Exhibit 10.11
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
U.S. NOTE AND WARRANT PURCHASE AGREEMENT
This agreement (this "Agreement") is made as of the Closing Date (as
hereinafter defined) by and between Sunrise Technologies International, Inc., a
Delaware corporation (the "Company"), with its principal office at 00000 Xxxxxxx
Xxxxxxxxx, Xxxxxxx, XX 00000, Pennsylvania Merchant Group Ltd (the "Placement
Agent") and each of the purchasers who are signatories hereto and any other
purchasers who are made a party to this Agreement pursuant to Section 1.1(c)
(individually, a "Purchaser" and collectively, the "Purchasers").
RECITALS
The Company has engaged the Placement Agent as exclusive agent of the
Company in connection with the placement and sale (the "Offering") of $1,500,000
Convertible Subordinated Notes (the "Notes") with Warrants. The Notes will be
convertible into shares of the Company's $.001 par value common stock ("Common
Stock") commencing on the Closing Date (as hereinafter defined) at an initial
conversion price (the "Conversion Price") of $0.875 per share of Common Stock.
The Notes are Redeemable at the Company's option, in whole but not in part, at
any time on or after March 31, 1997, at a price equal to the principal of the
Notes then outstanding plus accrued and unpaid interest to the date of
redemption (the "Redemption Date"). Holders of the Notes will receive not more
than 60 nor fewer days than 30 days' notice prior to the Redemption Date, during
such time they may exercise their conversion rights. Each Purchaser will receive
one warrant to purchase Common Stock substantially in the form attached (the
"Warrants") for each $1.75 in Notes purchased by such Purchaser. Each Warrant
entitles the holder to purchase one share of Common Stock for $1.00 during the
five year period commencing on the initial Closing Date (as hereinafter
defined). The Notes and Warrants will be sold by the Company to Purchasers
pursuant to Regulations D and S under the Securities Act of 1933, as amended
(the "Act") (individually the "Regulation D Purchasers" and "Regulation S
Purchasers"). Regulation D Purchasers will purchase Notes and Warrants pursuant
to this Agreement and Regulation S Purchasers will purchase Notes and Warrants
pursuant to an Offshore Note and Warrant Purchase Agreement of even date
herewith (the "Offshore Agreement"). Offers and sales of Notes and Warrants will
only be made pursuant to the Confidential Private Offering Memorandum dated
February 5, 1997 (together with all amendments, supplements, exhibits and
attachments thereto, the "Offering Materials").
AGREEMENT
In consideration of the mutual promises, representations, warranties
and conditions set forth in this Agreement, the Company, each Purchaser
(severally and not jointly) and the Placement Agent, intending to be legally,
bound agree as follows:
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1. PURCHASE AND SALE OF NOTES AND WARRANTS.
1.1 Issue of Notes and Warrants.
(a) The Company has authorized the issuance and sale
of up to $1,500,000 Notes, up to 1,714,286 shares of Common Stock (the
"Conversion Shares") pursuant to the conversion of the Notes, up to 857,143
Warrants, and up to 857,143 additional shares of Common Stock (the "Warrant
Shares") pursuant to the exercise of the Warrants, pursuant to the provisions of
this Agreement and an Offshore Agreement made as of the Closing Date.
(b) In reliance upon the Purchaser's representations
and warranties contained in Section 4 hereof and upon the Placement Agent's
representations and warranties contained in Section 6 hereof, and subject to the
terms and conditions set forth herein, the Company hereby agrees to sell to each
Purchaser the aggregate amount of Notes set forth below such Purchaser's
signature on the subscription page bearing such Purchaser's name.
(c) In reliance upon the representations and
warranties of the Company contained herein, and subject to the terms and
conditions set forth herein, each Purchaser hereby agrees to purchase the amount
of Notes and Warrants set forth on the subscription page bearing such
Purchaser's name at the purchase price set forth above. Each Purchaser shall
severally, and not jointly, be liable for only the amount of Notes and Warrants
that appear on the subscription page hereof that relates to such Purchaser.
(d) The Company's agreement with each of the
Purchasers is a separate agreement, and the sale of the Notes and Warrants to
each of the Purchasers is a separate sale.
2. CLOSING DATE: DELIVERY.
2.1 Closing.
(a) The initial closing of the sale and purchase of
the Notes under this Agreement (the "Closing"), together with the initial
closing of the sale and purchase of Notes under the Offshore Agreement, shall be
held at 10:00 a.m. (Pacific Standard Time) on or before February 20, 1997 (the
"Closing Date"), at the offices of Thelen, Marrin, Xxxxxxx & Xxxxxxx, San Jose
CA, or at such other time and place as the Company and the Placement Agent may
agree. There is no minimum amount of notes and Warrants required for an initial
closing.
(b) From time to time prior to and following the
Closing Date, the Company may, but shall not be obligated to, offer and sell the
balance of the Notes and Warrants authorized but not sold as of the Closing Date
herein to other purchasers (the "Other Purchasers") at one or more subsequent
closings to be held no later than February 20, 1997 unless otherwise extended by
the Company and the Placement Agent. By executing this Agreement, the Purchasers
hereunder agree to the inclusion of such Other Purchasers as parties to this
Agreement and the Registration Rights Agreement referenced in Section 7.1(d)
herein (the "Registration Rights Agreement"), and it shall be a condition to
each subsequent closing that the Other Purchasers, if any, shall become parties
to this Agreement and the Registration Rights Agreement, subject to the terms
hereof and thereof. If such a subsequent closing is held, the terms "Closing"
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and "Closing Date", as used herein, shall be deemed to apply to the initial
closing and each such subsequent closing.
2.2 Delivery. At the Closing, subject to the terms and
conditions hereof, the Company shall deliver to each Purchaser the Notes
subscribed for by such Purchaser, dated as of the Closing Date, and Warrants,
against payment of the purchase price therefor by wire transfer, unless other
means of payment shall have been agreed upon by such Purchaser and the Company
and the Placement Agent, on the other hand.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Subject to and except as disclosed by the Company in the Private
Placement Materials, the Company hereby represents and warrants to each
Purchaser as of the date hereof as follows, and all such representations and
warranties shall be true and correct as of the Closing Date as if then made and
shall survive the Closing:
3.1 Organization. The Company and Laser Biotech, Inc. as its
subsidiary (the "Subsidiary") is a corporation, duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. The Company and the Subsidiary has all requisite power and
authority to own or lease its properties and to conduct its business as now
conducted. The Company holds all licenses and permits required for the conduct
of its business as now conducted, which, if not obtained, would have a material
adverse effect on the business, financial condition or results of operations of
the Company taken as a whole. The Company and the Subsidiary is qualified as a
foreign or domestic corporation and is in good standing in all states where the
conduct of its business or its ownership or leasing of property requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, financial condition or results of operations of
the Company taken as a whole. The Company has previously delivered a true and
complete copy of its Certificate of Incorporation ("Certificate") and Bylaws to
the Placement Agent.
3.2 Capitalization. The authorized, issued and outstanding
capital stock of the Company on September 30, 1996 is as set forth in the Report
on Form 10-Q (September 30, 1996) which is included in the Private Placement
Materials (Tab A). Since September 30, 1996, there has been no material change
in the capitalization of the Company, except as has been described in the
Private Placement Materials. All of the issued and outstanding shares of Common
Stock have been duly authorized, validly issued and are fully paid and
nonassessable. Except as stated in the Private Placement Materials and except
for rights granted under the Company's stock plans, there are no existing
subscriptions, options, warrants, calls, commitments, agreements, conversion or
other rights of any character (contingent or otherwise) to purchase or otherwise
acquire from the Company at any time, or upon the happening of any stated event,
any shares of the capital stock of the Company.
3.3 Authority. The Company has all requisite corporate power
and authority to enter into this Agreement, the Warrants, the Registration
Rights Agreement, and the warrant to purchase up to 85,714 shares of Common
Stock issued to the Placement Agent (the "Placement Agent Warrant"), and to
consummate the transactions contemplated hereby and thereby. The
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execution and delivery of this Agreement, the Warrant Agreement, the
Registration Rights Agreement and the Placement Agent Warrant and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action on the part of the Company, and
upon their execution and delivery by the Company, such documents will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the indemnification and contribution
provisions of the Registration Rights Agreement may be limited by principles of
public policy, and subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditor's rights from time to time in effect and subject to general equity
principles.
3.4 Securities Filings. The Company has filed with the
Securities and Exchange Commission (the "SEC") the documents set forth in the
Private Placement Materials included herein under Tab A (the "SEC Filings"). The
Company has filed with the SEC all reports and all other filings required to be
filed with the SEC under the rules and regulations of the SEC.
(a) The SEC Filings, when filed, conformed in all
material respects to the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations of the SEC
thereunder as of their respective filing dates and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
documents or portions thereof that were incorporated by reference in the SEC
Filings pursuant to the requirements of the Exchange Act, when such incorporated
documents or portions were first filed with the SEC, conformed in all material
respects with any applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
(b) The consolidated financial statements of the
Company included in the SEC Filings fairly presented in all material respects
the financial position and results of operations of the Company and the
Subsidiary at their respective dates and for the respective periods to which
they apply; and such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved except as otherwise stated therein.
(c) Notwithstanding any provision therein to the
contrary, it is understood by the Company and the Purchasers that the Company is
not representing or warranting any statement in the SEC Filings relating to
future, anticipated or possible circumstances, occurrences or developments.
3.5 Issuance of the Notes. The Notes, when issued against
payment therefor pursuant to the terms of this Agreement, will be duly and
validly authorized and issued, fully paid and nonassessable.
3.6 No Conflict with Law or Documents. The execution, delivery
and consummation of this Agreement, the Warrants and the Registration Rights
Agreement and the transactions contemplated hereby and thereby will not (a)
conflict with any provisions of the Articles or Bylaws of the Company or of the
Subsidiary; (b) result in any violation of or default or
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loss of a benefit under, or permit the acceleration of any obligation under (in
each case, upon the giving of notice, the passage of time, or both) any
mortgage, indenture, lease, agreement or other instrument, permit, franchise,
license, judgment, order, decree, law, ordinance, rule or regulation applicable
to the Company, the Subsidiary or their respective properties.
3.7 Consents, Approvals and Private Offering. Except for any
filings required under federal and applicable state securities laws, all of
which shall have been made as of the Closing Date to the extent required as of
such time, no consent, approval, order or authorization of, or resignation,
declaration or filing with, any federal, state, local or foreign governmental
authority is required to be made or obtained by the Company in connection with
the execution and delivery of this Agreement, the Registration Rights Agreement
and the consummation of the transactions contemplated hereby and thereby.
3.8 Absence of Certain Developments. Except as described in
the Private Placement, since September 30, 1996, the Company has not (a)
incurred or become subject to any material liabilities (absolute or contingent)
except current liabilities incurred, and liabilities under contracts entered
into, in the ordinary course of business, consistent with past practices; (b)
mortgaged, pledged or subjected to any lien, charge or other encumbrance any of
its assets, tangible or intangible; (c) sold, assigned or transferred any of its
assets or canceled any debts or obligations except in the ordinary course of
business, consistent with past practices; (d) suffered any extraordinary losses,
or waived any rights of substantial value; (e) entered into any material
transaction other than in the ordinary course of business, consistent with past
practices; or (f) otherwise had any change in its condition, financial or
otherwise, except as shown on or reflected in the consolidated balance sheet as
of September 30, 1996 that is included in the Company's Report on Form 10-Q for
the quarter ended September 30, 1996, except for changes in the ordinary course
of business, consistent with past practices, none of which individually or in
the aggregate has been materially adverse, and excepted further that the Company
continues to incur additional substantial losses of the nature set forth in
and/or otherwise contemplated by the Private Placement Materials. Except as
described in the SEC Filings, neither the Company nor the Subsidiary has entered
into any agreement since September 30, 1996 of the type that would be required
under the SEC's rules and regulations to be filed as an exhibit to a Report on
Form 10-K.
3.9 Litigation. Except as described in the Private Placement
Materials, to the Company's knowledge, there are no actions, suits, proceedings
or investigations pending against or affecting the Company or the Subsidiary
that in the aggregate could reasonably be anticipated to result in any material
adverse effect on the Company.
3.10 Registration Rights. Except for shares issued or issuable
in connection with the Company's existing stock option plans and those disclosed
in the Private Placement Materials the Company has not granted any rights to
have any of the Company's securities registered under the Act.
3.11 Disclosure. The Private Placement Materials taken as a
whole do not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
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3.12 Security Interest. In order to secure the Company's
obligations under the Notes and perfect the Purchasers' security interests in
all of the Company's pending and issued opthalmic patents, the Company has made
all the necessary filings and has not granted a security interest in such
patents to any other party.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents, warrants and covenants with
the Company as follows:
4.1 Legal Power. Purchaser has the requisite corporate,
partnership, trust or fiduciary power, as appropriate, and is authorized, if
Purchaser is a corporation, partnership or trust, to enter into this Agreement
and the Registration Rights Agreement, to purchase the Notes and Warrants
hereunder, and to carry out and perform its obligations under the terms of this
Agreement and the Registration Rights Agreement.
4.2 Due Execution. Each of this Agreement and the Registration
Rights Agreement has been duly authorized, if Purchaser is a corporation,
partnership, trust or fiduciary, and has been executed and delivered by the
Purchaser, and, upon due execution and delivery by the Company, this Agreement
and the Registration Rights Agreement will be valid and binding agreements of
the Purchaser and subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditor's rights from time to time in effect and subject to general equity
principles.
4.3 Investment Representations.
(a) Purchaser is acquiring the Notes for its own
account, not as nominee or agent, for investment and not with a view to or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933, as amended (the "Act"), except
pursuant to an effective registration statement under the Act.
(b) Purchaser understands that (i) the Warrants, the
Conversion Shares and the Warrant Shares (collectively, the "Securities") have
[not] been registered under the Act by reason of a specific exemption therefrom,
and may not be transferred or resold except pursuant to an effective
registration statement or exemption from registration; (ii) each of such
Securities (unless such Warrant Shares have been registered prior to the
exercise of such Warrants) will be endorsed with the following legends:
A) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
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FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS;
B) Any legend required to be placed thereon by applicable federal,
state, or Canadian Provincial securities laws;
and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Securities unless the conditions specified in the
foregoing legends are satisfied;
(c) Purchaser has received and reviewed the Private
Placement Materials. In addition, Purchaser has been furnished with such
materials and has been given access to such information relating to the Company
as it or its qualified representative has requested and has been afforded the
opportunity to ask questions regarding the Company and the Securities, all as
Purchaser has found necessary to make an informed investment decision.
(d) Purchaser is an "accredited investor" as such
term is defined in Rule 501 of the Act and was not formed for the specific
purpose of acquiring the Securities.
(e) Purchaser is not a resident of Canada or any
territory thereof, or of any jurisdiction outside the United States and its
territories.
4.4 Pennsylvania Requirements.
Each Purchaser who is a Pennsylvania resident, or which has
its principal place of business in Pennsylvania and is not an "institutional
investor" within the meaning of the Pennsylvania Securities Act of 1972 as
amended and the regulations thereunder, hereby agrees not to sell any of the
Securities for a period of 12 months from the date hereof, except in accordance
with the requirements of section 203(d) of such act and regulation 204.011
thereunder.
5. COVENANTS OF THE COMPANY.
5.1 Information.
So long as the Company is subject to the periodic reporting
requirements of the Exchange Act pursuant to Section 13 or l5(d), the Company
shall deliver to each holder of Notes or Warrants all annual, quarterly or other
reports furnished to the public security holders; provided that if the Company
is not subject to the requirements of Section 13 or 15(d) of the Exchange Act,
the Company will promptly furnish to each holder of Notes or Warrants (i) as
soon as available, and in any event within 90 days after the end of each fiscal
year of the Company, a consolidated balance sheet of the Company and its
consolidated subsidiaries, if any, as of the end of such fiscal year and the
related consolidated statements of income, stockholders' equity and cash flows
for such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all prepared in accordance with generally accepted
accounting principles and reported on by independent certified public
accountants of recognized national standing; and (ii) as soon as available, and
in any event within 45 days after the end of each of the first three fiscal
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quarters of each fiscal year of the Company, a consolidated balance sheet of the
Company and its consolidated subsidiaries, if any, as of the end of such quarter
and the related consolidated statements of income and stockholder's equity
(together with any other quarterly financial statements being prepared by the
Company at such time), setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Company's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation and consistency by the chief
financial officer or the chief accounting officer of the Company.
6. REPRESENTATIONS OF PLACEMENT AGENT; COMPENSATION OF PLACEMENT AGENT.
The Company has authorized the Placement Agent to conduct the private placement
of the Securities (the "Private Placement") under Regulation D and Regulation S
of the Act, and the Placement Agent represents and agrees with the Company as
follows:
6.1 Sales to Accredited Investors. Placement Agent has and
will only make offers and sales of the Securities to Regulation D Purchasers or
potential Regulation D Purchasers it reasonably believes to be "accredited
investors" as that term is defined in Rule 501(a) under the Act;
6.2 Regulation D Compliance. Offers and sales of the
Securities have and will be made in compliance with Regulation D, to the extent
applicable to the Placement Agent, and the Placement Agent has not and shall not
offer to sell the Securities by any form of general solicitation or general
advertising that is prohibited by Rule 502(c) promulgated under the Act.
6.3 Compliance Generally. The Placement Agent has and will
observe all securities laws and regulations applicable to it in any jurisdiction
in which it has or may offer, sell or deliver any of the Securities and it will
not, directly or indirectly, offer, sell or deliver any of the Securities or
distribute or publish any prospectus, circular, advertisement or other offering
material in relation to any of the Securities in or from any state in the United
States or country or jurisdiction except under circumstances that will result in
compliance with any applicable laws and regulations.
6.4 Sales Commissions. In consideration of the Placement
Agent's services hereunder, the Company shall pay to the Placement Agent in cash
on each Closing Date a commission equal to seven and one-half percent (7.5 %) of
the proceeds of the Securities sold at such Closing (the "Placement Fee").
6.5 Placement Agent Expenses. Upon the initial closing, the
Company shall reimburse the Placement Agent for its reasonable out-of-pocket
expenses of the Private Placement, including the reasonable fees and expenses of
the Placement Agent's counsel, up to a maximum of $50,000. This amount may
include expenses from other pending or abandoned transactions involving the
Placement Agent.
6.6 Placement Agent Warrant. At each Closing, the Company
agrees to sell to the Placement Agent a Warrant to purchase a number of shares
of the Company's Common Stock
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equal to five percent (5%) of the number of Conversion Shares sold into which
the Notes sold at such Closing are convertible (the "Placement Agent Warrant")
at a purchase price of $.001 per share of Common Stock covered by the Placement
Agent Warrant. The Placement Agent Warrant will be exercisable at any time
before the fifth anniversary of the initial Closing at a price of $0.875
(subject to adjustments for stock dividends, splits, combinations and certain
other issuances of Common Stock or Common Stock equivalents, all as provided in
the Placement Agent Warrant). The Placement Agent Warrant will be in a form
reasonably satisfactory to the Company and the Placement Agent.
6.7 Right of First Refusal to Manage Future Offerings. For a
period of one (1) year commencing upon the last Closing Date hereunder, the
Placement Agent shall have a right of first refusal to act as the managing
underwriter for any and all equity offerings (excluding offerings to Company
employees, or to others as consideration for the purchase of assets for use in
the Company's business, or in one or more business combinations) of any
securities of the Company, or any successor to or any subsidiary of the Company.
The Placement Agent must exercise this right of first refusal within thirty (30)
days of receipt of written notice from the Company, or its successor or
subsidiary, of its intention to offer securities for sale.
6.8 Blue Sky Compliance. The Placement Agent will comply with
the state securities or blue sky laws of each state in which the Securities have
been or will be offered ("Applicable Blue Sky Laws"). The Placement Agent has
ensured and will ensure that all applications, notices and other filings
required to be made under Applicable Blue Sky Laws have been or will be timely
made. The Placement Agent has ensured that all legends or other notices required
to be either printed in the Private Placement Memorandum or otherwise given to
offerees or purchasers of the Securities under Applicable Blue Sky Laws have
been so printed or given.
7. CONDITIONS TO CLOSING.
7.1 Conditions to Obligations of the Purchaser. Each
Purchaser's obligation to purchase the Securities at the Closing is subject to
the fulfillment, at or prior to such Closing, of all of the following
conditions:
(a) Representations and Warranties True; Performance
of Obligations. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all material respects on the
Closing Date with the same force and effect as if they had been made on and as
of said date; except as described in or contemplated by the Private Placement
Materials, the business, assets, financial condition and results of operations
of the Company shall not have been adversely affected in any material way prior
to the Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed by it on or prior to the Closing
Date.
(b) Proceedings and Documents. All corporate and
other proceedings in connection with the transactions contemplated at the
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the Purchaser.
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(c) Qualifications, Legal Investment. All
authorizations, approvals, or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Securities pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of the
Closing Date. No stop order or other order enjoining the sale of the Securities
shall have been issued and no proceedings for such purpose shall be pending or,
to the knowledge of the Company, threatened by the SEC, or any commissioner of
corporations or similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the Securities
shall be legally permitted by all laws and regulations to which the Purchasers
and the Company are subject.
(d) Registration Rights Agreement. The Company shall
have entered into the Registration Rights Agreement in substantially the form
included in the Private Placement Materials (Tab C).
(e) Legal Opinion. Counsel to the Company shall have
provided a legal opinion to the Purchasers dated as of the Closing Date
reasonably acceptable to the Placement Agent.
7.2 Conditions to Obligations of the Company. The Company's
obligation to issue and sell the Securities at the Closing is subject to the
fulfillment to the Company's satisfaction, on or prior to the Closing, of the
following conditions:
(a) Representations and Warranties True. The
representations and warranties made by each Purchaser in Section 4 and by the
Placement Agent in Sec. 6 hereof shall be true and correct at the Closing Date
with the same force and effect as if they had been made on and as of the Closing
Date.
(b) Performance of Obligations. Each Purchaser and
the Placement Agent shall have performed and complied with all agreements and
conditions herein required to be performed or complied with by them on or before
the Closing Date, and each Purchaser shall have delivered payment to the Company
in respect of its purchase of Notes.
(c) Qualifications, Legal Investment. All
authorizations, approvals, or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Securities pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of the
Closing Date. No stop order or other order enjoining the sale of the Securities
shall have been issued and no proceedings for such purpose shall be pending or,
to the knowledge of the Company, threatened by the SEC or any commissioner of
corporations or similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the Securities
shall be legally permitted by all laws and regulations to which each Purchaser
and the Company are subject.
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8. MISCELLANEOUS.
8.1 Governing Law. This Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania as applied to
agreements among California residents, made and to be performed entirely within
the Commonwealth of Pennsylvania without regard to principles of conflict of
laws.
8.2 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto.
8.3 Entire Agreement. This Agreement and the Exhibits hereto
and thereto, and the other documents delivered pursuant hereto and thereto,
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other party in any manner by any representations, warranties, covenants, or
agreements except as specifically set forth herein or therein. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
8.4 Separability. In case any provision of this Agreement
shall be invalid, illegal, or unenforceable, it shall to the extent practicable,
be modified so as to make it valid, legal and enforceable and to retain as
nearly as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
8.5 Amendment and Waiver. Except as otherwise provided herein,
any term 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,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), with the written consent of the Company and the Purchaser and
with respect to any amendment or waiver of the provisions of Section 6, the
Placement Agent. Any amendment or waiver effected in accordance with this
section shall be binding upon each future holder of any security purchased under
this Agreement (including securities into which such securities have been
converted) and the Company.
8.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery, on the first business day following mailing by overnight
courier, or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company and the
Purchaser at the respective addresses included herein.
8.7 Fees and Expenses. The Company and the Purchasers shall
bear their own expenses and legal fees incurred on its behalf with respect to
this Agreement and the transactions contemplated hereby; provided, that in the
event that the transactions contemplated hereby close, the Company shall
reimburse the Placement Agent in accordance with the provisions of Section 6.5.
The fees and expenses for which the Company shall be liable hereunder shall in
no event
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exceed $50,000 in the aggregate. Purchasers acknowledge that the Placement Agent
will receive a commission equal to 7.5% of the aggregate amount sold in the
Offering and will be entitled to purchase for nominal consideration a five-year
warrant to purchase up to 85,714 shares of the Company's Common Stock at an
exercise price equal to $0.875, as described in the Private Placement Materials
under the heading "Summary of the Offering."
8.8 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
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