Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
February 19, 2002 is made by and among Cypress Bioscience, INC., a Delaware
corporation (the "Company"), and the Purchasers named on the signature pages
hereto, together with their permitted transferees (each, a "Purchaser" and
collectively, the "Purchasers").
Recitals:
A. The Company has retained Paramount Capital, Inc. and Evolution
Capital, Inc. (the "Placement Agents") as non-exclusive Placement Agents, on a
"best efforts" basis, in a private placement offering (the "Offering") of
securities of the Company.
B. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
C. The Purchasers desire to purchase and the Company desires to
sell, upon the terms and conditions stated in this Agreement, up to a maximum of
$17,000,000 of Securities (as defined below).
D. The capitalized terms used herein and not otherwise defined have
the meanings given them in Article 8 hereof.
In consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:
AGREEMENT
In consideration of the Company's agreement to sell the Securities to
the undersigned upon the terms and conditions continued herein, each Purchaser
(severally and not jointly) agrees and represents as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. At the Closing the Company will
issue and sell to each Purchaser, and each Purchaser will, jointly and not
severally, purchase the number of shares of Common Stock of the Company (the
"Shares") and the number of warrants to purchase shares of Common Stock of the
Company (the "Warrants") set forth opposite such Purchaser's name on Exhibit A
from the Company (the Shares and the Warrants referred to collectively as the
"Securities"). The purchase price for each Security (the "Purchase Price") shall
be $2.47, which shall be equal to 90% of the average of the closing bid price of
the Common Stock as reported on Nasdaq (symbol "CYPB") for the 10 trading days
immediately preceding the date of the execution of this Agreement (the "Initial
Closing Date"). For each
1.
two Shares purchased by a Purchaser, such Purchaser shall receive a Warrant to
purchase one share of Common Stock at an exercise price equal to 125% of the
Purchase Price (the "Warrant Purchase Price") and the Warrant will be
exercisable for five years from the Closing pursuant to the Warrant
substantially in the form attached as Exhibit B. The Company shall have the
right to redeem the Warrants for $0.02 per share of Common Stock underlying the
Warrants upon notice to the record holders of the Warrants if the average of the
closing price of the Common Stock exceeds 200% of the Warrant Purchase Price for
20 consecutive trading days.
1.2 Payment. At the Closing, each Purchaser will pay the aggregate
Purchase Price set forth on Exhibit A hereof by wire transfer of immediately
available funds in accordance with the Company's wire instructions set forth
opposite its name on Exhibit C hereto. The Company will deliver stock
certificates representing the Shares and the Warrant representing the Warrant
Shares against delivery of the aggregate Purchase Price as described above.
1.3 Closing Date. The Closing will take place immediately following
receipt by the Company of the Stockholder Approval of the issuance and sale of
the Securities (the "Closing Date"). The Closing will be held at the offices of
the Company or at such other place as the parties agree.
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser represents and warrants to the Company, severally and
solely with respect to itself and its purchase hereunder and not with respect to
any other Purchaser, that:
2.1 Investment Purpose. The Purchaser is purchasing the Securities
for its own account and not with a present view toward the public sale or
distribution thereof.
2.2 Accredited Purchaser Status. The Purchaser is an "accredited
investor" as defined in Rule 501(a) of Regulation D. The Purchaser has delivered
an Accredited Investor Questionnaire in the form of Exhibit D to the Company.
The Purchaser hereby represents that, either by reason of the Purchaser's
business or financial experience, the Purchaser has the capacity to protect the
Purchaser's own interests in connection with the purchase of the Securities. In
addition, the Purchaser is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interest.
2.3 Reliance on Exemptions. The Purchaser understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Securities.
2.4 Information. The Purchaser has been furnished with all materials
relating to the business, finances and operations of the Company, and materials
relating to the offer and sale of the Securities, that have been requested by
the Purchaser, including, without limitation, the
2.
Company's Quarterly Reports on Form 10-Q for the Quarters ended September 30,
2001, June 30, 2001, and March 31, 2001, the Company's Annual Report on Form
10-K for the year ended December 31, 2000 and the Private Placement Memorandum
dated February 13, 2002 (the "Private Placement Memorandum") and the Purchaser
has read such materials. The Purchaser has been afforded the opportunity to ask
questions of the Company.
2.5 Acknowledgement of Risk. The Purchaser acknowledges and
understands that its investment in the Securities involves a significant degree
of risk, including, without limitation, (i) the Company remains a development
stage business with limited operating history and requires substantial funds in
addition to the proceeds from the sale of the Securities; (ii) an investment in
the Company is highly speculative, and only Purchasers who can afford the loss
of their entire investment should consider investing in the Company and the
Securities; (iii) the Purchaser may not be able to liquidate its investment;
(iv) transferability of the Securities is extremely limited; (v) in the event of
a disposition of the Securities, the Purchaser could sustain the loss of its
entire investment; (vi) the Company has not paid any dividends on its Common
Stock since inception and does not anticipate the payment of dividends in the
foreseeable future; and (vii) the Company's Securities may be delisted from
Nasdaq. Such risks are more fully set forth in the SEC Documents and the Private
Placement Memorandum.
2.6 Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities or
an investment therein.
2.7 Transfer or Resale. The Purchaser understands that:
(a) the Securities have not been and are not being registered
under the Securities Act or any applicable state securities laws and,
consequently, the Purchaser may have to bear the risk of owning the Securities
for an indefinite period of time because the Securities may not be transferred
unless (i) the resale of the Securities is registered pursuant to an effective
registration statement under the Securities Act, as contemplated in Article 6;
(ii) the Purchaser has delivered to the Company an opinion of counsel (in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; or (iii)
the Securities are sold or transferred pursuant to Rule 144;
(b) any sale of the Securities made in reliance on Rule 144 may
be made only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and
(c) except as set forth in Article 6, neither the Company nor
any other person is under any obligation to register the resale of the
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
3.
2.8 Legends. The Purchaser understands the certificates representing
the Securities will bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
2.9 Authorization; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Purchaser and
represent the valid and binding obligations of the Purchaser enforceable in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and the application of general principles of equity.
2.10 Residency. The Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on the signature pages hereto.
2.11 Acknowledgements Regarding Placement Agent.
(a) The Purchaser acknowledges that Paramount Capital, Inc. and
Evoluton Capital are acting as the non-exclusive Placement Agents for the
Securities being offered hereby and will be compensated by the Company for
acting in such capacity. The Purchaser further acknowledges that the Placement
Agents have acted solely as Placement Agents in connection with the offering of
the Securities by the Company, that the information and data provided to the
Purchaser in connection with the transactions contemplated hereby have not been
subjected to independent verification by the Placement Agents, and that the
Placement Agents make no representation or warranty with respect to the accuracy
or completeness of such information, data or other related disclosure material.
The Purchaser further acknowledges that in making its decision to enter into
this Agreement and purchase the Securities it has relied on its own examination
of the Company and the terms of, and consequences, of holding the Securities.
The Purchaser further acknowledges that the provisions of this Section 2.11 are
for the benefit of, and may be enforced by, the Placement Agents.
(b) The Purchaser represents that (i) the Purchaser was
contacted regarding the sale of the Securities by one of the Placement Agents
(or an authorized agent or representative thereof) with whom the Purchaser had a
prior substantial pre-existing relationship and (ii) no Securities were offered
or sold to it by means of any form of general solicitation or general
advertising, and in connection therewith the Purchaser did not: (A) receive or
review any advertisement, article, notice or other communication published in a
newspaper or magazine or similar media or broadcast over television or radio
whether closed circuit, or generally available; or (B) attend any seminar
meeting or industry investor conference whose attendees were invited by any
general solicitation or general advertising.
4.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers that:
3.1 Organization and Qualification. The Company is duly incorporated,
validly existing and in good standing under the laws of Delaware, the
jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted.
The Company is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
3.2 Authorization; Enforcement. (a) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, to consummate the transactions contemplated hereby and to issue
the Securities in accordance with the terms hereof; (b) the execution, delivery
and performance of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby (including without limitation the issuance
of the Securities) have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company, its Board of Directors,
or its stockholders is required, pending the receipt of Stockholder Approval of
the issuance and sale of the Securities which is required and is condition to
Closing, as set forth in Article 5; (c) this Agreement has been duly executed by
the Company; and (d) this Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity.
3.3 Capitalization. The capitalization of the Company is described in
the Company's SEC Documents. The Company has not issued any capital stock since
September 30, 2001 other than pursuant to employee benefit plans disclosed in
the Company's SEC Documents. All of such outstanding shares of capital stock
are, or upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company, including the
Securities issuable pursuant to this Agreement, are subject to preemptive rights
or any other similar rights of the stockholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company.
Except as described in this Section 3.3 and except as disclosed in Schedule 3.3
and except for the transactions contemplated hereby and the issuance of the
warrants to purchase Common Stock of the Company granted to the Placement
Agents, in connection with the Placement Agency Agreements dated February 14,
2002 (the "Placement Agent Warrants"), (i) there are no outstanding options,
warrants, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into,
exercisable for, or exchangeable for any shares of capital stock of the Company,
or arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the `Company; (ii) there are no agreements or
5.
arrangements under which the Company is obligated to register the sale of any of
its securities under the Securities Act (except as contemplated under Article 6)
and (iii) there are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders) that will be triggered by the issuance of the Securities. The
Company has furnished to the Purchasers true and correct copies of the Company's
Amended and Restated Certificate of Incorporation, as amended (the "Certificate
of Incorporation"), as in effect on the date hereof, the Company's Bylaws as in
effect on the date hereof.
3.4 Issuance of Securities. The Shares and all the shares of Common
Stock issuable upon exercise of the Warrants (the "Warrant Shares") are duly
authorized and, upon issuance in accordance with the terms of this Agreement
(and, in the case of Warrant Shares, the Warrants), will be validly issued,
fully paid and non-assessable, free from all taxes, liens, claims, encumbrances
and charges with respect to the issue thereof, will not be subject to preemptive
rights or other similar rights of stockholders of the Company, and will not
impose personal liability on the holders thereof.
3.5 No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby (including, without limitation, the issuance of the Securities) will not
(i) conflict with or result in a violation of any provision of its Certificate
of Incorporation or Bylaws, (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment (including without limitation, the triggering
of any anti-dilution provision), acceleration or cancellation of, any agreement,
indenture, patent, patent license, or instrument to which the Company is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including United States federal and state securities laws
and regulations and regulations of any self-regulatory organizations to which
the Company or its securities are subject) applicable to the Company or by which
any property or asset of the Company is bound or affected, except for such
conflicts, breaches, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect.
(b) The Company is not in violation of its Certificate of
Incorporation or Bylaws and the Company is not in default (and no event has
occurred which with notice or lapse of time or both could put the Company in
default) under any agreement, indenture or instrument to which the Company is a
party or by which any property or assets of the Company is bound or affected,
except for possible defaults as would not, individually or in the aggregate,
have a Material Adverse Effect.
(c) The Company is not conducting its business in violation of
any law, ordinance or regulation of any governmental entity, the failure to
comply with which would, individually or in the aggregate, have a Material
Adverse Effect.
6.
(d) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws or
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof, or to issue and sell the Securities in accordance with
the terms hereof. All consents, authorizations, orders, filings and
registrations that the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof.
3.6 SEC Documents, Financial Statements. The Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC since January 1, 2001, pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits) incorporated by reference therein,
being hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to each Purchaser, or each Purchaser has had access to, true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the financial statements included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than liabilities incurred in the
ordinary course of business subsequent to September 30, 2001, and liabilities of
the type not required under generally accepted accounting principles to be
reflected in such financial statements. Such liabilities incurred subsequent to
September 30, 2001, are not, in the aggregate, material to the financial
condition or operating results of the Company.
3.7 Absence of Certain Changes. Except as disclosed in the SEC
Documents or on Schedule 3.7 and except for the potential delisting of the
Company's securities from Nasdaq, since September 30, 2001, there has been no
material adverse change in the assets, liabilities, business, properties,
operations, financial condition or results of operations of the Company.
7.
3.8 Absence of Litigation. Except as disclosed in the SEC Documents
and except as disclosed on Schedule 3.8, there is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its officers or directors acting as such that could, individually or in the
aggregate, have a Material Adverse Effect.
3.9 Intellectual Property Rights. To the Company's knowledge, the
Company owns or possesses licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
necessary to enable it to conduct its business as now operated (the
"Intellectual Property"). Except as set forth in the SEC Documents, there are no
material options, licenses or agreements relating to the Intellectual Property,
nor is the Company bound by or a party to any material options, licenses or
agreements relating to the patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service
marks, service names, trade names or copyrights of any other person or entity.
Except as disclosed in the SEC Documents, there is no claim or action or
proceeding pending or, to the Company's knowledge, threatened that challenges
the right of the Company with respect to any Intellectual Property.
3.10 Tax Status. The Company has timely made or filed all federal,
state and foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) and has timely paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith, and has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
To the knowledge of the Company, there are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim. The Company has not
executed a waiver with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, state or local tax. None of
the Company's tax returns is presently being audited by any taxing authority.
3.11 Environmental Laws. To the Company's knowledge, the Company (i)
is in compliance with all applicable foreign federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
its business and (iii) is in compliance with all terms and conditions of any
such permit, license or approval where, in each of the three foregoing clauses,
the failure to so comply would have, individually or in the aggregate, a
Material Adverse Effect
3.12 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
Securities Act of the issuance of the Securities to the Purchasers. The
8.
issuance of the Securities to the Purchasers will not be integrated with any
other issuance of the Company's securities (past or current) for purposes of the
Securities Act or any applicable rules of Nasdaq.
3.13 No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, Placement Agent's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with the Placement Agents, whose commissions and
fees will be paid by the Company.
3.14 Insurance. The Company is insured by insurers of recognized
financial responsibility in the following aggregate amounts (a) $1,000,000 for
general liability, (b) $10,000,000 in an umbrella policy (excluding product
liability claims) and (c) $10,000,000 for product liability claims.
3.15 Employment Matters. The Company is in compliance with all
federal, state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours
except where failure to be in compliance would not have a Material Adverse
Effect. The Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the Company's knowledge, has sought to represent any of the
employees, representatives or agents of the Company. There is no strike or other
labor dispute involving the Company pending, or to the Company's knowledge,
threatened, that could have a Material Adverse Effect nor is the Company aware
of any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of officers or key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing.
3.16 Investment Company Status. The Company is not and upon
consummation of the sale of the Securities will not be an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
3.17 Subsidiaries. Except as set forth in the SEC Documents, the
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, association, joint venture, partnership or other
business entity and the Company is not a direct or indirect participant in any
joint venture or partnership.
3.18 No Conflict of Interest. The Company is not indebted, directly or
indirectly, to any of its officers or directors or to their respective spouses
or children, in any amount whatsoever other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or relocation
expenses of employees. None of the Company's officers, directors or employees,
or any members of their immediate families, are directly, or indirectly,
indebted to the Company (other than in connection with purchases of the
Company's stock or as set forth on Schedule 3.18) or, to the best of the
Company's knowledge, have any direct or indirect ownership interest in any
entity with which the Company is affiliated or with
9.
which the Company has a business relationship, or any entity which competes with
the Company, except that officers, directors, employees and/or stockholders of
the Company may own stock in (but not exceeding 5% of the outstanding capital
stock of) any publicly traded company that may compete with the Company. To the
best of the Company's knowledge, none of the Company's officers, directors or
employees or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company. The Company is
not a guarantor or indemnitor of any indebtedness of any other person or entity.
ARTICLE 4
COVENANTS
4.1 Form D; Blue Sky Laws. The Company will timely file a Notice of
Sale of Securities on Form D with respect to the Securities, as required under
Regulation D. The Company will, on or before the Closing Date, take such action
as it reasonably determines to be necessary to qualify the Securities for sale
to the Purchasers under this Agreement under applicable securities (or "blue
sky") laws of the states of the United States (or to obtain an exemption from
such qualification).
4.2 Reporting Status; Eligibility to Use Form S-3. The Company's
Common Stock is registered under Section 12 of the Exchange Act. During the
Registration Period (as defined below), the Company will timely file all SEC
Documents, and the Company will not terminate its status as an issuer required
to file reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination. The Company currently
meets the "registrant eligibility" requirements set forth in the general
instructions to Form S-3 to enable the registration of the Registrable
Securities.
4.3 Expenses. The Company and each Purchaser is liable for, and will
pay, its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement, including, without limitation,
attorneys' and consultants' fees and expenses.
4.4 Financial Information. The financial statements of the Company to
be included in any SEC Documents will be prepared in accordance with United
States generally accepted accounting principles, consistently applied, and will
fairly present in all material respects the consolidated financial position of
the Company and results of its operations and cash flows as of, and for the
periods covered by, such financial statements (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
4.5 Compliance with Law. As long as an Purchaser owns any of the
Securities, the Company will conduct its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business (including, without limitation, all applicable local, state
and federal environmental laws and regulations), the failure to comply with
which would have a Material Adverse Effect.
4.6 Sales by Purchasers. Each Purchaser will sell any Securities sold
by it in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules
10.
and regulations promulgated thereunder. No Purchaser will make any sale,
transfer or other disposition of the Securities in violation of federal or state
securities laws.
ARTICLE 5
CONDITIONS TO CLOSING
5.1 Purchasers Obligations. The Purchasers obligations to purchase
the Securities at the Closing are subject to the Company satisfying the
following conditions (or with respect to Section 5.1(b), the waiver by each
Purchaser of such condition).
(a) Stockholder Approval. The Company must obtain Stockholder
Approval for the issuance and sale of the Securities as contemplated under this
Agreement.
(b) Continued Listing on Nasdaq. The Nasdaq Stock Market, Inc.
must make the determination after the oral hearing on February 21, 2002 to
continue listing the Company's securities on Nasdaq.
(c) Legal Opinion. The Company's counsel shall have delivered a
legal opinion to each Purchaser in substantially the form set forth as Exhibit
E.
5.2 The Company's Obligations. The Company's obligations to issue and
sell the Securities at the Closing are subject to the Company satisfying the
following conditions.
(a) Stockholder Approval. The Company must obtain Stockholder
Approval for the issuance and sale of the Securities as contemplated under this
Agreement.
ARTICLE 6
REGISTRATION RIGHTS
6.1 As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" shall mean, with respect to any Person (as
defined below), any other Person controlling, controlled by or under direct or
indirect common control with such Person (for the purposes of this definition
"control," when used with respect to any specified Person, shall mean the power
to direct the management and policies of such person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) "Business Day" shall mean a day Monday through Friday on
which banks are generally open for business in New York.
(c) "Holders" shall mean any person holding Registrable
Securities or any person to whom the rights under Article 6 have been
transferred in accordance with Section 6.9 hereof.
11.
(d) "Person" shall mean any person, individual, corporation,
limited liability company, partnership, trust or other nongovernmental entity or
any governmental agency, court, authority or other body (whether foreign,
federal, state, local or otherwise).
(e) The terms "register," "registered" and "registration" refer
to the registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(f) "Registrable Securities" shall mean (i) the Shares; and (ii)
the Warrant Shares; (iii) any shares of Common Stock issuable upon exercise of
the Placement Agent Warrants (the "Placement Agent Shares"); and (iv) any shares
of Common Stock issued as (or issuable upon the conversion of any warrant, right
or other security which is issued as) a dividend or other distribution with
respect to or in replacement of the Shares, the Warrant Shares or the Placement
Agent Shares; provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC,
(B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale or (C) are held by a Holder or a permitted transferee
pursuant to Section 6.9.
(g) "Registration Expenses" shall mean all expenses incurred by
the Company in complying with Section 6.2 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the fees of legal counsel for any Holder).
(h) "Registration Statement" shall have the meaning ascribed to
such term in Section 6.2.
(i) "Registration Period" shall have the meaning ascribed to
such term in Section 6.4.
(j) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and expenses of legal counsel for any Holder.
6.2 No later than fifteen (15) days after the Closing Date (the
"Filing Date"), the Company shall file a registration statement covering the
resale of the Registrable Securities on the appropriate form (the "Registration
Statement") with the SEC and use its best efforts to effect the registration,
qualifications or compliances (including, without limitation, the execution of
any required undertaking to file post-effective amendments, appropriate
qualifications or exemptions under applicable blue sky or other state securities
laws and appropriate compliance with applicable securities laws, requirements or
regulations) prior to the date which is ninety (90) days after the Filing Date.
Notwithstanding the foregoing, the Company shall not be obligated to enter into
any underwriting agreement for the sale of any of the Registrable Securities.
12.
6.3 All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 6.2
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.
6.4 In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company shall:
(a) use its best efforts to keep such registration, and any
qualification, exemption or compliance under state securities laws which the
Company determines to obtain, continuously effective until the earlier of the
following: (i) the second anniversary of the first date on which no Warrants
remain unexercised or unexpired or (ii) the date all Shares and Warrant Shares
may be sold under Rule 144 during any ninety (90) day period. The period of time
during which the Company is required hereunder to keep the Registration
Statement effective is referred to herein as "the Registration Period."
(b) advise the Holders:
(i) when the Registration Statement or any amendment
thereto has been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making
of any changes in the Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
(c) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of any Registration Statement at the
earliest possible time;
(d) furnish to each Holder, without charge, at least one
copy of such Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits in the form filed with the SEC;
13.
(e) during the Registration Period, deliver to each Holder,
without charge, as many copies of the prospectus included in such Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and the Company consents to the use, consistent with the provisions
hereof, of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the prospectus or any amendment or
supplement thereto. In addition, upon the reasonable request of the Holder and
subject in all cases to confidentiality protections reasonably acceptable to the
Company, the Company will meet with a Holder or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Registrable Securities, and will otherwise
cooperate with any Holder conducting an investigation for the purpose of
reducing or eliminating such Holder's exposure to liability under the Securities
Act, including the reasonable production of information at the Company's
headquarters;
(f) during the Registration Period, deliver to each Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the Company) one copy of the following documents, other than those
documents available via XXXXX: (A) its annual report to its stockholders, if any
(which annual report shall contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified public accountants of recognized standing); (B) if not
included in substance in its annual report to stockholders, its annual report on
Form 10-K (or similar form); (C) each of its quarterly reports to its
stockholders, and, if not included in substance in its quarterly reports to
stockholders, its quarterly report on Form 10-Q (or similar form), and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;
(g) prior to any public offering of Registrable Securities
pursuant to any Registration Statement, register or qualify or obtain an
exemption for offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holders reasonably request in writing, provided that
the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction, and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by such Registration Statement; and
(h) upon the occurrence of any event contemplated by Section
6.4(b)(v) above, the Company shall promptly prepare a post-effective amendment
to the Registration Statement or a supplement to the related prospectus, or file
any other required document so that, as thereafter delivered to purchasers of
the Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
14.
6.5 The Holders shall have no right to take any action to restrain, enjoin
or otherwise delay any registration pursuant to Section 6.2 hereof as a result
of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.
6.6 (a) To the extent permitted by law, the Company shall indemnify each
Holder, each underwriter of the Registrable Securities and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which any registration that has been effected pursuant to this
Agreement, against all claims, losses, damages and liabilities (or action in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 6.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement, prospectus, any amendment
or supplement thereof, incident to any such registration, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances in which they were made, and will reimburse each
Holder, each underwriter of the Registrable Securities and each person
controlling such Holder, for reasonable legal and other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred; provided that the Company will not be
liable in any such case to the extent that any untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder and stated
to be specifically for use in preparation of such Registration Statement,
prospectus; provided that the Company will not be liable in any such case where
the claim, loss, damage or liability arises out of or is related to the failure
of the Holder to comply with the covenants and agreements contained in this
Agreement respecting sales of Registrable Securities, and except that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement or alleged untrue statement or omission or
alleged omission made in the preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the SEC at the time the Registration
Statement becomes effective or in the amended prospectus filed with the SEC
pursuant to Rule 424(b) or in the prospectus subject to completion under Rule
434 of the Securities Act, which together meet the requirements of Section 10(a)
of the Securities Act (the "Final Prospectus"), such indemnity shall not inure
to the benefit of any such Holder, any such underwriter or any such controlling
person, if a copy of the Final Prospectus furnished by the Company to the Holder
for delivery was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act and the Final Prospectus would have cured the defect
giving rise to such loss, liability, claim or damage.
(b) Each Holder will severally, if Registrable Securities held by such
Holder are included in the securities as to which such registration is being
effected, indemnify the Company, each of its directors and officers, each
underwriter of the Registrable Securities and each person who controls the
Company within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 6.6(c) below), arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in the Registration Statement, prospectus, or any amendment or
supplement thereof, incident to any such registration, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to
15.
make the statements therein not misleading, in light of the circumstances in
which they were made, and will reimburse the Company, such directors and
officers, each underwriter of the Registrable Securities and each person
controlling the Company for reasonable legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred, in each case to the extent, but only to
the extent, that such untrue statement or omission or allegation thereof is made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Holder and stated to be specifically for use in
preparation of the Registration Statement, prospectus; provided that the
indemnity shall not apply to the extent that such claim, loss, damage or
liability results from the fact that a current copy of the prospectus was not
made available to the person or entity asserting the loss, liability, claim or
damage at or prior to the time such furnishing is required by the Securities Act
and the Final Prospectus would have cured the defect giving rise to such loss,
claim, damage or liability.
(c) Each party entitled to indemnification under this Section 6.6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless such failure
is materially prejudicial to the Indemnifying Party in defending such claim or
litigation. An Indemnifying Party shall not be liable for any settlement of an
action or claim effected without its written consent (which consent will not be
unreasonably withheld).
(d) If the indemnification provided for in this Section 6.6 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
6.7 (a) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event requiring the preparation of a supplement
or amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required
16.
to be stated therein or necessary to make the statements therein not misleading,
each Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement and prospectus contemplated by Section
6.2 until its receipt of copies of the supplemented or amended prospectus from
the Company and, if so directed by the Company, each Holder shall deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice.
(b) Each Holder shall suspend, upon request of the Company, any
disposition of Registrable Securities pursuant to the Registration Statement and
prospectus contemplated by Section 6.2 during (i) any period not to exceed two
60-day periods within any one 12-month period the Company requires in connection
with a primary underwritten offering of equity securities and (ii) any period,
not to exceed one 45-day period per circumstance or development, when the
Company determines in good faith that offers and sales pursuant thereto should
not be made by reason of the presence of material undisclosed circumstances or
developments with respect to which the disclosure that would be required in such
a prospectus is premature, would have an adverse effect on the Company.
(c) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may request in
writing or as shall be required in connection with any registration referred to
in this Article 6.
(d) Each Holder hereby covenants with the Company (i) not to make any
sale of the Registrable Securities without effectively causing the prospectus
delivery requirements under the Securities Act to be satisfied, and (ii) if such
Registrable Securities are to be sold by any method or in any transaction other
than on a national securities exchange, Nasdaq or in the over-the-counter
market, in privately negotiated transactions, or in a combination of such
methods, to notify the Company at least five (5) business days prior to the date
on which the Holder first offers to sell any such Registrable Securities.
(e) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement are not transferable on
the books of the Company unless the stock certificate submitted to the transfer
agent evidencing such Registrable Securities is accompanied by a certificate
reasonably satisfactory to the Company to the effect that (i) the Registrable
Securities have been sold in accordance with such Registration Statement and
(ii) the requirement of delivering a current prospectus has been satisfied.
(f) Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to such Registration Statement which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
(g) At the end of the Registration Period the Holders shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold, and such
Holders shall notify the Company of the number of shares registered which remain
unsold immediately upon receipt of such notice from the Company.
17.
6.8 With a view to making available to the Holders the benefits of certain
rules and regulations of the SEC which at any time permit the sale of the
Registrable Securities to the public without registration, so long as the
Holders still own Registrable Securities, the Company shall use its reasonable
best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) so long as a Holder owns any Registrable Securities, furnish to
such Holder, upon any reasonable request, a written statement by the Company as
to its compliance with Rule 144 under the Securities Act, and of the Exchange
Act, a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as such Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing a
Holder to sell any such securities without registration.
6.9 The rights to cause the Company to register Registrable Securities
granted to the Holders by the Company under Section 6.1 may be assigned in full
by a Holder in connection with a transfer by such Holder of its Registrable
Securities, provided, however, that such transfer must be made at least 10 days
prior to the Filing Date and that (i) such transfer may otherwise be effected in
accordance with applicable securities laws; (ii) such Holder gives prior written
notice to the Company at least 10 days prior to the Filing Date; and (iii) such
transferee agrees to comply with the terms and provisions of this Agreement, and
such transfer is otherwise in compliance with this Agreement. Except as
specifically permitted by this Section 6.9, the rights of a Holder with respect
to Registrable Securities as set out herein shall not be transferable to any
other Person, and any attempted transfer shall cause all rights of such Holder
therein to be forfeited.
6.10 With the written consent of the Company and the Holders holding at
least a majority of the Registrable Securities that are then outstanding, any
provision of this Article 6 may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) or amended. Upon the effectuation of each such
waiver or amendment, the Company shall promptly give written notice thereof to
the Holders, if any, who have not previously received notice thereof or
consented thereto in writing.
6.11 Additional Common Stock Issuable Upon Delay of Registration and Other
Events.
(a) Except to the extent any delay is due to the failure of a Holder
to reasonably cooperate in providing to the Company such information as shall be
reasonably requested by the Company in writing for use in the Registration
Statement, if the Registration Statement is not filed with the SEC within 30
days following the Closing Date (the "Outside Target Date"), the Company shall
be required to immediately issue to each Holder of Registrable Securities issued
in the Offering (including, without limitation, the Placement Agent Shares)
additional Warrants (the "Additional Warrants") to purchase a number of
additional
18.
shares of Common Stock equal to one-half of one percent (0.5%) of the aggregate
number of Securities issued to such Holder in the Offering (as adjusted but
without reference to any shares issued pursuant to this Section 6.11(a)) for
each week after the Outside Target Date that the Registration Statement remains
unfilled.
(b) All Additional Warrants issuable pursuant to this Section 6.11
shall be duly authorized and all shares of Common Stock issuable upon exercise
of the Additional Warrants, when issued in accordance with the terms hereof for
the consideration expressed herein, will have been duly and validly issued,
fully paid and nonassessable and shall be included in the Registration Statement
contemplated by Section 6.2. Such shares shall be registered in the Holders'
names or the name of the nominee(s) of Holders in such denominations as Holders
shall request pursuant to instructions delivered to the Company.
(c) In no event, however, shall the aggregate number of Additional
Warrants exceed fifteen percent (15%) of the aggregated number of shares of
Common Stock (as adjusted) included sold in the Offering (including the Warrant
Shares).
ARTICLE 7
INDEMNIFICATION
In consideration of each Purchaser's execution and delivery of this
Agreement and its acquisition of the Securities hereunder, and in addition to
all of the Company's other obligations under this Agreement, the Company will
indemnify and hold harmless each Purchaser and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect Purchasers and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (regardless of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by an Indemnitee as a result of, or arising out of, or relating to (a)
any breach of any representation or warranty made by the Company in Section 3 of
this Agreement (b) any breach of any covenant, agreement or obligation of the
Company contained in Section 4 of this Agreement or (c) any cause of action,
suit or claim brought against such Indemnitee and arising out of or resulting
from the execution, delivery, performance, breach or enforcement of this
Agreement by the Company. To the extent that the foregoing undertaking by the
Company is unenforceable for any reason, the Company will make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities that is permissible under applicable law.
ARTICLE 8
DEFINITIONS
8.1 "Certificate of Incorporation" has the meaning set forth in Section
3.3.
19.
8.2 "Closing" means the closing of the purchase and sale of the Securities
under this Agreement.
8.3 "Closing Date" has the meaning set forth in Section 1.3.
8.4 "Common Stock" means the common stock, par value $.02 per share, of
the Company.
8.5 "Company" means Cypress Bioscience, Inc.
8.6 "Environmental Laws" has the meaning set forth in Section 3.11.
8.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
8.8 "Initial Closing Date" has the meaning set forth in Section 1.1.
8.9 "Indemnitees" has the meaning set forth in Section 7.
8.10 "Indemnified Liabilities" has the meaning set forth in Section 7.
8.11 "Intellectual Property" has the meaning set forth in Section 3.9.
8.12 "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, assets or financial condition of the Company or (b) the
ability of the Company to perform its obligations pursuant to the transactions
contemplated by this Agreement or under any instruments to be entered into or
filed in connection herewith.
8.13 "Nasdaq" means The Nasdaq SmallCap Market.
8.14 "Offering" has the meaning set forth in Recital A.
8.15 "Placement Agents" has the meaning set forth in Recital A.
8.16 "Placement Agent Warrants" has the meaning set forth in Section 3.3.
8.17 Placement Agent Shares" has the meaning set forth in Section 6.1(f).
8.18 "Private Placement Memorandum" has the meaning set forth in Section
2.4.
8.19 "Purchasers" means the Purchasers whose names are set forth on the
signature pages of this Agreement, and their permitted transferees.
8.20 "Purchase Price" has the meaning set forth in Section 1.1.
8.21 "Regulation D" means Regulation D as promulgated under by the SEC
under the Securities Act.
8.22 "Rule 144" means Rule 144 promulgated under the Securities Act, or any
successor rule.
20.
8.23 "SEC" means the United States Securities and Exchange Commission.
8.24 "SEC Documents" has the meaning set forth in Section 3.6.
8.25 "Securities" has the meaning set forth in Section 1.1.
8.26 "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute.
8.27 "Shares" has the meaning set forth in Section 1.1.
8.28 "Stockholder Approval" shall mean the receipt by the Company of the
affirmative vote of a majority of the shares present in person or represented by
proxy and entitled to vote at the stockholder meeting in compliance with Rule
4350(i) of the National Association of Securities Dealers, Inc.
8.29 "to the Company's knowledge" and variations thereon mean to the actual
knowledge of Xxx Xxxxxxxx.
8.30 "Warrants" has the meaning set forth in Section 1.1.
8.31 "Warrant Purchase Price" has the meaning set forth in Section 1.1.
8.32 "Warrant Shares" has the meaning set forth in Section 3.4.
ARTICLE 9
GOVERNING LAW; MISCELLANEOUS
9.1 Governing Law; Jurisdiction. This Agreement will be governed by and
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of Delaware with respect to any dispute arising under this Agreement
or the transactions contemplated hereby or thereby.
9.2 Counterparts; Signatures by Facsimile. This Agreement may be executed
in two or more counterparts, all of which are considered one and the same
agreement and will become effective when counterparts have been signed by each
party and delivered to the other parties. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
9.3 Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
9.4 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or
21.
unenforceable under any law will not affect the validity or enforceability of
any other provision hereof.
9.5 Entire Agreement; Amendments. This Agreement (including all schedules
and exhibits hereto) constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement supersedes all prior agreements
and understandings among the parties hereto with respect to the subject matter
hereof. No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
9.6 Notices. Any notices required or permitted to be given under the terms
of this Agreement must be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) and will be effective five days after being placed
in the mail, if mailed by regular U.S. mail, or upon receipt, if delivered
personally, or by courier (including a recognized overnight delivery service),
in each case addressed to a party. The addresses for such communications are:
If to the Company: Chief Executive Officer
Cypress Bioscience, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx Godward LLP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxx, Esq.
If to a Purchaser: To the address set forth immediately below such
Purchaser's name on the signature pages hereto.
Each party will provide written notice to the other parties of any change
in its address.
9.7 Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties and their successors and assigns. The Company will
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchasers, and no Purchaser may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, an Purchaser may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is an accredited Purchaser (within the meaning
of Regulation D under the Securities Act) and agrees in writing to be bound by
this Agreement. This provision does not limit the Purchaser's right to transfer
the Securities pursuant to the terms of this Agreement or to assign the
Purchaser's rights hereunder to any such transferee pursuant to the terms of
this Agreement.
22.
9.8 Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
9.9 Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
9.10 No Strict Construction. The language used in this Agreement is deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
9.11 Equitable Relief. The Company recognizes that, if it fails to perform
or discharge any of its obligations under this Agreement, any remedy at law may
prove to be inadequate relief to the Purchasers. The Company therefore agrees
that the Purchasers are entitled to seek temporary and permanent injunctive
relief in any such case. Each Purchaser also recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Company. Each Purchaser therefore
agrees that the Company is entitled to seek temporary and permanent injunctive
relief in any such case.
23.
In Witness Whereof, the undersigned Purchasers and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
Cypress Bioscience, Inc.
By: /s/ Xxx X. Xxxxxxxx
-----------------------------
Name: Xxx X. Xxxxxxxx
---------------------------
Title: Chief Executive Officer,
-------------------------
President and Secretary
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
OMNIBUS SIGNATURE PAGE TO
CYPRESS BIOSCIENCE, INC.
SECURITIES PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Securities 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 Securities Purchased ________
Aggregate Purchase Price ______________
