Seller authorizing the execution, delivery
and performance of this Agreement and the
Related Documents (as defined below),
instruments and certificates required to be
executed by it in connection herewith and
therewith and approving the consummation of
the transactions in the manner contemplated
hereby including, but not limited to, the
authorization and issuance of the Preferred
Stock, Warrants, Conversion Shares and
Warrant Shares;
(iv) the names and true signatures of the
officers of the Seller signing this
Agreement and all other documents to be
delivered in connection with this Agreement;
and
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(v) that (A) set forth in or attached to the
Secretary's Certificate is a true and
complete list of all officers of Seller as
of the date thereof, and that attached to
such certificate is an original or true and
complete copy of the Management Lock-up
Agreement in the form of Exhibit E attached
hereto (the "Management Lock-up Agreement")
executed by each of such officers, and (B)
the staff of the Nasdaq Stock Market has
verbally confirmed to the Seller that (y) it
has reviewed the binding term sheet between
the Seller and the Purchasers dated
September 22, 2003 and (z) on the basis of
such review, approval by the stockholders of
the Seller of the issuance of the Preferred
Stock, the Warrants, the Conversion Shares,
the Placement Agent Warrants and the Warrant
Shares is not required, and the Seller has
not received from such staff any oral or
written information or advice contrary to
such verbal confirmation. For purposes of
this paragraph, "officers" means all
officers who are required to report any
beneficial ownership of the Company's
securities pursuant to Section 16 of the
Exchange Act.
5. A wire transfer representing the Purchasers'
reasonable legal fees and expenses as described in
Section 9.2 hereof; such fee may, at the election of
the Seller, be paid out of the funds due from the
Purchasers at the Closing.
6. Proof of due filing with the Secretary of State of
the State of Delaware of the Certificate of
Designations authorizing the Preferred Stock.
7. The Management Lock-up Agreements executed by all the
officers of the Company that are listed on Schedule
6.1(j).
(b) DELIVERIES BY THE PURCHASERS. At the Closing,
each of the Purchasers shall deliver or cause to be delivered to the Seller the
following:
1. Payment of the purchase price set forth opposite such
Purchaser's name on Schedule 1, in cash by wire
transfer of immediately available funds to the Seller
at the following account:
Bank: UBS AG, Stamford, Connecticut
Routing Number (ABA): 000000000
Credit to account: 101-WA258640-000
MA 48352 Spectrum Pharmaceuticals,
Inc.
2. The Registration Rights Agreement duly executed by
such Purchaser.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER
For purposes of this Article III, all references to the Seller and its
Subsidiaries shall be deemed to include all their respective predecessor
entities, if any. The Seller represents, warrants and covenants to the
Purchasers, except as set forth on the Seller's Disclosure Schedule
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attached hereto as Schedule 3 specifically identifying the applicable section of
this Article III, it being understood that information disclosed under a
particular section of Schedule 3 shall be deemed disclosed only for purposes of
such section and not for purposes of or with respect to any other section of
this Article III, as of the date hereof, as follows:
3.1 CORPORATE EXISTENCE AND POWER; SUBSIDIARIES. The Seller and
its Subsidiaries are corporations duly incorporated, validly existing and in
good standing under the laws of the state in which they are incorporated, and
have all corporate powers required to carry on their business as now conducted.
The Seller and its Subsidiaries are duly qualified to do business as a foreign
corporation and are in good standing in each jurisdiction where the character of
the property owned or leased by them or the nature of their activities makes
such qualification necessary, except for those jurisdictions where the failure
to be so qualified would not have a Material Adverse Effect on the Seller or any
of its Subsidiaries. For purposes of this Agreement, the term "Material Adverse
Effect" means, with respect to any person or entity, a material adverse effect
on its or its Subsidiaries' condition (financial or otherwise), business,
properties, assets, liabilities (including contingent liabilities), and results
of operations. True and complete copies of the Seller's Certificate of
Incorporation, as amended, and Bylaws, as amended (collectively, the "Charter
and Bylaws") have previously been provided to the Purchasers. For purposes of
this Agreement, the term "Subsidiary" or "Subsidiaries" means, with respect to
any entity, any corporation or other organization of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are directly or
indirectly owned by such entity or of which such entity is a partner or is,
directly or indirectly, the beneficial owner of 50% or more of any class of
equity securities or equivalent profit participation interests. The Seller has
no Subsidiaries other than as set forth in Exhibit 21 to the Seller's annual
report on Form 10-K for the fiscal year ended December 31, 2002.
3.2 CORPORATE AUTHORIZATION; RIGHTS PLAN. (a) The execution,
delivery and performance by the Seller of this Agreement, the Warrants, the
Registration Rights Agreement, the Certificate of Designations and each of the
other documents executed pursuant to and in connection with this Agreement (all
such documents, other than this Agreement, the "Related Documents"), and the
consummation of the transactions contemplated hereby and thereby (including, but
not limited to, the sale and delivery of the Preferred Stock and the Warrants,
and the subsequent issuance of the Conversion Shares upon conversion of the
Preferred Stock, and the subsequent issuance of the Warrant Shares upon exercise
of the Warrants, have been duly authorized, and no additional corporate action
is required for the approval of this Agreement or the Related Documents. The
Conversion Shares and the Warrant Shares have been duly reserved for issuance by
the Seller. This Agreement and the Related Documents have been or, to the extent
contemplated hereby or by the Related Documents, will be duly executed and
delivered and constitute the legal, valid and binding agreement of the Seller,
enforceable against the Seller in accordance with their terms, except as may be
limited by bankruptcy, reorganization, insolvency, moratorium and similar laws
of general application relating to or affecting the enforcement of rights of
creditors, and except as enforceability of its obligations hereunder are subject
to general principles of equity.
(b) The Preferred Stock that will be issued to the
Purchasers at Closing will have been duly and validly reserved for issuance and,
when issued and delivered in accordance
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with the terms hereof, will be duly authorized, validly issued, fully paid and
non-assessable and free of restrictions on transfer other than applicable state
and federal securities laws. The Common Stock issuable upon conversion of the
Preferred Stock and exercise of the Warrants has been duly and validly reserved
for issuance, and upon issuance in accordance with the terms of the Certificate
of Designations or the Warrants, will be duly authorized, validly issued, fully
paid and non-assessable and free of restrictions on transfer other than
applicable federal and state securities laws and, assuming the accuracy of the
representations and warranties of the Purchasers, will be issued in compliance
with all applicable federal and state securities laws.
(c) The issuance of the Preferred Stock, the Warrants, or
the Common Stock upon conversion or exercise of the Preferred Stock or Warrants,
as applicable, will not result in or obligate the Seller to (i) issue or offer
to issue, with or without consideration, any securities or rights to acquire any
securities to any person, whether as a pre-emptive right, or pursuant to any
rights plan, or pursuant to any agreement, undertaking or other obligation of
any nature, or (ii) adjust the number or kind of securities held by or issuable
(with or without the payment of any consideration) to any person.
3.3 CORPORATE RECORDS. The minute books of the Seller and its
Subsidiaries contain complete and accurate records of all meetings and other
corporate actions of the board of directors, committees of the board of
directors, incorporators and shareholders of the Seller and its Subsidiaries
from the date of their incorporation to the date hereof. All material corporate
decisions and actions have been validly made or taken. The Seller's share
transfer register complies with applicable laws and regulations and has been
regularly updated through the date hereof. Such books fully and correctly
reflect all the decisions of the shareholders. The Seller maintains complete and
correct books and records of the Seller and its Subsidiaries which fairly
present, in all material respects, the financial position and the results of
operations and cash flows of the Seller and its Subsidiaries as of the dates and
for the periods indicated therein, subject to customary and usual audit
adjustments consistently applied.
3.4 GOVERNMENTAL AUTHORIZATION; NASD AND NASDAQ. Except as
otherwise specifically contemplated in this Agreement and the Related Documents,
and except for: (i) the filing of the Registration Statement with the
Commission; (ii) any filings required under SEC Regulation D or any state
securities laws that are permitted to be made after the date hereof, including
but not limited to filings pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, and
(iii) the filing of the Certificate of Designations in the office of the
Secretary of State of the State of Delaware, the execution, delivery and
performance by the Seller of this Agreement and the Related Documents, and the
consummation of the transactions contemplated hereby and thereby (including, but
not limited to, the sale and delivery of the Preferred Stock and Warrants and
the subsequent issuance of the Conversion Shares and Warrant Shares upon
conversion of the Preferred Stock or exercise of the Warrants, as applicable) by
the Seller require no action by or in respect of, or filing with, any
governmental body, agency, official or authority (including the NASD and the
Nasdsaq Stock Market).
3.5 NON-CONTRAVENTION. The execution, delivery and performance by
the Seller and its Subsidiaries, as applicable, of this Agreement and the
Related Documents, and the consummation by the Seller of the transactions
contemplated hereby and thereby (including, but
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not limited to, the issuance of the Conversion Shares and Warrant Shares) do not
and will not (a) violate or conflict with the Charter and Bylaws of the Seller
and its Subsidiaries or any material agreement (which, for purposes of this
Agreement, means any agreement, contract or other document which the Seller
would be required to disclose pursuant to SEC Regulation S-K, Item 601, Exhibits
1, 2, 3, 4, 9 or 10) to which the Seller or any of its Subsidiaries is a party
or bound; (b) violate or conflict with or constitute a material violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Seller or any of its Subsidiaries; (c) constitute a
default under or give rise to a right of termination, cancellation or
acceleration or loss of any benefit under any material agreement, contract or
other instrument binding upon the Seller or any of its Subsidiaries or under any
material license, franchise, permit or other similar authorization held by the
Seller or any of its Subsidiaries; or (d) result in the creation or imposition
of any Lien (as defined below) on any material asset of the Seller or any of its
Subsidiaries. For purposes of this Agreement, the term "Lien" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest,
claim or encumbrance of any kind in respect of such asset.
3.6 SEC DOCUMENTS. The Seller is obligated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") to file reports pursuant
to Sections 13 and 15(d) thereof (all such reports filed or required to be filed
by the Seller, including all exhibits thereto or incorporated therein by
reference, and all documents filed by the Seller under the Securities Act are
hereinafter called the "SEC Documents"). The Seller has filed all reports or
other documents required to be filed under the Exchange Act. All SEC Documents
filed by the Seller (i) were prepared in all material respects in accordance
with the requirements of the Exchange Act and the Securities Act and (ii) did
not at the time they were filed (or, if amended or superseded by a filing prior
to the date hereof, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Seller has
previously delivered to the Purchaser a correct and complete copy of each report
which the Seller filed with the Securities and Exchange Commission (the "SEC" or
the "Commission") under the Exchange Act for any period ending on or after
December 31, 2001 (the "Recent Reports," which term includes all exhibits
thereto and all exhibits and other information incorporated by reference into
the Recent Reports) other than those Recent Reports, if any, which have been
filed via the SEC's XXXXX filing system; Schedule 3.6 identifies all Recent
Reports which have not been filed via the SEC's XXXXX filing system. All of the
information about the Seller or its Subsidiaries which has been disclosed to the
Purchasers herein or in the course of discussions and negotiations with respect
hereto which is material to the Seller has been disclosed in the Recent Reports.
3.7 FINANCIAL STATEMENTS. Each of the Seller's consolidated
balance sheet and related consolidated statements of income, cash flows and
changes in stockholders' equity (including the related notes), as contained in
the Recent Reports (collectively, the "Seller's Financial Statements" or the
"Financial Statements") (x) present fairly in all material respects the
financial position of the Seller and its consolidated Subsidiaries as of the
dates thereof and the results of operations, cash flows and stockholders' equity
as of and for each of the periods then ended, except that any unaudited
financial statements are subject to normal year-end adjustments, and (y) were
prepared in accordance with United States generally accepted
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accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved, in each case, except as otherwise indicated in the notes
thereto.
3.8 COMPLIANCE WITH LAW. The Seller and its Subsidiaries are in
compliance and have conducted their business so as to comply in all respects
with all laws, rules and regulations, judgments, decrees or orders of any court,
administrative agency, commission, self regulatory organization, regulatory
authority or other governmental authority or instrumentality, domestic or
foreign, applicable to its operations except as could not individually or in the
aggregate have or result in a Material Adverse Effect. There are no judgments or
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration), including, without
limitation, any such actions relating to affirmative action claims or claims of
discrimination, against the Seller or its Subsidiaries or against any of their
properties or businesses.
3.9 NO DEFAULTS. The Seller and its Subsidiaries are not, nor will
they be with the passage of time, giving of notice, or both, (i) in violation of
any provision of their Charter and Bylaws (ii) in default or violation of any
term, condition or provision of (A) any judgment, decree, order, injunction or
stipulation applicable to the Seller or its Subsidiaries or (B) any material
agreement, note, mortgage, indenture, contract, lease or instrument, permit,
concession, franchise or license to which the Seller or its Subsidiaries are a
party or by which the Seller or its Subsidiaries or their properties or assets
may be bound, and no circumstances exist which would entitle any party to any
material agreement, note, mortgage, indenture, contract, lease or instrument to
which the Seller or its Subsidiaries are a party, to terminate such as a result
of the Seller or its Subsidiaries, having failed to meet any provision thereof
including, but not limited to, meeting any applicable milestone under any
material agreement or contract.
3.10 LITIGATION. Except as disclosed in Item 3 of the Seller's
Annual Report on Form 10-K for the year ended December 31, 2002, there is no
action, suit, proceeding, judgment, claim or investigation pending or, to the
best knowledge of the Seller, threatened against the Seller and any of its
Subsidiaries which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Seller or its Subsidiaries.
There is no action, suit, proceeding, judgment, claim or investigation pending
or, to the best knowledge of the Seller, threatened, which in any manner
challenges or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated hereby, and, to the Seller's knowledge, there is no basis for the
assertion of any of the foregoing. There are no claims or complaints existing
or, to the knowledge of the Seller or its Subsidiaries, threatened for product
liability in respect of any product of the Seller or its Subsidiaries, and the
Seller and its Subsidiaries are not aware of any basis for the assertion of any
such claim.
3.11 ABSENCE OF CERTAIN CHANGES. Since May 13, 2003, the Seller has
conducted its business only in the ordinary course and there has not occurred,
except as set forth in the Recent Reports:
(a) Any event that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Seller or any of its Subsidiaries;
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(b) Any amendments or changes in the Charter or Bylaws of
the Seller and its Subsidiaries, other than on account of the filing of the
Certificate of Designations;
(c) Any damage, destruction or loss, whether or not
covered by insurance, that would, individually or in the aggregate, have a
Material Adverse Effect on the Seller and its Subsidiaries;
(d) Any
(i) incurrence, assumption or guarantee by the
Seller or its Subsidiaries of any debt for
borrowed money (other than for equipment
leases or working capital lines of credit,
in each case, in the ordinary course of
business);
(ii) issuance or sale of any securities
convertible into or exchangeable for
securities of the Seller other than to
directors, employees and consultants
pursuant to existing equity compensation or
stock purchase plans of the Seller in
accordance with past business practices;
(iii) issuance or sale of options or other rights
to acquire from the Seller or its
Subsidiaries, directly or indirectly,
securities of the Seller or any of its
Subsidiaries or any securities convertible
into or exchangeable for any such
securities, other than options issued to
directors, employees and consultants in the
ordinary course of business pursuant to
existing equity compensation or stock
purchase plans of the Seller in accordance
with past practices;
(iv) issuance or sale of any stock, bond or other
corporate security;
(v) declaration or making any dividend, payment
or other distribution to shareholders or
purchase or redemption of any share of its
capital stock or other security;
(vi) sale, assignment or transfer any of its
intangible assets except in the ordinary
course of business, or cancellation of any
debt or claim except in the ordinary course
of business all in accordance with past
practices;
(vii) waiver of any right of substantial value
whether or not in the ordinary course of
business;
(viii) material change in officer compensation; or
(ix) other commitment (contingent or otherwise)
to do any of the foregoing.
10
(e) Any creation, sufferance or assumption by the Seller
or any of its Subsidiaries of any Lien on any asset or any making of any loan,
advance or capital contribution to or investment in any Person in an aggregate
amount which exceeds $25,000 outstanding at any time;
(f) Any entry into, amendment of, relinquishment,
termination or non-renewal by the Seller or its Subsidiaries of any material
contract, license, lease, transaction, commitment or other right or obligation,
other than in the ordinary course of business; or
(g) Any transfer or grant of a right with respect to the
patents, patent applications, patent licenses, trademarks, trade names, service
marks, trade secrets, copyrights or other intellectual property rights owned or
licensed by the Seller or its Subsidiaries, except as among the Seller and its
Subsidiaries.
3.12 NO UNDISCLOSED LIABILITIES. The Seller and its Subsidiaries do
not have any direct or indirect indebtedness, liabilities, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed or contingent,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured, absolute,
accrued or otherwise, whether or not of a kind required by GAAP to be set forth
in financial statements, including but not limited to off-balance sheet
financings, guarantees and similar transactions ("Liabilities") which are not
fully and adequately reflected in the Financial Statements. To the knowledge of
the Seller, there are no existing circumstances, conditions, events or
arrangements which may hereafter give rise to any Liabilities of the Seller or
its Subsidiaries except in the ordinary course of business.
3.13 TAXES. All tax returns and tax reports required to be filed
with respect to the income, operations, business or assets of the Seller and its
Subsidiaries have been timely filed (or appropriate extensions have been
obtained) with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, and all of the
foregoing as filed are correct and complete and, in all material respects,
reflect accurately all liability for taxes of the Seller and its Subsidiaries
for the periods to which such returns relate, and all amounts shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value added,
occupancy, property, excise, payroll, withholding, FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by the Seller
and its Subsidiaries or relating to or chargeable against any of its material
assets, revenues or income or relating to any employee, independent contractor,
creditor, stockholder or other third party through the Closing Date, were fully
collected and paid by such date if due by such date or provided for by adequate
reserves in the Financial Statements as of and for the periods ended December
31, 2002 (other than taxes accruing after such date) and all similar items due
through the Closing Date will have been fully paid by that date or provided for
by adequate reserves, whether or not any such taxes were reported or reflected
in any tax returns or filings. No taxation authority has sought to audit the
records of the Seller or any of its Subsidiaries for the purpose of verifying or
disputing any tax returns, reports or related information and disclosures
provided to such taxation authority, or for the Seller's or any of its
Subsidiaries' alleged failure to provide any such tax returns, reports or
related information and disclosure. To the knowledge of Seller and its
Subsidiaries, no material claims or deficiencies have been asserted against or
inquiries raised with the Seller or any of its Subsidiaries with respect to any
taxes or other governmental charges or levies which have not been paid or
otherwise satisfied, including claims that, or inquiries whether, the Seller
11
or any of its Subsidiaries has not filed a tax return that it was required to
file, and there exists no reasonable basis for the making of any such claims or
inquiries. Neither the Seller nor any of its Subsidiaries has waived any
restrictions on assessment or collection of taxes or consented to the extension
of any statute of limitations relating to taxation. Neither the Seller nor any
of its Subsidiaries is a party to any tax sharing or indemnification agreement,
and none of them is liable for the taxes of any other Person (other than
Subsidiaries) whether as a transferee, successor, by contract or otherwise.
3.14 INTERESTS OF OFFICERS, DIRECTORS AND OTHER AFFILIATES. The
description of any material interest held, directly or indirectly, by any
officer, director or other Affiliate of Seller in any property, real or
personal, tangible or intangible, used in or pertaining to Seller's business,
including any interest in the Seller's Intellectual Property (as defined in
Section 3.15 hereof), as set forth in the Recent Reports, is true and complete,
and no officer, director or, to the Seller's knowledge, other Affiliate of the
Seller has any interest in any property, real or personal, tangible or
intangible, used in or pertaining to the Seller's business, including the
Seller's Intellectual Property, other than as set forth in the Recent Reports.
3.15 INTELLECTUAL PROPERTY. Other than as set forth in the Recent
Reports: (a) the Seller or a Subsidiary thereof has the right to use or is the
sole and exclusive owner of all right, title and interest in and to all foreign
and domestic patents, patent rights, patent applications, trademarks, service
marks, trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, used or
controlled by the Seller and its Subsidiaries (collectively, the "Rights") and
in and to each material invention, software, trade secret, technology, product,
composition, formula, method of process used by the Seller and any intangible
property and assets that are material to the business of the Seller or its
Subsidiaries (the Rights and such other items, the "Intellectual Property"), and
has the right to use the same, free and clear of any claim or conflict with the
rights of others; (b) no royalties or fees (license or otherwise) are payable by
the Seller or its Subsidiaries to any Person by reason of the ownership or use
of any of the Intellectual Property except as set forth on Schedule 3.15; (c) to
the Seller's knowledge, there have been no claims made against the Seller or any
Subsidiary asserting the invalidity, abuse, misuse, or unenforceability of any
of the Intellectual Property, and, to each of their knowledge, there are no
reasonable grounds for any such claims; (d) neither the Seller nor any
subsidiary has made any claim of any violation or infringement by others of its
rights in the Intellectual Property, and to the best of their knowledge, no
reasonable grounds for such claims exist; and (e) neither the Seller nor any
Subsidiary has received any notice that it is in conflict with or infringing
upon the asserted rights of others in connection with the Intellectual Property,
and to the best of their knowledge, no reasonable grounds for such claims exist.
Each of the Seller and its Subsidiaries has taken security measures designed to
enable it to assert trade secret protection in its non-patented technology.
3.16 RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as set forth
in the Recent Reports, there is no agreement, judgment, injunction, order or
decree binding upon the Seller or its Subsidiaries which has or could reasonably
be expected to have the effect of prohibiting or materially impairing any
business practice of the Seller or its Subsidiaries, any acquisition of property
by the Seller or its Subsidiaries or the conduct of business by the Seller or
its Subsidiaries as currently conducted or as currently proposed to be conducted
by the Seller or its Subsidiaries.
12
3.17 PREEMPTIVE RIGHTS. No Person possesses any preemptive rights,
registration rights or anti-dilution rights, in respect of the Preferred Stock
or the Conversion Shares or Warrant Shares to be issued to the Purchasers upon
conversion of the Preferred Stock or exercise of the Warrants.
3.18 INSURANCE. The insurance policies providing insurance coverage
to the Seller or its Subsidiaries, including for product liability, provide
adequate and customary coverage for the business conducted by the Seller and its
Subsidiaries and are sufficient for compliance by the Seller and its
Subsidiaries with all requirements of law and all material agreements to which
the Seller or its Subsidiaries are a party or by which any of their assets are
bound. All of such policies are with financially sound and reputable insurers
having an "A" rating or better from Best's Rating Service (or any successor
thereto), are in full force and effect and are valid and enforceable in
accordance with their terms, and the Seller and its Subsidiaries have complied
with all material terms and conditions of such policies, including, without
limitation, premium payments. None of the insurance carriers has indicated to
the Seller or its Subsidiaries an intention to cancel or refuse to renew any
such policy.
3.19 SUBSIDIARIES AND INVESTMENTS. Except as set forth in the
Recent Reports or on Schedule 3.19, the Seller has no Subsidiaries or
Investments. For purposes of this Agreement, the term "Investments" shall mean,
with respect to any Person, all advances, loans or extensions of credit to any
other Person, all purchases or commitments to purchase any stock, bonds, notes,
debentures or other securities of any other Person, and any other investment in
any other Person, including partnerships or joint ventures (whether by capital
contribution or otherwise) or other similar arrangement (whether written or
oral) with any Person, including but not limited to arrangements in which (i)
the Person shares profits and losses, (ii) any such other Person has the right
to obligate or bind the Person to any third party, or (iii) the Person may be
wholly or partially liable for the debts or obligations of such partnership,
joint venture or other arrangement.
3.20 CAPITALIZATION. (a) The authorized capital stock of the Seller
consists of 50,000,000 shares of common stock, $0.001 par value per share, of
which 5,145,827 shares are issued and outstanding as of the date hereof, and
5,000,000 shares of preferred stock, issuable in one or more classes or series,
with such relative rights and preferences as the Board of Directors may
determine, none of which has been authorized for issuance or designated and
provided with terms, other than as follows:
(i) 400 shares have been designated 5% Series A Preferred
Stock, of which no shares are outstanding and as to which
there is no obligation (including any contingent obligation)
to issue any such shares;
(ii) 200,000 shares have been designated Series B Junior
Participating Preferred Stock, of which no shares are
outstanding and as to which there is no obligation (including
any contingent obligation) to issue any such shares, other
than pursuant to the Rights Agreement by and between the
Seller and U.S. Stock Transfer Corporation (the "Rights
Plan");
13
(iii) 200 shares have been designated 7% Series C Preferred
Stock, of which no shares are outstanding and as to which
there is no obligation (including any contingent obligation)
to issue any such shares;
(iv) 600 shares have been designated Series D 8% Cumulative
Convertible Voting Preferred Stock (the "Series D Preferred
Stock"), of which 358 shares are outstanding and as to which
there is no obligation (including any contingent obligation)
to issue any such shares; and
(v) A number of shares equal to the number set forth on
Schedule 1 hereto will be, immediately prior to the Closing of
this Agreement, designated as the Series E Convertible Voting
Preferred Stock, of which no shares are issued and outstanding
immediately prior to the execution of this Agreement.
(b) All shares of the Seller's issued and outstanding capital stock
have been duly authorized, are validly issued and outstanding, and are fully
paid and nonassessable. No securities issued by the Seller from January 1, 2000
to the date hereof were issued in violation of any statutory, contractual or
common law preemptive rights. There are no dividends which have accrued or been
declared but are unpaid on the capital stock of the Seller other than dividends
on the Series D Preferred Stock. All taxes required to be paid by Seller in
connection with the issuance and any transfers of the Seller's capital stock
have been paid. All permits or authorizations required to be obtained from or
registrations required to be effected with any Person in connection with any and
all issuances of securities of the Seller from January 1, 2000, to the date
hereof have been obtained or effected, and all securities of the Seller issued
on or after January 1, 2000, have been issued in accordance with the provisions
of all applicable securities or other laws.
3.21 OPTIONS, WARRANTS, RIGHTS. Except as set forth on Schedule
3.21, there are no outstanding (a) securities, notes or instruments convertible
into or exercisable for any of the capital stock or other equity interests of
the Seller or its Subsidiaries; (b) options, warrants, subscriptions or other
rights to acquire capital stock or other equity interests of the Seller or its
Subsidiaries; or (c) commitments, agreements or understandings of any kind,
including employee benefit arrangements, relating to the issuance or repurchase
by the Seller or its Subsidiaries of any capital stock or other equity interests
of the Seller or its Subsidiaries, any such securities or instruments
convertible into or exercisable for securities or any such options, warrants or
rights. Other than the rights of the Purchasers under the Preferred Stock and
the Warrants, and except as set forth on Schedule 3.21, neither the Seller nor
any Subsidiary has granted anti-dilution rights to any person or entity in
connection with any option, warrant, subscription or any other instrument
convertible into or exercisable for the securities of the Seller or any of its
Subsidiaries. Other than the rights granted to the Purchasers under the
Registration Rights Agreement, there are no outstanding rights which permit the
holder thereof to cause the Seller or the Subsidiaries to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of the Seller or any of its Subsidiaries in a registration statement
filed by the Seller or any of its Subsidiaries under the Securities Act, and
there are no outstanding agreements or other commitments which otherwise relate
to the registration of any securities of the Seller or any of its Subsidiaries
for sale or distribution in any jurisdiction, except as set forth on Schedule
3.21.
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3.22 EMPLOYEES, EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in the Recent Reports or on Schedule 3.22, there are no
employment, consulting, severance or indemnification arrangements, agreements,
or understandings between the Seller or its Subsidiaries and any officer,
director, consultant or employee of the Seller or its Subsidiaries (the
"Employment Agreements"). No Employment Agreement provides for the acceleration
or change in the award, grant, vesting or determination of options, warrants,
rights, severance payments, or other contingent obligations of any nature
whatsoever of the Seller or its Subsidiaries in favor of any such parties in
connection with the transactions contemplated by this Agreement. Except as
disclosed in the Recent Reports or on Schedule 3.22, the terms of employment or
engagement of all directors, officers, employees, agents, consultants and
professional advisors of the Seller and its Subsidiaries are such that their
employment or engagement may be terminated upon not more than two weeks' notice
given at any time without liability for payment of compensation or damages and
the Seller and its Subsidiaries have not entered into any agreement or
arrangement for the management of their business or any part thereof other than
with their directors or employees.
(b) Except as set forth on Schedule 3.22, the Seller and
its Subsidiaries have no pension, retirement, stock purchase, stock bonus, stock
ownership, stock option, profit sharing, savings, medical, disability,
hospitalization, insurance, deferred compensation, bonus, incentive, welfare or
any other employee benefit plan, policy, agreement, commitment, arrangement or
practice currently or previously maintained or contributed to by the Seller or
its Subsidiaries for any of its directors, officers, consultants, employees or
former employees (the "Seller Plans"). The Seller has previously made available
to the Purchasers, to the extent applicable, (i) a true and complete copy of all
of the Seller Plans (or, if oral, a true and complete written summary thereof);
(ii) a current summary plan description (plus summaries of any subsequent
modifications thereto) for each Seller Plan; (iii) the latest IRS determination
letter obtained with respect to any Seller Plan qualified under Section 401 or
501 of the Code; and (iv) Forms 5500 for the last three (3) plan years for each
Seller Plan required to file such form. Except as set forth on Schedule 3.22,
none of the Seller Plans is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and, except as set forth on Schedule 3.22,
neither the Seller nor any of its Subsidiaries has established, maintained, made
or been required to make any contributions to, or terminated, and has no
liability with respect to, any "employee benefit plan" within the meaning of
ERISA. The Seller and its Subsidiaries have not incurred any liability to the
Pension Benefit Guaranty Corporation (the "PBGC"), and, to the Seller's
knowledge, no facts or circumstances exist which might give rise to any
liability of the Seller or its Subsidiaries to the PBGC or which could
reasonably be anticipated to result in any claims being made against the
Purchaser, the Seller or their Subsidiaries by the PBGC. To the Seller's
knowledge, no facts or circumstances exist which might give rise to any
liability of any Seller Plan to any other Person, other than in the ordinary
course of the Seller's business. The Seller and its Subsidiaries have paid all
amounts required under applicable law and any Seller Plan to be paid as a
contribution to any Seller Plan through the date hereof. The Seller has set
aside adequate reserves to meet contributions which are not yet due under any
Seller Plan. Neither the Seller, nor its Subsidiaries nor, to the Seller's
knowledge, any other Person has engaged in any transaction with respect to any
Seller Plan which would subject the Seller to any tax, penalty or liability for
prohibited transactions. No director, officer or employee of the Seller or its
Subsidiaries, to the extent he or she is a fiduciary with respect to any Seller
Plan, has breached any of his/her responsibilities or obligations imposed upon
fiduciaries or which could
15
result in any claim being made under, by or on behalf of any Seller Plan. No
Seller Plan provides post-employment medical, health, or life insurance benefits
for present or future retirees or present or future terminated employees, except
for continuation coverage provided pursuant to the requirements of Section 4980B
of the Code or Sections 601-608 of ERISA or a similar state law.
(c) No material labor dispute with employees of the
Seller exists or, to the best knowledge of the Seller is imminent.
3.23 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Seller, nor
any Affiliate of the Seller (including, but not limited to, its Subsidiaries),
nor any agent or employee of the Seller, any other Person acting on behalf of or
associated with the Seller, or any individual related to any of the foregoing
Persons, acting on behalf of the Seller alone or together, has: (a) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, supplier, trading company, shipping company, governmental
employee or other Person with whom the Seller or its Subsidiaries has done
business directly or indirectly; or (b) directly or indirectly, given or agreed
to give any gift or similar benefit to any customer, supplier, trading company,
shipping company, governmental employee or other Person who is or may be in a
position to help or hinder the business of the Seller or its Subsidiaries (or
assist the Seller or its Subsidiaries in connection with any actual or proposed
transaction) which (i) may subject the Seller or its Subsidiaries to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, may have had an adverse effect on the Seller or its
Subsidiaries or (iii) if not continued in the future, may adversely affect the
assets, business, operations or prospects of the Seller or its Subsidiaries or
subject the Seller or its Subsidiaries to suit or penalty in any private or
governmental litigation or proceeding.
3.24 PRODUCTS AND SERVICES. There exists no set of facts (i) which
could furnish a basis for the withdrawal, suspension or cancellation of any
registration, license, permit or other governmental approval or consent of any
governmental or regulatory agency issued to the Seller with respect to any
component of any product being developed by, or that is material to and used by,
the Seller or its Subsidiaries, or (ii) which could have a Material Adverse
Effect on the continued development of any product candidate of the Seller or
its Subsidiaries or which could otherwise cause the Seller or its Subsidiaries
to withdraw, suspend or cancel development of any such product, it being
understood that the Seller is not presently offering any product or service for
sale and has never in the past offered any product or service for sale, and that
the Seller's product candidates will require, before they can be offered for
commercial sale, certain governmental or regulatory licenses, permits or
approvals which have not been issued.
3.25 ENVIRONMENTAL MATTERS. None of the premises or any other
property owned, occupied or leased by the Seller or its Subsidiaries (the
"Premises") in the past has been used by the Seller or its Subsidiaries, or to
the Seller's knowledge, by any other Person, to manufacture, treat, utilize,
store, or dispose of any waste, pollutant or toxic or hazardous substance
(including, without limitation, asbestos, radioactive material and pesticides)
or any other substance that has been designated to be a "hazardous substance"
under Environmental Laws ("Hazardous Substances") other than substances
customarily used in the Seller's or its Subsidiaries' businesses and in
accordance with applications laws and regulations. The Seller and its
16
Subsidiaries have not disposed of, discharged, emitted or released any Hazardous
Substances which would require, under applicable Environmental Laws,
remediation, investigation or similar response activity. No Hazardous Substances
are present as a result of the actions of the Seller or its Subsidiaries or, to
the Seller's or its Subsidiaries' knowledge, any other Person, in, on or under
the Premises which would give rise to any liability or clean-up obligations of
the Seller or its Subsidiaries under applicable Environmental Laws. The Seller
and its Subsidiaries and, to the Seller's and its Subsidiaries' knowledge, any
other Person for whose conduct it may be responsible, are in material compliance
with all laws, regulations and other federal, state or local governmental
requirements, and all applicable judgments, orders, writs, notices, decrees,
permits, licenses, approvals, consents or injunctions in effect on the
applicable Closing Date relating to the generation, management, handling,
transportation, treatment, disposal, storage, delivery, discharge, release or
emission of any waste, pollutant or toxic or hazardous substance (including,
without limitation, asbestos, radioactive material and pesticides) or to any
other actions, omissions or conditions affecting the environment (the
"Environmental Laws"). Neither the Seller nor its Subsidiaries nor, to the
Seller's or its Subsidiaries' knowledge, any other Person for whose conduct it
may be responsible has received any complaint, notice, order, or citation of any
actual, threatened or alleged noncompliance with any of the Environmental Laws,
and there is no proceeding, suit or investigation pending or, to the Seller's or
its Subsidiaries knowledge, threatened against the Seller or its Subsidiaries or
any such Person with respect to any violation or alleged violation of the
Environmental Laws, and there is no basis for the institution of any such
proceeding, suit or investigation.
3.26 LICENSES; COMPLIANCE WITH FDA AND OTHER REGULATORY
REQUIREMENTS.
(a) GENERAL. The Seller and its Subsidiaries hold all
authorizations, consents, approvals, franchises, licenses and permits required
under applicable law or regulation for the operation of the business of the
Seller and its Subsidiaries as presently operated (the "Governmental
Authorizations"). All the Governmental Authorizations have been duly issued or
obtained and are in full force and effect, and the Seller and its Subsidiaries
are in compliance with the terms of all the Governmental Authorizations. The
Seller and its Subsidiaries have not engaged in any activity that could cause
revocation or suspension of any such Governmental Authorizations. The Seller and
its Subsidiaries have no knowledge of any facts which could reasonably be
expected to cause them to believe that the Governmental Authorizations will not
be renewed by the appropriate governmental authorities in the ordinary course.
Neither the execution, delivery nor performance of this Agreement will adversely
affect the status of any of the Governmental Authorizations.
(b) FDA. Without limiting the generality of the
representations and warranties made in paragraph (a) above, the Seller
represents and warrants that (i) the Seller and each of its Subsidiaries is in
compliance in all material respects with all applicable provisions of the United
States Federal Food, Drug, and Cosmetic Act (the "FDC Act"), (ii) the Seller and
each of its Subsidiaries is in compliance with the following specific
requirements: (A) all of the products used by the Seller and its Subsidiaries
comply in all material respects with any conditions of approval and the terms of
the applications, if any, submitted by or on behalf of the Seller to the United
States Food and Drug Administration (the "FDA"); (B) all adverse events that
were required to be reported by Seller or its Subsidiaries to the FDA have been
reported to the FDA in a timely manner; (C) neither the Seller nor any of its
Subsidiaries is, to their
17
knowledge, employing or utilizing the services of any individual who has been
debarred under the FDC Act; (D) all stability studies required to be performed
by or on behalf of the Seller for products used by the Seller or any of its
Subsidiaries have been completed or are ongoing in accordance with the
applicable FDA requirements; and (E) any substances exported by the Seller or
any of its Subsidiaries have been exported in compliance in all material
respects with the FDC Act. Without limiting the generality of the
representations and warranties made in paragraph (a) above, the Seller and its
Subsidiaries are in compliance in all material respects with all applicable
provisions of the Controlled Substances Act.
3.27 BROKERS. Except as set forth in Schedule 3.27 hereto, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement, based upon any arrangement made by or on behalf of the Seller or any
of its Affiliates.
3.28 SECURITIES LAWS. Neither the Seller nor its Subsidiaries nor
any agent acting on behalf of the Seller or its Subsidiaries has taken or will
take any action which might cause this Agreement or any of the Securities to
violate the Securities Act or the Exchange Act or any rules or regulations
promulgated thereunder, or any applicable state securities laws, as in effect on
the Closing Date. All offers and sales of capital stock, securities and notes of
the Seller were conducted and completed in compliance with the Securities Act,
the rules and regulations promulgated thereunder and applicable state securities
laws. All shares of capital stock and other securities issued by the Seller and
its Subsidiaries prior to the date hereof have been issued in transactions that
were either registered offerings or were exempt from the registration
requirements under the Securities Act and all applicable state securities laws
and in compliance with all applicable corporate laws.
3.29 DISCLOSURE. No representation or warranty made by the Seller
in this Agreement, nor in any document, written information, financial
statement, certificate, schedule or exhibit prepared and furnished by the Seller
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
made.
3.30 CHANGE IN CONTROL. Assuming that there are no contractual
agreements (other than this Agreement) among any two or more of the Purchasers
with respect to the purchase, sale or other disposition, or voting of the equity
securities of the Company, the execution, delivery and performance of this
Agreement and the Related Documents, and the consummation of the transactions
contemplated hereby and thereby (including the conversion of some or all of the
Preferred Stock, the exercise of some or all of the Warrants and the issuance of
the Conversion Shares and Warrant Shares) do not and will not constitute a
change in control under or give rise to a right of termination, cancellation,
severance or similar payments, or acceleration or loss of any benefit under any
material agreement, contract or other instrument binding upon the Seller or any
of its Subsidiaries, under any material license, franchise, permit or other
similar authorization held by the Seller or any of its Subsidiaries or under any
agreement or arrangement between the Seller or any of its Subsidiaries and their
directors, officers, employees or consultants.
18
3.31 APPLICATION OF TAKEOVER PROTECTION. The Seller and its board
of directors have taken all necessary action in order to render inapplicable,
and have rendered inapplicable, any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti- takeover provision under the Charter, the By-laws, the
laws of the state of its incorporation or any rights plan or similar arrangement
which is or could become applicable as a result of the transactions contemplated
by this Agreement, including, without limitation, the Seller's issuance of the
Securities and the Purchasers' ownership of the Preferred Stock, the Warrants,
the Conversion Shares or the Warrant Shares.
3.32 NASDAQ COMPLIANCE. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and is listed on the Nasdaq SmallCap Market
(the "Nasdaq Stock Market"), and the Seller has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market. The issuance of the Securities does not
require stockholder approval, including, without limitation, pursuant to the
Nasdaq Marketplace Rules as in effect on the Closing Date, including without
limitation all Interpretive Materials issued on or before the Closing Date. No
order ceasing or suspending trading in any securities of Seller or prohibiting
the issuance and/or sale of the Preferred Stock, Warrants, Conversion Shares or
Warrant Shares is in effect and no proceedings for such purpose are pending or,
to the Seller's knowledge, threatened.
3.33 MATERIAL CONTRACTS. Each of the Seller's and its Subsidiaries
material contracts (which, for purposes of this Agreement, means any agreement,
contract or other document which the Seller would be required to disclose
pursuant to SEC Regulation S-K, Item 601, Exhibits 1, 2, 3, 4, 9 or 10) are
listed as exhibits to the Recent Reports and are in full force and effect on the
date hereof, and none of the Seller, its Subsidiaries nor, to the Seller's or
any Subsidiary's knowledge, any other party to such contracts is in breach of or
default under any of such contracts. The Seller is not required to file and will
not be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into by the Seller or any Subsidiary prior to the date hereof
which has not been previously filed as an exhibit to its Recent Reports.
3.34 TITLE TO AND CONDITION OF PERSONAL PROPERTY; NO LIENS. The
Seller and its Subsidiaries have good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of their
tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any Liens, except as set forth on Schedule 3.34. All
tangible personal property owned by the Seller and its Subsidiaries is in good
operating condition and in a good state of maintenance and repair, and is
adequate for the business conducted and proposed to be conducted by the Seller
and its Subsidiaries. Except for the Leases specifically identified in Schedule
3.34, there are no assets owned by any third party which are material to the
operation of the business of the Seller or its Subsidiaries, as presently
conducted or proposed to be conducted.
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, for itself, hereby severally, and not jointly,
represents and warrants to the Seller as follows:
4.1 EXISTENCE AND POWER. The Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of such
Purchaser's organization. The Purchaser has all powers required to carry on such
Purchaser's business as now conducted.
4.2 AUTHORIZATION. The execution, delivery and performance by the
Purchaser of this Agreement, the Related Documents to which such Purchaser is a
party, and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized, and no additional action is required for the
approval of this Agreement. This Agreement and the Related Documents to which
the Purchaser is a party have been or, to the extent contemplated hereby, will
be duly executed and delivered and constitute valid and binding agreements of
the Purchaser, enforceable against such Purchaser in accordance with their
terms, except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the
enforcement of rights of creditors and except that enforceability of their
obligations thereunder are subject to general principles of equity.
4.3 INVESTMENT. The Purchaser is acquiring the Securities for its
own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with the intention of distributing or
reselling the same, provided, however, that by making the representation herein,
the Purchaser does not agree to hold any of the securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act. The Purchaser is aware that none of the Securities has
been registered under the Securities Act or under applicable state securities or
blue sky laws. The Purchaser is an "Accredited Investor" as such term is defined
in Rule 501 of Regulation D, as promulgated under the Securities Act.
4.4 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Purchaser is subject or any provision of
its charter or bylaws or other similar governing instruments.
4.5 NO REGISTRATION. The Purchaser understands that the Preferred
Stock and Warrants are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Seller is relying upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.
4.6 BUSINESS OR FINANCIAL EXPERTISE; QUALIFIED INSTITUTIONAL
BUYER. Purchaser has, by reason of Purchaser's business or financial expertise
or the business or financial experience of its professional advisors who are
unaffiliated with and who are not, to such Purchaser's
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knowledge, compensated by the Seller or any affiliate or selling agent of the
Seller, directly or indirectly, the capacity to protect its own interests in
connection with its acquisition of the Securities. Purchaser has had the
opportunity to ask questions about the Seller's business affairs and financial
condition, and has acquired sufficient information about the Seller to reach an
informed and knowledgeable decision to acquire the Securities.
4.7 BROKERS' FEES. Purchaser has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
ARTICLE V - COVENANTS OF THE SELLER AND PURCHASERS
5.1 INSURANCE. The Seller and its Subsidiaries shall maintain
insurance coverage which is adequate and customary coverage for the business in
which the Seller and its Subsidiaries shall then be engaged in. The Seller and
its Subsidiaries shall, from time to time upon the written request of the
Purchasers, promptly furnish or cause to be furnished to the Purchasers
evidence, in form and substance reasonably satisfactory to the Purchasers, of
the maintenance of all insurance maintained by it for loss or damage by fire and
other hazards, damage or injury to persons and property, including, without
limitation, from product liability, and under workmen's compensation laws.
5.2 REPORTING OBLIGATIONS. So long as at least 100 shares of
Preferred Stock are outstanding, and so long as Warrants are outstanding under
which more than 150,000 shares of Common Stock may be acquired, the Seller shall
furnish to the Purchasers, or any other persons who hold any of the Preferred
Stock or Warrants (provided that such holders give notice to the Seller that
they hold Preferred Stock or Warrants and furnish their addresses) promptly upon
their becoming available one copy of each report, notice or proxy statement sent
by the Seller to its stockholders generally, and of each regular or periodic
report (pursuant to the Exchange Act) and any registration statement, prospectus
or written communication other than transmittal letters (pursuant to the
Securities Act) relating to the Conversion Shares and the Warrant Shares and
filed by the Seller with (i) the Commission or (ii) any securities exchange on
which shares of Common Stock are listed, provided, however, that the Seller
shall not be required to deliver any report filed and available through the
SEC's XXXXX website. To the extent that the Seller is no longer required to
provide information pursuant to the Exchange Act, the Seller shall provide the
Purchasers with (i) within 45 days after the close of each fiscal quarter in
each fiscal year of the Seller an unaudited consolidated balance sheet of the
Seller, a consolidated statement of income of the Seller, and a consolidated
statement of cash flows of the Seller, as at the end of and for the period
commencing at the end of the previous fiscal year and ending with such month,
prepared in accordance with GAAP, subject to normal year-end adjustments and
complete notes thereto; and (ii) within 90 days after the close of each fiscal
year then ended of the Seller a consolidated balance sheet of the Seller, a
consolidated statement of income of the Seller, and a consolidated statement of
cash flows of the Seller, as at the end of and for the fiscal year then ended,
setting forth the corresponding figures of the previous fiscal year in
comparative form, and certified (without any qualification or exception
reasonably deemed material by the Purchasers, other than a qualification as to
the going-concern status of the Seller or the unavailability of Xxxxxx Xxxxxxxx
LLP) by the independent certified public accountants of the Seller.
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5.3 INVESTIGATION. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. Without limiting the generality of the
foregoing, the inability or failure of the Purchasers to discover any breach,
default or misrepresentation by the Seller under this Agreement or the Related
Documents (including under any certificate furnished pursuant to this Agreement)
shall not in any way diminish any liability hereunder.
5.4 PUBLIC ANNOUNCEMENTS. Neither the Purchasers nor the Seller
shall (and each such party shall use its reasonable efforts to cause its
Subsidiaries, Affiliates, directors, officers, employees and authorized
representatives not to), issue any press release, make any public announcement
or furnish any written statement to its employees or stockholders generally
concerning the transactions contemplated by this Agreement without the consent
of the other party (which consent shall not be unreasonably withheld), except to
the extent required by applicable law or the applicable requirements of
applicable stock exchange rules (including Nasdaq) or as otherwise contemplated
herein (and in either such case such party shall, to the extent consistent with
timely compliance with such requirement, consult with the other party prior to
making the required release, announcement or statement). Notwithstanding the
foregoing, the Seller shall, promptly after the Closing, issue a press release
and file an 8-K disclosing the transactions contemplated hereby.
5.5 USE OF PROCEEDS. The Seller covenants and agrees that the
proceeds of the Purchase Price shall be used by the Seller for working capital
and general corporate purposes.
5.6 CORPORATE EXISTENCE. So long as a Purchaser owns Preferred
Stock, Warrants, Conversion Shares or Warrant Shares, the Seller shall preserve
and maintain and cause its Subsidiaries to preserve and maintain their corporate
existence and good standing in the jurisdiction of their incorporation and the
rights, privileges and franchises of the Seller and its Subsidiary in each case
where failure to so preserve or maintain could have a Material Adverse Effect on
the financial condition, business or operations of the Seller and its
Subsidiaries taken as a whole.
5.7 PERFORM COVENANTS. The Seller shall (a) make full and timely
payment of any and all payments on the Preferred Stock, and all other
indebtedness of the Seller to the Purchasers in connection therewith, whether
now existing or hereafter arising, and (b) duly comply with all the terms and
covenants contained herein and in each of the instruments and documents given to
the Purchasers in connection with or pursuant to this Agreement, all at the
times and places and in the manner set forth herein or therein.
5.8 ADDITIONAL COVENANTS. (a) Subject to the rights of the holders
of the Seller's Series D Preferred Stock and the limitations set forth in
Section 5.8(c), the Seller covenants and agrees that so long as 20% of the
Preferred Stock issued at the Closing is outstanding, none of the following
actions will take place without the prior written consent of the holders of a
majority of the outstanding Preferred Stock, which consent may be withheld for
any or no reason:
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(i) Any amendment, alteration or repeal of any provision of the
Charter or Bylaws which adversely affects the terms of the
Preferred Stock or the relative rights, preferences and
privileges of the Holders of the Preferred Stock as such
Holders;
(ii) Any amendments or changes to the Rights Plan or the adoption
of any other similar plans or arrangements, provided that
nothing herein shall be deemed to restrict the right of the
Seller to redeem all, but not less than all, of the
outstanding Rights (as defined in the Rights Plan) or
otherwise terminate the Rights Plan;
(iii) The offer, sale, designation or issuance by the Seller or any
of its Subsidiaries of any equity or debt security senior to
or pari passu with the Preferred Stock in any respect;
(iv) The sale or issuance of any shares of Common Stock, any
warrant, option, subscription or purchase right with respect
to shares of Common Stock, any security convertible into,
exchangeable for, or otherwise entitling the holder thereof to
acquire shares of Common Stock, or any warrant, option,
subscription or purchase right with respect to any such
convertible, exchangeable or other security at a price below
the Conversion Value, other than (A) options, warrants, and
other rights outstanding on the date hereof to acquire,
directly or indirectly, Common Stock, and the Common Stock
acquirable thereunder (including, without limitation, shares
of Common Stock acquirable upon conversion of, or issuable as
dividends on, the Series D Preferred Stock), and (B) options
granted hereafter to any employee, officer, Director or
consultant pursuant to any plan approved by stockholders for
the benefit of employees, officers, Directors and consultants
("Incentive Options"), and the Common Stock acquirable
thereunder, and (C) awards presently outstanding or hereafter
awarded under the Seller's employee stock purchase plan
effective as of January 26, 2001 (the "ESPP");
(v) The entering into by the Seller or any Subsidiary of any bank
or other non-trade indebtedness for borrowed money;
(vi) The granting or making by the Seller or any of its
Subsidiaries of any mortgage or pledge, or the assumption or
suffering to exist on, or the imposition on, any of its
material properties or assets any Lien;
(vii) The liquidation, dissolution or winding-up of the Seller or
any of its Subsidiaries or any merger or consolidation of the
Seller or any of its Subsidiaries with or into another entity
or the sale, conveyance or other disposition of all, or
substantially all, the assets, property or business of the
Seller or any of its Subsidiaries;
(viii) The reorganization, recapitalization, sale, conveyance, or
other disposition of or encumbrance of all or substantially
all of the property or business of the Seller or any of its
Subsidiaries or the merger into or consolidation with any
other corporation (other than a wholly owned subsidiary
corporation) or effect any transaction or series of related
transactions in which, in any case, more than 20%
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of the voting power of the corporation is disposed of,
calculated on a post-transaction basis;
(ix) The redemption, purchase, repurchase or other acquisition,
directly or indirectly, of any shares of capital stock of the
Seller or any of its Subsidiaries or any option, warrant or
other right to purchase or acquire any such shares;
(x) The declaration or payment of any dividend or other
distribution (whether cash, stock or property) with respect to
the capital stock of the Seller, other than the Preferred
Stock and the Series D Preferred Stock; and
(xi) The taking of any action by the Seller with the primary intent
of causing the Common Stock to be delisted from any securities
exchange or quotation system upon which the Common Stock is
then listed.
(b) For purposes of this Agreement, "Fair Market Value" shall
mean: (i) if the Common Stock is then listed for trading on a national
securities exchange or through the Nasdaq National Market System or the Nasdaq
SmallCap Market, the closing price of the Common Stock for such Trading Day;
(ii) if on the date as of which Fair Market Value is to be determined the Common
Stock is not so listed, the average of the highest bid and lowest asked prices
of the Common Stock quoted in the Nasdaq OTC Bulletin Board or the
over-the-counter-market, for such Trading Day as reported by Bloomberg
Financial, L.P.; or (iii) if on the date for which Fair Market Value is to be
determined the Common Stock is not listed on any national securities exchange,
the Nasdaq National Market System, the Nasdaq SmallCap Market or quoted in the
Nasdaq System or the over-the-counter market, the Fair Market Value of Common
Stock shall be the highest price per share which the Corporation could then
obtain from a willing buyer (not an employee or director of the Corporation at
the time of determination), under no compulsion to buy, in an arms'-length
transaction for shares of Common Stock sold by the Corporation, from authorized
but unissued shares, as determined in good faith by the Board of Directors. For
purposes of this Agreement, "Trading Day" means a day on whichever of (x) the
national securities exchange, (y) the Nasdaq or (z) such other securities
market, in any such case which at the time constitutes the principal securities
market for the Common Stock, is open for general trading of securities.
(c) The restrictions contained in this Section 5.8 shall cease to
apply if, for no less than 10 trading days during any period of 30 consecutive
trading days following the Closing Date, (i) the Fair Market Value (as defined
herein) of the Common Stock exceeds five dollars ($5) per share (subject to
adjustment for stock splits, stock dividends and the like) and (ii) all of the
Conversion Shares and Warrant Shares have been duly registered for sale under an
effective registration statement pursuant to the Securities Act, and such
registration statement is effective throughout the aforesaid 30-day period.
5.9 LISTING OF SHARES. The Seller shall use its best efforts to
list the Conversion Shares and Warrant Shares on each securities exchange or
quotation system upon which the Common Stock may be listed from time to time
during the time period that the Common Stock is listed on such securities
exchange or quotation system.
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5.10 RESERVATION OF SHARES. The Seller shall hereafter take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 100% of the number of shares of Common Stock needed to
provide for the issuance of the shares of Common Stock upon conversion of all
outstanding Preferred Stock and exercise of all outstanding Warrants (without
regard to any limitations on conversions or exercise).
5.11 INTERNAL ACCOUNTING CONTROLS. The Seller and each of its
Subsidiaries shall maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability and (iii) assets are amortized and depreciated, as applicable, in
accordance with generally accepted accounting principles.
5.12 FILING OF FORM D. The Seller will timely file Form D in
accordance with the provisions of Regulation D promulgated by the SEC under the
Securities Act with respect to the transactions contemplated by this Agreement
and the Related Documents.
5.13 INDEMNIFICATION FOR CLAIMS. The Seller agrees to indemnify and
hold harmless the Purchasers, their Affiliates, each of their officers,
directors, employees and agents and their respective successors and assigns (for
purposes of this Section 5.13, the "Indemnified Parties"), from and against any
losses, damages, or expenses (net of any related insurance proceeds) incurred by
the Indemnified Parties due to any and all third party actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) which are brought by or on behalf of a third
party or any of its successors or assigns claiming a right to participate as a
placement agent, underwriter, financial advisor, finder or broker with respect
to the offering of the Securities pursuant to this Agreement, against any of the
Indemnified Parties, with respect to any act or omission occurring on or before
the Closing Date. The indemnification herein provided shall be provided in the
manner and in accordance with the procedures set forth in Section 7.3 hereof.
The indemnification provided for in this Section 5.13 shall be made
notwithstanding the reference to any underwriting, placement agent, financial
advisory, finder's or broker's agreement in the Seller's Disclosure Schedule,
and notwithstanding any knowledge or information which the Purchasers have with
respect to any underwriting, placement agent, financial advisory, finder's or
broker's agreement.
5.14 NO SOLICITATION OF TRANSACTION. Prior to the earlier of (i)
the Closing, or (ii) the termination of this Agreement pursuant to Section 8,
the Seller shall not, and shall use its best efforts to cause its
representatives (other than SCO Securities LLC and its affiliates) not to,
directly or indirectly, take any of the following actions with any person other
than the Purchasers without the prior written consent of all the Purchasers: (A)
solicit, initiate, facilitate or encourage, or furnish information with respect
to the Seller, in connection with, any inquiry, proposal or offer with respect
to any equity transaction involving the Seller (an "Alternative Transaction")
(other than the information which the Seller provides to other persons in the
ordinary course of its business consistent with past custom and practice, so
long as the Seller and its shareholders have no reason to believe that the
information may be utilized to evaluate an Alternative Transaction); (B)
negotiate, discuss explore or otherwise communicate or cooperate
25
in any way with any third party with respect to any Alternative Transaction; or
(C) enter into any agreement, arrangement or understanding with respect to an
Alternative Transaction or requiring the Seller to abandon, terminate or refrain
from consummating a transaction with the Purchasers. The Seller shall, and shall
use its best efforts to cause its representatives (other than SCO Securities LLC
and its affiliates) to, notify the Purchasers orally and in writing promptly
upon receipt of any inquiry, offer or proposal with respect to an Alternative
Transaction, including the identity of the party making such inquiry, offer or
proposal and stating the terms thereof. The Seller shall immediately cease any
existing discussions or negotiations with any third party relating to any
proposed Alternative Transaction.
5.15 CONDUCT OF THE SELLER PENDING CLOSING. The Seller covenants
and agrees that until the earlier of the time of Closing or the termination of
the Agreement pursuant to Section 8, the Seller shall conduct its business only
in the ordinary course consistent with past practice and shall use its
commercially reasonable best efforts to preserve intact its business
organizations and relationships with third parties. Without limiting the
generality of the foregoing, other than as contemplated pursuant to the terms of
this Agreement, without the prior written consent of the Purchasers:
(a) Except of dividends on the Seller's Series D
Preferred Stock, there shall not be any declaration, setting aside or payment of
any dividend or other distribution with respect to any shares of capital stock
of the Seller or any repurchase, redemption or other acquisition by the Seller
of any outstanding shares of its capital stock or of the Seller;
(b) There shall not be any amendment of any term of any
outstanding security of the Seller or any Subsidiary;
(c) There shall not be any transaction or commitment
made, or any contract, agreement or settlement entered into, by (or judgment,
order or decree affecting) the Seller relating to its assets or business
(including the acquisition or disposition of any material amount of assets) or
any relinquishment by the Seller of any contract or other right, other than
transactions, commitments, contracts, agreements or settlements (including
without limitation settlements of litigation and tax proceedings) in the
ordinary course of business and those contemplated by this Agreement, other than
agreements with Protarga, Inc. for the acquisition of certain assets of
Protarga, Inc.;
(d) Except for any change required by reason of a
concurrent change in GAAP, there shall not be any change in any method of
accounting or accounting practice by the Seller;
(e) There shall not be any (i) grant of any severance or
termination pay to (or amendment to any such existing arrangement with) any
director or officer of the Seller, (ii) entering into of any employment,
deferred compensation, supplemental retirement or other similar agreement (or
any amendment to any such existing agreement) with any director or officer of
the Seller, (iii) increase in, or accelerated vesting and/or payment of,
benefits under any existing severance or termination pay policies or employment
agreements of any director or officer of the Seller or (iv) increase in or
enhancement of any rights or features related to
26
compensation, bonus or other benefits payable to directors or officers of the
Seller, in each case, other than in the ordinary course of business consistent
with past practice;
(f) There shall not be any material tax election made or
changed, any material audit settled or any material amended tax returns filed;
(g) Except as required herein, the Seller will not adopt
any change in its Certificate of Incorporation or Bylaws;
(h) The Seller will not adopt a plan or agreement of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Seller;
(i) The Seller will not issue, sell, transfer, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class or series of the Seller;
(j) The Seller will not (A) split, combine, subdivide or
reclassify its outstanding shares of capital stock, or (B) declare, set aside or
pay any dividend or other distribution payable in cash, stock or property with
respect to its capital stock other than dividends on the Seller's Series D
Preferred Stock; and
(k) The Seller will not agree or commit to do any of the
foregoing.
5.16 SUBMISSION TO NASDAQ. Promptly after the execution of this
Agreement, the Seller will provide a Listing Notice, which shall include true
copies of this Agreement, the form of Certificate of Designations, form of
Warrants, form of Placement Agent Warrants and form of Registration Rights
Agreement, to the Nasdaq SmallCap Market with respect to the Conversion Shares
and the Warrant Shares.
ARTICLE VI
CONDITIONS TO THE CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. The obligations
of the Purchasers are subject to the fulfillment or satisfaction, on and as of
the Closing Date, except as otherwise expressly indicated below or in Section
2.3 hereof, of each of the following conditions (any one or more of which may be
waived by any Purchaser, in its sole discretion, but only with respect to its
investments and only in a writing signed by such Purchaser):
(a) OPINION. The Purchasers shall have received the
opinion of Seller's Counsel, substantially in the form attached as Exhibit D.
(b) PROOF OF FILING. At the Closing, the Seller shall
deliver or cause to be delivered to each of the Purchasers proof of due filing
with the Secretary of State of the State of Delaware of the Certificate of
Designations authorizing the Preferred Stock.
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(c) SUPPORTING DOCUMENTS. The Purchasers shall have
received the following:
(i) Such certificates to evidence compliance
with the conditions set forth in this Section 6 as may be reasonably requested
by the Purchasers, executed by the chief executive officer and chief financial
officer of the Seller.
(ii) Certificates of good standing with respect
to the Seller issued by the Secretaries of State of Delaware and California; and
copies of the resolutions of the Seller's Board of Directors approving this
Agreement, the Registration Rights Agreement, the creation and issuance of
Series E Preferred Stock, the filing of the Certificate of Designations and the
transactions, contemplated herein and therein, certified by an appropriate
officer.
(iii) Such additional supporting documentation and
other information with respect to the transactions contemplated by this
Agreement as the Purchasers may reasonably request.
(d) PREFERRED STOCK, WARRANTS. The Seller shall have
executed and delivered certificates evidencing the Preferred Stock and the
Warrants purchased hereby.
(e) REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been duly executed, and the Seller, its Subsidiaries
and Affiliates shall not be in breach of default of any provision thereof. There
shall not then exist any facts or circumstances which would prevent the Seller
from registering the Registrable Securities (as that term is defined in the
Registration Rights Agreement) in accordance with the Registration Rights
Agreement.
(f) PERFORMANCE; REPRESENTATION AND WARRANTIES;
COVENANTS. (i) The Seller shall have performed and observed in all material
respects all of its obligations hereunder required to be performed by it at or
prior to the Closing Date; (ii) the representations and warranties of the Seller
contained in this Agreement and in any certificate delivered by the Seller
pursuant hereto shall be true and correct in all material respects (except to
the extent such representations and warranties contain a materiality
qualification, in which case they shall be true and correct in all respects) at
and as of the Closing Date as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such earlier
date); and (iii) the Purchasers shall have received a certificate signed by the
chief executive officer and the chief financial officer to the foregoing effect.
(g) CONSENTS AND WAIVERS. The Seller shall have obtained
all consents and waivers necessary to execute and perform its obligations under
this Agreement, and the Related Documents, to issue the Preferred Stock and
Warrants, and to carry out the transactions contemplated hereby and thereby. All
corporate and other action and governmental filings necessary to effectuate the
terms of this Agreement, the Preferred Stock and Warrants and other agreements
and instruments to be executed and to be delivered, or executed and delivered,
by the Seller in connection herewith shall have been made or taken.
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(h) NO MATERIAL ADVERSE CHANGE. There shall not have
been, nor shall there have occurred any event which could result in, a material
adverse change in the business, properties, assets, results of operations, or
condition (financial or otherwise) of the Seller from and after the date of this
Agreement and until the Closing Date.
(i) NO LITIGATION. No litigation, arbitration or other
legal or administrative proceeding against the Seller or its Subsidiaries shall
have been commenced or be pending by or before any court, arbitration panel or
governmental authority or official, and no statute, rule or regulation of any
foreign or domestic, national or local government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative
decision shall have been rendered which enjoins or prohibits, or seeks to enjoin
or prohibit, the consummation of all or any of the transactions contemplated by
this Agreement.
(j) MANAGEMENT LOCK-UP AGREEMENTS. Each of the officers
of the Registrant has executed a management lock-up agreement in the form set
forth in Exhibit E. Schedule 6.1(j) correctly and completely identifies all
officers of the Seller. For purposes of this Section 6.1(j) "officers" means all
officers who are required to report any beneficial ownership of the Company's
securities pursuant to Section 16 of the Exchange Act.
(k) NASDAQ CONFIRMATION. The staff of the Nasdaq Stock
Market shall have verbally confirmed to the Seller that (i) it has reviewed the
binding term sheet between the Seller and the Purchasers dated September 22,
2003 and (ii) on the basis of such review, approval by the stockholders of the
Seller of the issuance of the Preferred Stock, the Warrants, the Conversion
Shares, the Placement Agent Warrants and the Warrant Shares is not required, and
the Seller has not received from such staff any oral or written information or
advice contrary to such verbal confirmation.
6.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of
the Seller hereunder with respect to each Purchaser are subject to the
fulfillment or satisfaction, on and as of the Closing Date, of the following
conditions (which may be waived by the Seller, in its sole discretion):
(a) PERFORMANCE; REPRESENTATION AND WARRANTIES. Such
Purchaser shall have performed and complied in all respects with all agreements
and conditions contained in this Agreement which are required to be performed or
complied with by such Purchaser prior to or at the Closing, and the
representation and warranties of such Purchaser contained herein shall be true
and correct on and as of the Closing Date as though made on such date.
(b) NO LITIGATION. No litigation, arbitration or other
legal or administrative proceeding against the Purchasers shall have been
commenced or be pending by or before any court, arbitration panel or
governmental authority or official, and no statute, rule or regulation of any
foreign or domestic, national or local government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative
decision shall have been rendered which enjoins or prohibits, or seeks to enjoin
or prohibit, the consummation of all or any of the transactions contemplated by
this Agreement.
29
ARTICLE VII - - INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS. Except as otherwise provided
herein, the representations and warranties of the Seller and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing Date and shall continue in full force
and effect for a period of 24 months after the Closing Date and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of the Seller or the Purchasers.
7.2 INDEMNIFICATION. (a) The Seller agrees to indemnify and hold
harmless the Purchasers, their Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any losses, damages, or expenses (net of any related insurance proceeds)
due to any and all third party actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees and expenses)
(all of the foregoing, "Third Party Claims") which are caused by or arise out of
(i) any breach or default in the performance by the Seller of any covenant or
agreement made by the Seller in this Agreement or in any of the Related
Documents; (ii) any breach of warranty or representation made by the Seller in
this Agreement or in any of the Related Documents.
(b) Each of the Purchasers agrees to indemnify and hold
harmless the Seller, its Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any Third Party Claims (net of any related insurance proceeds) which are
caused by or arise out of (i) any breach or default in the performance by it of
any covenant or agreement made by it in this Agreement or in any of the Related
Documents; (ii) any breach of warranty or representation made by it in this
Agreement or in any of the Related Documents; provided, however, that a
Purchaser's liability under this Section 7.2(b) shall not exceed the Purchase
Price paid by such Purchaser hereunder.
7.3 INDEMNITY PROCEDURE. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
An Indemnified Party under this Agreement shall, with respect to claims
asserted against such party by any third party, give written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement within sixty (60) business days of the receipt of
any written claim from any such third party, but not later than twenty (20) days
prior to the date any answer or responsive pleading is due, and with respect to
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.
The Indemnified Party shall have the right to conduct and control,
through counsel of its choosing, the defense, compromise or settlement of any
third Person claim, action or suit against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnifying
Party hereunder, and in any such case the Indemnifying Party shall
30
cooperate in connection therewith and shall furnish such records, information
and testimony and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnified Party in
connection therewith; provided, that the Indemnifying Party may participate,
through counsel chosen by it and at its own expense, in the defense of any such
claim, action or suit as to which the Indemnified Party has so elected to
conduct and control the defense thereof; and provided, further, that the
Indemnified Party shall not, without the written consent of the Indemnifying
Party (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit, except that no such consent
shall be required if, following a written request from the Indemnified Party,
the Indemnifying Party shall fail, within 14 days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or suit
shall be adversely determined, such Indemnifying Party has an obligation to
provide indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided, that
in such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
The parties agree to cooperate in defending such third party claims and
the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party shall reasonably request
with respect to any matter for which indemnification is sought hereunder; and
the parties hereto agree to cooperate with each other in order to ensure the
proper and adequate defense thereof.
With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, the reasonable expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party if such expenses are required to be paid pursuant to this Agreement. With
regard to other claims for which indemnification is payable hereunder, such
indemnification shall be paid promptly by the Indemnifying Party upon demand by
the Indemnified Party.
31
ARTICLE VIII - TERMINATION
8.1 BEST EFFORTS. Subject to the terms and conditions provided in
this Agreement, each of the parties shall use their respective best efforts in
good faith to take or cause to be taken as promptly as practicable all
reasonable actions that are within its power to cause to be fulfilled those of
the conditions precedent to its obligations or the obligations of the other
parties to consummate the transactions contemplated by this Agreement that are
dependent upon its actions, including obtaining all necessary consents,
authorizations, orders, approvals and waivers.
8.2 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated:
(i) at any time by the mutual consent of the
Seller and the Purchasers;
(ii) by the Purchasers at any time at or prior to
Closing in their sole discretion if:
(1) any of the representations or
warranties of the Seller in this
Agreement are not true, accurate
and complete in all material
respects (except to the extent such
representations and warranties
contain a materiality
qualification, in which case they
shall be true and correct in all
respects) and such breach, if
curable, is not cured by the
Expiration Date;
(2) the Seller materially breaches any
covenant contained in this
Agreement and such breach, if
curable, is not cured by the
Expiration Date;
(3) any of the conditions precedent to
the Purchasers' obligations to
conduct the Closing have not been
satisfied by the date required
thereof;
(4) any legal proceeding is commenced
or threatened by any governmental
agency or other person directed
against the consummation of the
Closing or any other transaction
contemplated hereby, and the
Purchasers reasonably and in good
xxxxx xxxx it impractical or
inadvisable to proceed in view of
such legal proceeding or threat
thereof;
(5) the Closing has not occurred on or
before the Expiration Date,
provided that the failure of the
Closing to occur has not been
caused by any breach or default by
the Purchasers.
32
(iii) by the Seller at any time at or prior to
Closing in its sole discretion if:
(1) any of the representations or
warranties of the Purchasers in
this Agreement are not true,
accurate and complete in all
material respects (except to the
extent such representations and
warranties contain a materiality
qualification, in which case they
shall be true and correct in all
respects) and such breach, if
curable, is not cured by the
Expiration Date;
(2) Purchasers materially breach any
covenant contained in this
Agreement and such breach, if
curable, is not cured by the
Expiration Date;
(3) any of the conditions precedent to
Seller's obligations to conduct the
Closing have not been satisfied by
the date required thereof; or
(4) the Closing has not occurred on or
before the Expiration Date,
provided that the failure of the
Closing to occur has not been
caused by any breach or default by
the Seller.
8.3 EFFECT OF TERMINATION. In the event of termination of this
Agreement as expressly permitted under 8.2 hereof, this Agreement shall
forthwith become void and no party hereto shall be liable to any other party
hereto or their respective officers, directors or affiliates; provided, that, if
such termination shall result from the willful breach by a party of the
covenants of such party contained in this Agreement, such party shall be fully
liable for any and all damages sustained or incurred as a result of such breach,
including without limitation all expenses incurred in connection with this
Agreement.
ARTICLE IX - MISCELLANEOUS
9.1 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement, and further agrees to take promptly, or cause to
be taken, all actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated hereby, to obtain all necessary waivers,
consents and approvals, to effect all necessary registrations and filings, and
to remove any injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the transactions contemplated by this
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement.
9.2 FEES AND EXPENSES. The Seller shall be responsible for the
payment of the Purchasers' reasonable legal fees and expenses relating to the
preparation and negotiation of this Agreement, the Related Documents, the
conversion of any Preferred Stock or the exercise of any Warrants. At the
Closing, the Seller will pay the reasonable and customary third party expenses
33
incurred by the Purchasers in connection with the negotiation, preparation and
execution of this Agreement and the Related Documents, including attorneys' fees
and expenses, not to exceed $65,000 without the prior approval of the Seller.
9.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 5:00 p.m. (New York City
time) on a business day, (b) the next business day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a business day
or later than 5:00 p.m. (New York City time) on any business day, or (c) the
business day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service such as Federal Express. The address for
such notices and communications shall be as follows:
If to the Purchasers, to their respective If to the Seller:
addresses set forth on Schedule 1. Spectrum Pharmaceuticals, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: CEO
Fax No.: 000-000-0000
With a copy in each case to: With a copy in each case to:
Xxxxxx & Xxxx LLP Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxx
Xxxxxxxx, XX 00000 Floor
Attn: Xxxxxxx Xxxxxxx, Esq. Xxxxx Xxxx, XX 00000
Fax No.: 000-000-0000 Attn: Xxxx X. Xxxxxx, Esq.
Fax No.: 000-000-0000
Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.
9.4 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and enforced in accordance with the laws of the State of New York without
reference to the choice of law principles thereof.
9.5 JURISDICTION AND VENUE. This Agreement shall be subject to the
exclusive jurisdiction of the Federal and State Courts located in New York
County, New York. The parties to this Agreement agree that any breach of any
term or condition of this Agreement shall be deemed to be a breach occurring in
the State of New York by virtue of a failure to perform an act required to be
performed in the State of New York and irrevocably and expressly agree to submit
to the jurisdiction of the Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx of New York
and if such court does not have proper jurisdiction, the State Courts of New
York County, New York for the
34
purpose of resolving any disputes among the parties relating to this Agreement
or the transactions contemplated hereby. The parties irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, or any judgment entered by any court in respect
hereof brought in New York County, New York, and further irrevocably waive any
claim that any suit, action or proceeding brought in Federal or State Courts
located in New York County, New York has been brought in an inconvenient forum.
9.6 SUCCESSORS AND ASSIGNS. This Agreement is personal to each of
the parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Purchasers shall be permitted to
assign their rights under this Agreement to any transferee of such Purchaser to
whom it assigns or transfers Securities, as provided in Section 1.3 hereof.
9.7 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
9.8 ENTIRE AGREEMENT. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
9.9 OTHER REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law, or in
equity on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
9.10 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the Seller, and the holders of at
least a majority of the outstanding Preferred Stock. The waiver by a party of
any breach hereof or default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
9.11 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
9.12 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. For purposes of this
Agreement, the term "knowledge," when used in reference to a corporation means
the knowledge of the directors, officers and managers of such corporation
assuming such officers shall have made inquiry that is customary and appropriate
under the circumstances to which reference is made, and when used in reference
to an individual means the knowledge of such individual assuming the individual
shall have made inquiry that is customary and appropriate under the
circumstances to which reference is made.
9.13 COUNTERPARTS; FACSIMILE. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against any party
whose signature appears
35
thereon and all of which together shall constitute one and the same instrument.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as signatories. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
9.14 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
9.15 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under this Agreement or any Related Documents are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under any such agreement. Nothing contained herein or in
any Related Documents, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by such agreement. Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation, the rights arising out of this Agreement or out of the other
Related Documents, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose. Each Purchaser
represents that it has been represented by its own separate legal counsel in its
review and negotiation of this Agreement and the Related Documents. For reasons
of administrative convenience only, the Purchasers acknowledge and agree that
they and their respective counsel have chosen to communicate with the Company
through Xxxxxx & Xxxx LLP, but such counsel does not represent any of the
Purchasers in this transaction other than SCO Securities LLC.
[Signature Pages Follow]
36
IN WITNESS WHEREOF, the undersigned Purchasers and the Seller have
caused this Preferred Stock and Warrant Purchase Agreement to be duly executed
as of the date first above written.
SELLER:
SPECTRUM PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx, M.D.
Chief Executive Officer
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name:
__________________________________
By:
__________________________________
Name:
__________________________________
Title:
__________________________________
Address:
__________________________________
__________________________________
__________________________________
Telephone:
__________________________________
Facsimile:
__________________________________
SOC/EIN#:
__________________________________
Number of Shares of Series E Preferred Stock
Purchased
____________________________________
Series E-1 Warrants Purchased
________________
Series E-2 Warrants Purchased
________________
Aggregate Purchase Price
_____________________
[See Purchaser Information on Schedule 1]
SCHEDULE 1
TO
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
PURCHASERS AND SHARES OF PREFERRED STOCK AND WARRANTS PURCHASED
Shares of Shares of
Shares of Common Stock Common Stock
Series E Acquirable Acquirable Total
Preferred under Series under Series Purchase
Name and Address of Purchaser Stock E-1 Warrants E-2 Warrants Price
-------------------------------------------------------------------------------------------------------------------
SDS Merchant Fund, LP
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx 317 221,900 221,900 $ 3,170,000
-------------------------------------------------------------------------------------------------------------------
Xxxxxx Apple
00 Xxxxx Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000 3 2,100 2,100 $ 30,000
-------------------------------------------------------------------------------------------------------------------
BayStar Capital II, L.P.
00 X. Xxx Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxx 0X
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxx 320 224,000 224,000 $ 3,200,000
-------------------------------------------------------------------------------------------------------------------
North Sound Legacy Fund LLC
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx 15 10,500 10,500 $ 150,000
-------------------------------------------------------------------------------------------------------------------
North Sound Legacy International Ltd.
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx 160 112,000 112,000 $ 1,600,000
-------------------------------------------------------------------------------------------------------------------
North Sound Legacy Institutional Fund LLC
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx 145 101,500 101,500 $ 1,450,000
-------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx
0 Xxxx 00xx Xxxxxx, Xxx 00-X
Xxx Xxxx, XX 00000 50 35,000 35,000 $ 500,000
SCHEDULE 1 (CONT'D)
Shares of Shares of
Shares of Common Stock Common Stock
Series E Acquirable Acquirable Total
Preferred under Series under Series Purchase
Name and Address of Purchaser Stock E-1 Warrants E-2 Warrants Price
-------------------------------------------------------------------------------------------------------------------
SCO Capital Partners LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx 50 35,000 35,000 $ 500,000
-------------------------------------------------------------------------------------------------------------------
Xmark Fund, Ltd.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxx 180 126,000 126,000 $ 1,800,000
-------------------------------------------------------------------------------------------------------------------
Xmark Fund, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxx 120 84,000 84,000 $ 1,200,000
-------------------------------------------------------------------------------------------------------------------
Cranshire Capital
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000 150 105,000 105,000 $ 1,500,000
-------------------------------------------------------------------------------------------------------------------
Omicron Master Trust
000 0xx Xxxxxx, 00xx Xxx
Xxx Xxxx, XX 00000 150 105,000 105,000 $ 1,500,000
-------------------------------------------------------------------------------------------------------------------
ProMed Partners, L.P.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx 21 14,700 14,700 $ 210,000
-------------------------------------------------------------------------------------------------------------------
ProMed Offshore Fund, Ltd.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx 4 2,800 2,800 $ 40,000
-------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx. 0-X
Xxx Xxxx, XX 00000 25 17,500 17,500 $ 250,000
-------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. Xxxxx
c/o SCO Financial Group LLC
0000 Xxxxxx xx Xxxxxxxx, 00xx Xxx.
Xxx Xxxx, XX 00000 10 7,000 7,000 $ 100,000
SCHEDULE 1 (CONT'D)
Shares of Shares of
Shares of Common Stock Common Stock
Series E Acquirable Acquirable Total
Preferred under Series under Series Purchase
Name and Address of Purchaser Stock E-1 Warrants E-2 Warrants Price
-------------------------------------------------------------------------------------------------------------------
Xxxxxx XxXxxxxx
c/o SCO Financial Group LLC
0000 Xxxxxx xx Xxxxxxxx, 00xx Xxx.
Xxx Xxxx, XX 00000 2 1,400 1,400 $ 20,000
-------------------------------------------------------------------------------------------------------------------
Xxx Xxxxx
c/o Shipman & Xxxxxxx LLP
Xxx Xxxxxxxx Xxx
Xxxxxxxx, XX 00000-0000 10 7,000 7,000 $ 100,000
-------------------------------------------------------------------------------------------------------------------
Quogue Capital LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxx.
Xxx Xxxx, XX 00000 110 77,000 77,000 $ 1,100,000
-------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxx
00 Xxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000 25 17,500 17,500 $ 250,000
-------------------------------------------------------------------------------------------------------------------
Alpha Capital XX
Xxxxxxxxx 0
Xxxxxxxxxx 0000
Xxxxx Liechtenstein 20 14,000 14,000 $ 200,000
-------------------------------------------------------------------------------------------------------------------
Bluegrass Growth Fund LP
000 Xxxx 00xx Xx, Xxx 00X
Xxx Xxxx, XX 00000 15 10,500 10,500 $ 150,000
-------------------------------------------------------------------------------------------------------------------
OTAPE Investments LLC
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx 15 10,500 10,500 $ 150,000
-------------------------------------------------------------------------------------------------------------------
Islandia, LP
000 Xxxxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000 25 17,500 17,500 $ 250,000
-------------------------------------------------------------------------------------------------------------------
Midsummer Investment, Ltd.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 38 26,600 26,600 $ 380,000
SCHEDULE 1 (CONT'D)
-------------------------------------------------------------------------------------------------------------------
Shares of Shares of
Shares of Common Stock Common Stock
Series E Acquirable Acquirable Total
Preferred under Series under Series Purchase
Name and Address of Purchaser Stock E-1 Warrants E-2 Warrants Price
-------------------------------------------------------------------------------------------------------------------
Sands Brother Venture Capital, LLC
c/o Sands Brothers
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Manager 5 3,500 3,500 $ 50,000
-------------------------------------------------------------------------------------------------------------------
Sands Brother Venture Capital II, LLC
c/o Sands Brothers
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Manager 5 3,500 3,500 $ 50,000
-------------------------------------------------------------------------------------------------------------------
Sands Brother Venture Capital III, LLC
c/o Sands Brothers
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Manager 5 3,500 3,500 $ 50,000
-------------------------------------------------------------------------------------------------------------------
Sands Brother Venture Capital IV, LLC
c/o Sands Brothers
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Manager 5 3,500 3,500 $ 50,000
-------------------------------------------------------------------------------------------------------------------
Total 2000 1,400,000 1,400,000 $20,000,000
===================================================================================================================
SCHEDULE 1 (CONT'D)
PLACEMENT AGENT WARRANTS:
--------------------------------------------------------------------------------------------------------------------
Shares of Common Stock
Acquirable under Series Shares of Common Stock Acquirable
Name and Address of Placement Agent or its E-1 Placement Agent under Series E-3 Placement Agent
designees. Warrants Warrants
--------------------------------------------------------------------------------------------------------------------
SCO Securities LLC
1285 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
xxxxxxxxxx@xxxxxxxx.xxx 168,000 168,000
--------------------------------------------------------------------------------------------------------------------
