Exhibit 10.54
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March
20, 1998, by and between GENZYME TRANSGENICS CORPORATION, a Massachusetts
corporation, with headquarters located at Xxxx Xxxxxxxx Xxxx, Xxxxxxxxxx, XX,
00000 (the "Company"), and the Buyers set forth on the signature page hereto
(the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended, (the "1933 Act"), and Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the 1933 Act;
B. The Company has authorized a new series of preferred stock, designated as its
Series A Convertible Preferred Stock (the "Preferred Stock"), having the voting
powers, preferences and rights set forth in the Certificate of Vote of Directors
Establishing a Series of a Class of Stock attached hereto as Exhibit "A" (the
"Certificate of Designation");
C. The Preferred Stock is convertible into shares of Common Stock, par value
$.01 per share, of the Company (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in the Certificate of Designation;
D. The Company has authorized the issuance to the Buyers of warrants, to
purchase in the aggregate 400,000 shares of Common Stock, in the form attached
hereto as Exhibit "B" (the "Warrants");
E. The Buyers desire to purchase from the Company and the Company desires to
issue and sell to the Buyers, upon the terms and conditions and in reliance on
the representations and warranties set forth in this Agreement, (i) Twenty
Thousand (20,000) shares of Preferred Stock, and (ii) the Warrants, for an
aggregate purchase price of Twenty Million Dollars ($20,000,000); and
F. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit "C" (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide to the Buyers certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.
a. Purchase of Preferred Shares and Warrants. The Company shall
issue and sell to the Buyers and the each Buyer agrees, on a several and not a
joint basis, to purchase from the Company such number of shares of Preferred
Stock (together with any Preferred Stock issued in replacement thereof or as a
dividend thereon or otherwise with respect thereto in accordance with the terms
thereof, the "Preferred Shares") and Warrants set forth under Buyer's name on
the signature page hereto executed by each Buyer, for an aggregate purchase
price of Twenty Million U.S. Dollars (the "Purchase Price") and a per share of
Preferred Stock purchase price of $1,000. The issuance, sale and purchase of the
Preferred Shares and Warrants shall take place at the closing (the "Closing"),
subject to the satisfaction (or waiver) of the conditions thereto set forth in
Section 6 and Section 7 below. At the Closing, the Company shall issue and sell
to the Buyers and the Buyers shall purchase from the Company Twenty Thousand
(20,000) Warrants for each $1,000,000 of Preferred Shares purchased.
b. Form of Payment. The Purchasers shall pay the Purchase Price for
the Preferred Shares by wire transfer to the account designated pursuant to the
Escrow Agreement by and among the Company, each Purchaser and the escrow agent
("Escrow Agent") designated therein in the form attached hereto as Exhibit "D"
("Escrow Agreement"), all in accordance with the terms of the Escrow Agreement.
Upon satisfaction of the other conditions to Closing specified herein, the
escrowed Purchase Price shall be released to the Company against delivery of
duly executed certificates representing the number of Preferred Shares and
Warrants which the Buyers are purchasing.
c. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, and further
subject to the terms and conditions of the Escrow Agreement, the date and time
of the issuance and sale of the Preferred Shares and Warrants pursuant to this
Agreement shall be 10:00 a.m. Pacific Standard Time on March 20, 1998 or such
other mutually agreed upon date or time (the "Closing Date").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants to the Company as of the date
hereof and as of the Closing, severally and solely with respect to itself and
its purchase hereunder and not with respect to any other Buyer, as set forth in
this Section 2. Each Buyer makes no other representations or warranties, express
or implied, to the Company in connection with the transactions contemplated
hereby and any and all prior representations and warranties, if any, which may
have been made by the Buyers to the Company in connection with the transactions
contemplated hereby shall be deemed to have been merged in this Agreement and
any such prior representations and warranties, if any, shall not survive the
execution and delivery of this Agreement.
a. Investment Purpose. As of the date hereof, the Buyer is
purchasing the Preferred Shares and the shares of Common Stock issuable upon
conversion thereof (the "Conversion Shares") and the Warrants and the shares of
Common Stock issuable upon exercise thereof (the "Warrants Shares", and
collectively with the Preferred Shares, Conversion Shares and Warrants, the
"Securities") for its own account for investment only and not with a present
view towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the 1933 Act.
b. Accredited Investor Status. The Buyer is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D. Buyer has delivered an
Investor Questionnaire in the form of Exhibit "E" to the Company and Shoreline
Pacific (as defined below).
c. Reliance on Exemptions. The Buyer 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 Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.
d. Information. The Buyer and its advisors, if any, have 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
which have been requested by the Buyer or its advisors. The Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and have received what the Buyer believes to be satisfactory answers to
any such inquiries. Neither such inquiries nor any other due diligence
investigation conducted by Buyer or any of its advisors or representatives shall
modify, amend or affect Buyer's right to rely on the Company's representations
and warranties contained in Section 3 below. The Buyer acknowledges and
understands that its investment in the Securities involves a significant degree
of risk, including the risks reflected in the SEC Documents (as defined below).
e. Governmental Review. The Buyer 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.
f. Transfer or Resale. The Buyer understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the 1933 Act or any applicable state securities
laws and consequently the Buyer may have to bear the risk of owning the
Securities for an indefinite period of time, and the Securities may not be
transferred unless (a) subsequently included in an effective registration
statement under the 1933 Act; (b) the Buyer shall have delivered to the Company
an opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Securities to be sold or transferred
may be sold or transferred pursuant to an exemption from such registration; (c)
sold under Rule 144 promulgated under the 1933 Act (or a successor rule) or (d)
sold or transferred to an affiliate (as defined in Rule 144) of the Buyer; (ii)
any sale of such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such 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 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder (in each case, other than pursuant to the Registration Rights
Agreement). Notwithstanding the foregoing or anything else contained herein to
the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement. The Buyer covenants it
will not make any sale, transfer or other disposition of the Securities in
violation of federal or state securities laws.
g. Legends. The Buyer understands that the certificates representing
the Preferred Shares, Warrants and, until such time as the Conversion Shares and
Warrants Shares have been registered under the 1933 Act or otherwise may be sold
by the Buyer under Rule 144, as contemplated by the Registration Rights
Agreement, the Conversion Shares and Warrant Shares, may 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 have been acquired for
investment and 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.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any certificate upon which it
is stamped, if, unless otherwise required by applicable state securities laws,
(a) the Securities represented by such certificate are registered for sale under
an effective registration statement filed under the 1933 Act, and a conversion
notice or exercise notice containing a representation and covenant with respect
to compliance with applicable prospectus delivery requirements, if any, has been
delivered to the Company with respect to the Conversion Shares or Warrant Shares
to be issued without legend or (b) such holder provides the Company with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Securities may be made without registration under the 1933 Act and such
sale either has occurred or may occur without restriction on the manner of such
sale or transfer or (c) such holder provides the Company with reasonable
assurances that such Security can be sold under Rule 144(k) under the 1933 Act
(or a successor
rule thereto). The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the 1933 Act and the rules and regulations promulgated thereunder.
h. Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of the Buyer and are valid and binding agreements of the Buyer
enforceable in accordance with their 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.
i. Residency. The Buyer is a resident of the jurisdiction set forth
immediately below such Buyer's name on the signature pages hereto.
j. Compliance with Short Sale Regulations. To the extent the Buyer
engages in any hedging transaction involving "short sales" of the Company's
Common Stock, the Buyer agrees to comply with applicable rules and regulations,
including exemptions therefrom, applying to short sales.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyers that:
a. Organization and Qualification. The Company and each of its
Subsidiaries (as defined below), if any, is duly incorporated, validly existing
and in good standing under the laws of 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. Schedule 3(a) sets forth a list of
all of the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries 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. "Material Adverse Effect" means any material adverse effect on (i) the
business, operations, assets or financial condition or prospects of the Company
or its Subsidiaries, if any, taken as a whole, or (ii) on the ability of the
Company to perform its obligations hereunder or under the agreements or
instruments to be entered into or filed in connection herewith, or (iii) the
Securities. "Subsidiaries" means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, 50% or more of the equity or other ownership interests.
b. Authorization; Enforcement. (i) The Company has all requisite
corporate power and authority to file and perform its obligations under the
Certificate of Designation and to enter into and to perform its obligations
under this Agreement, the Registration Rights Agreement, the Escrow Agreement
and the Warrants and to consummate the transactions contemplated hereby and
thereby and to issue the Securities, in accordance with the terms hereof and
thereof, (ii) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation the filing of the Certificate of Designation, the
issuance of the Preferred Shares and the Warrants and the issuance and
reservation for issuance of the Conversion Shares and Warrant Shares issuable
upon conversion or exercise thereof) have been duly authorized by the Company's
Board of Directors and no further consent or authorization of the Company, its
Board or Directors, or its shareholders is required, (iii) this Agreement, the
Registration Rights Agreement, the Escrow Agreement and the Warrants have been
duly executed and delivered and the Certificate of Designation has been duly
filed by the Company, and (iv) each of this Agreement , the Registration Rights
Agreement, the Escrow Agreement, the Warrants and the Certificate of Designation
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.
c. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (i) 40,000,000 shares of Common Stock of which
17,406,912 shares are issued and outstanding, 4,115,000 shares are reserved for
issuance pursuant to the Company's employee and director stock option plans,
210,600 shares are reserved for issuance pursuant to securities (other than
securities issued under the foregoing plans, the Preferred Shares and the
Warrants) exercisable for, or convertible into or exchangeable for shares of
Common Stock and 3,149,141 shares are reserved for issuance upon conversion of
the Preferred Shares and exercise of the Warrants (subject to adjustment
pursuant to the Company's covenant set forth in Section 4(h) below); (ii)
5,000,000 shares of undesignated preferred stock, par value $.01 per share, of
which no shares are issued and outstanding. 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, 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 disclosed in
Schedule 3(c) and except for the transactions contemplated hereby, as of the
date of this Agreement, (i) there are no outstanding options, warrants, scrip,
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 any of
its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, and (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the
1933 Act (except the Registration Rights Agreement) 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 Preferred Shares, Conversion Shares,
Warrants or Warrant Shares. The Company has furnished to the Buyers true and
correct copies of the Company's Certificate of Incorporation, as amended, as in
effect on the date hereof ("Certificate of Incorporation"), the Company's
By-laws as in effect on the date hereof (the "By-laws"), and the terms of all
securities convertible into or exercisable for Common Stock of the Company and
the material rights of the holders thereof in respect thereto. The Company shall
provide each Buyer with a written update of this representation signed by the
Company's Chief Executive or Treasurer on behalf of the Company as of the
Closing Date.
d. Issuance of Shares. The Preferred Shares, Conversion Shares and
Warrant Shares are duly authorized and, upon issuance in accordance with the
terms of this Agreement (including the issuance of the Conversion Shares upon
conversion of the Preferred Shares in accordance with the Certificate of
Designation and the issuance of the Warrant Shares upon exercise of the Warrants
in accordance with the terms thereof) will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims, encumbrances, and
charges with respect to the issue thereof and shall 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. The term Conversion Shares
includes the shares of Common Stock issuable upon conversion of the Preferred
Shares, including without limitation, such additional shares, if any, as are
issuable as a result of the events described in Section 2(c) of the Registration
Rights Agreement. The Company understands and acknowledges the potentially
dilutive effect to the Common Stock of the issuance of the Conversion Shares and
Warrant Shares upon conversion or exercise of the Preferred Shares or Warrants.
The Company further acknowledges that its obligation to issue Conversion Shares
upon conversion of the Preferred Shares and Warrant Shares upon exercise of the
Warrants in accordance with this Agreement, the Certificate of Designation and
the Warrants is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company. Taking the foregoing into account, the Company's Board of Directors
has determined that the issuance of the Securities and the consummation of the
other transactions contemplated hereby are in the best interests of the Company
and its stockholders.
e. Series of Preferred Stock. Other than the Preferred Stock the
Company has not designated or established any other preferred stock of the
Company. The terms, designations, powers, preferences and relative,
participating, and optional or special rights, and the qualifications,
limitations, and restrictions of the Preferred Stock are as stated in the
Certificate of Designation.
f. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Warrants by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the filing of the Certificate of
Designation and the issuance and
reservation for issuance of the Preferred Shares, Warrants, Conversion Shares
and Warrant Shares) will not (i) conflict with or result in a violation of any
provision of the Certificate of Incorporation or By-laws or (ii) except as
described in Schedule 3(f), 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 or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including U.S. 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 any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries 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). Neither the
Company nor any of its Subsidiaries is in violation of its Certificate of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that (and no event has occurred which,
without notice or lapse of time or both) would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries, if any, are not being conducted, and shall
not be conducted so long as a Buyer owns any of the Securities, 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. Except as specifically contemplated by this Agreement and as
required under the 1933 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, the Registration Rights
Agreement or the Warrants or to perform its obligations under the Certificate of
Designation in each case in accordance with the terms hereof or thereof. Except
as discussed in Schedule 3(f), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company is not in violation of the listing requirements of Nasdaq (as defined
below) and does not reasonably anticipate that the Common Stock will be delisted
by Nasdaq in the foreseeable future. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing.
g. SEC Documents, Financial Statements. Since January 1, 1996, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 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 Buyer 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 1934 Act or the 1933 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 U.S. generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to 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 December 31, 1996 of
the type required under generally accepted accounting principles to be reflected
in such financial statements. Such liabilities incurred subsequent to December
31, 1996 are not, in the aggregate, material to the financial condition or
operating results of the Company.
h. Absence of Certain Changes. Except as disclosed in the SEC
Documents, since December 31, 1996, there has been no material adverse change
and no material adverse development in the assets, liabilities, business,
properties, operations, financial condition, prospects or results of operations
of the Company or any of its Subsidiaries.
i. Absence of Litigation. 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 or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries or any of its officers or
directors acting as such that could, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries are
aware of any facts or circumstances which would reasonably be expected to give
rise to any action or
proceeding described in the foregoing sentence. Schedule 3(i) contains a
complete list and summary description of any pending or, to the knowledge of the
Company, threatened proceeding against or affecting the Company or any of its
Subsidiaries, without regard to whether it could have a Material Adverse Effect.
j. Patents, Copyrights, etc. The Company and each of its
Subsidiaries owns or possesses the requisite 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 ("Intellectual Property") necessary to enable it to conduct
its business as now operated (and, except as set forth in Schedule 3(j) hereof,
to the best of the Company's knowledge, as presently contemplated to be operated
in the future); there is no claim or action by any person pertaining to, or
proceeding pending, or to the Company's knowledge threatened, which challenges
the right of the Company or of a Subsidiary with respect to any Intellectual
Property necessary to enable it to conduct its business as now operated (and,
except as set forth in Schedule 3(j) hereof, to the best of the Company's
knowledge, as presently contemplated to be operated in the future); to the best
of the Company's knowledge, the Company's or its Subsidiaries' products,
services and processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company and
each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.
k. No Materially Adverse Contracts, Etc. Neither the Company nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
reasonable judgment of the Company's officers has or is expected in the future,
individually or in the aggregate, to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is a party to any contract or agreement
which in the reasonable judgment of the Company's officers has or is expected to
have a Material Adverse Effect.
l. Tax Status. Except as set forth on Schedule 3(l), the Company and
each of its Subsidiaries has 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 and each
of its Subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) and has paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. 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.
Except as set forth on Schedule 3(l), none of the Company's tax returns is
presently being audited by any taxing authority.
m. Certain Transactions. Except as disclosed in the SEC Documents or
as set forth on Schedule 3(m) and except for arm's length transactions pursuant
to which the Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or any of its
Subsidiaries could obtain from third parties and other than the grant of stock
options or the ownership of other securities and rights disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.
n. Disclosure. All information relating to or concerning the Company
or any of its Subsidiaries set forth in this Agreement and provided to the
Buyers pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company's reports filed under the 1934 Act
are being incorporated into an effective registration statement filed by the
Company under the 1933 Act).
o. Acknowledgment Regarding Buyer's Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm's length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Buyer is acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
advice given by any Buyer or any of its representatives or agents in connection
with this Agreement and the transactions contemplated hereby is merely
incidental to the Buyer's purchase of the Securities and has not been relied on
by the Company in any way. The Company further represents to each Buyer that the
Company's decision to enter into this Agreement has been based solely on an
independent evaluation by the Company and its representatives.
p. 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 1933 Act of the issuance of the
Securities to the Buyers. The issuance of the Securities to the Buyers will not
be integrated with any other issuance of the Company's securities (past, current
or future) for purposes of the 1933 Act or any applicable rules of Nasdaq.
q. No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby,
except for dealings with Shoreline Pacific Institutional Financial, the
Institutional Division of Financial West Group ("Shoreline Pacific"), whose
commissions and fees will be paid for by the Company.
r. Permits; Compliance. The Company and each of its Subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted except those the failure of which to possess would
not, individually or in the aggregate, have a Material Adverse Effect
(collectively, the "Company Permits"), and there is no action pending or, to the
knowledge of the Company, threatened regarding suspension or cancellation of any
of the Company Permits. Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of, any of the Company Permits, except
for any such conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Since December 31, 1996, neither the Company nor any of its Subsidiaries has
received any notification with respect to possible conflicts, defaults or
violations of applicable laws, except for notices relating to possible
conflicts, defaults or violations, which conflicts, defaults or violations would
not have a Material Adverse Effect.
s. Environmental Matters.
(i) Except as set forth in Schedule 3(s), there are, to the
Company's knowledge, with respect to the Company or any of its Subsidiaries or
any predecessor of the Company, no past or present violations of Environmental
Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental liability or any
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or similar federal, state, local or foreign laws and
neither the Company nor any of its Subsidiaries has received any notice with
respect to any of the foregoing, nor is any action pending or, to the Company's
knowledge, threatened in connection with any of the foregoing. The term
"Environmental Laws" means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants contaminants, or toxic
or hazardous substances or wastes (collectively, "Hazardous Materials") into the
environment,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as
well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
(ii) Other than those that are or were stored, used or
disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was owned, leased or used
by the Company or any of its Subsidiaries.
(iii) Except as set forth in Schedule 3(s), to the best
knowledge of the Company, there are no underground storage tanks on or under any
real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
t. Title to Property. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(t) or such
as would not have a Material Adverse Effect. Any real property and facilities
held under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as would not have
a Material Adverse Effect.
u. Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
v. Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
w. Employment Matters. The Company and its Subsidiaries are 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. There are no pending investigations
involving the Company or any of its Subsidiaries by the U.S. Department of Labor
or any other governmental agency responsible for the enforcement of such
federal, state, local or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company or any of its Subsidiaries
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company or any of its Subsidiaries. Except as set forth in
Schedule 3(w), no representation question exists respecting the employees of the
Company or any of its Subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or any of its
subsidiaries. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the Company or any of
its Subsidiaries. No material labor dispute with the employees of the Company or
any of its Subsidiaries exists or, to the knowledge of the Company, is imminent.
x. ERISA Matters. Except as set forth on Schedule 3(x), the Company
has no "employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, or intended to be
qualified under Section 401(a) of the Internal Revenue Code.
y. 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.
z. No General Solicitation. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts to satisfy
timely each of the conditions described in Section 6 and 7 of this Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities
for sale to the Buyers pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. The Company agrees to file a Form
8-K disclosing this Agreement and the transactions contemplated hereby with the
SEC within ten (10) business days following the Closing Date.
c. Reporting Status; Eligibility to Use Form S-3. The Company's
Common Stock is registered under Section 12(b) of the 1934 Act. Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company currently
meets, and will take all reasonably necessary action to continue to meet, the
"registrant eligibility" requirements set forth in the general instructions to
Form S-3.
d. Use of Proceeds. The Company shall use the proceeds from the sale
of the Preferred Shares and Warrants in the manner set forth in Schedule 4(d)
attached hereto and made a part hereof and shall not otherwise, directly or
indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership, enterprise or other person (except in connection with
its direct or indirect Subsidiaries).
e. Expenses. The Company and the Buyers shall each be liable for
their own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, attorneys' and
consultants' fees and expenses.
f. Financial Information. The Company agrees to file all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act. The financial
statements of the Company will be prepared in accordance with generally accepted
accounting principles, consistently applied, and will fairly present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries and results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). The Company agrees to send the following reports to
each Buyer until such Buyer transfers, assigns, or sells all of the Securities:
(i) within ten (10) days after the filing with the SEC, a copy of its Annual
Report on Form 10-K, its Quarterly Reports on Form 10- Q and any Current Reports
on Form 8-K; (ii) within one (1) day after release, copies of all press releases
issued by the Company or any of its Subsidiaries; and (iii) contemporaneously
with the making available or giving to the stockholders of the Company, copies
of any notices or other information the Company makes available or gives to such
stockholders.
g. Reservation of Shares. Subject to the Maximum Share Amount, the
Company shall at all times have authorized, and reserved for the purpose of
issuance, a sufficient number of shares of Common Stock to provide for the full
conversion of the
outstanding Preferred Shares and issuance of the Conversion Shares in connection
therewith (based on the Conversion Price of the Preferred Shares in effect from
time to time) and the full exercise of the Warrants and the issuance of the
Warrant Shares in connection therewith (based upon the Exercise Price of the
Warrants in effect from time to time). The Company shall not reduce the number
of shares of Common Stock reserved for issuance upon conversion of the Preferred
Shares or exercise of the Warrants without the consent of the Buyers, which
consent will not be unreasonably withheld. The Company shall use its best
efforts at all times to maintain the number of shares of Common Stock so
reserved for issuance at no less than the lesser of (i)) the Maximum Share
Amount (as defined in the Certificate of Designation or (ii) two (2) times the
number that is then actually issuable upon full conversion of the Preferred
Shares plus the number that is then actually issuable upon full exercise of the
Warrants (based on the Conversion Price of the Preferred Shares or Exercise
Price of the Warrants in effect from time to time). If at any time the number of
shares of Common Stock authorized and reserved for issuance is below the number
of Conversion Shares and Warrant Shares issued and issuable upon conversion of
the Preferred Shares and exercise of the Warrants (based on the Conversion Price
of the Preferred Shares and Exercise Price of the Warrants then in effect), the
Company will promptly take all corporate action necessary to authorize and
reserve a sufficient number of shares, including, without limitation, calling a
special meeting of shareholders to authorize additional shares to meet the
Company's obligations under this Section 4(g), in the case of an insufficient
number of authorized shares, and using its best efforts to obtain shareholder
approval of an increase in such authorized number of shares.
h. Listing. The Company shall, on or before 10 business days
following the date hereof, secure the listing of the Conversion Shares and
Warrant Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain such listing of all Conversion
Shares and Warrant Shares from time to time issuable (subject to the Maximum
Share Limit (as defined in the Certificate of Designation)) upon conversion or
exercise of the Preferred Shares and the Warrants. The Company will use its best
efforts to obtain and maintain the listing and trading of its Common Stock on
the Nasdaq National Market System ("Nasdaq"), the American Stock Exchange
("AMEX") or the New York Stock Exchange ("NYSE"), and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Nasdaq or other exchanges, as applicable. The Company
shall promptly provide to each Buyer copies of any notices it receives regarding
the continued eligibility of the Common Stock for listing on the Nasdaq or other
principal exchange or quotation system on which the Common Stock is listed or
traded.
i. Corporate Existence. So long as a Buyer beneficially owns any
Securities, the Company shall maintain its corporate existence in good standing
under the laws of the jurisdiction in which it is incorporated and shall not
sell all or substantially all of the Company's assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company's
assets, where the surviving or successor entity in such transaction (i) assumes
the Company's obligations hereunder and under the agreements and
instruments entered into or filed in connection herewith and (ii) is a publicly
traded corporation whose Common Stock is listed for trading on AMEX, Nasdaq or
NYSE.
j. Solvency; Compliance with Law. The Company (both before and after
giving effect to the transactions contemplated by this Agreement) is solvent
(i.e., its assets have a fair market value in excess of the amount required to
pay its probable liabilities on its existing debts as they become absolute and
matured) and currently the Company has no information that would lead it to
reasonably conclude that the Company would not have, nor does it intend to take
any action that would impair, its ability to pay its debts from time to time
incurred in connection therewith as such debts mature. 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.
k. Insurance. The Company shall maintain liability, casualty and
other insurance (subject to customary deductions and retentions) with
responsible insurance companies against such risk of the types and in the
amounts customarily maintained by companies of comparable size to the Company.
l. No Integration. The Company will not conduct any future offering
that will be integrated with the issuance of the Securities for purposes of the
rules promulgated by the SEC or NASD.
m. No Qualified Opinion. The Company did not receive a qualified
opinion from its auditors with respect to its most recent fiscal year end and
does not anticipate or know of any basis upon which its auditors might issue a
qualified opinion in respect of its current fiscal year.
n. Additional Equity Capital; Right of First Refusal. Subject to the
exceptions described below, the Company will not, without the prior written
consent of the Buyer, negotiate or contract with any party to obtain additional
equity financing (including debt financing with an equity component) that
involves (A) the issuance of Common Stock at a discount to the market price of
the Common Stock on the date of original issuance of such securities (including
Common Stock issued directly or indirectly upon conversion or exercise of such
security, and in each case taking into account the value of any warrants or
options issued in connection therewith) or (B) the issuance of convertible
securities that are convertible into an indeterminate number of shares of Common
Stock during the period (the "Lock-up Period") beginning on the Closing Date and
ending on the later of (i) ninety (90) days from the Closing Date and (ii)
thirty (30) days from the date the Registration Statement (as defined in the
Registration Rights Agreement) is declared effective (the limitations referred
to in this sentence are referred to as the "Capital Raising Limitations"). The
Capital Raising Limitations shall not apply to any transaction involving (i)
issuances of securities in a firm commitment underwritten public offering
(excluding a continuous offering pursuant to Rule
415 under the 1933 Act),(ii) issuances of securities as consideration for a
merger, consolidation or sale of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital) or financing arrangement with an affiliated company, or in
connection with the disposition or acquisition of a business, product or license
by the Company or (iii) the issuance of up to $10,000,000 in the aggregate of
common stock at prevailing market prices within 120 days following the Closing
Date. The Capital Raising Limitations also shall not apply to the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof or to the grant
of additional options or warrants, or the issuance of additional securities,
under any Company stock option or restricted stock plan approved by the
Company's board of directors.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of each Buyer or its nominee, for the
Conversion Shares and Warrant Shares in such amounts as specified from time to
time by such Buyer to the Company upon conversion or exercise of the Preferred
Shares and the Warrants on and following the date that is 90 days following the
Closing Date, or such earlier date as a registration statement is effective with
respect to the Conversion Shares and/or Warrant Shares, respectively (the
"Irrevocable Transfer Agent Instructions"). All such certificates shall bear the
restrictive legend as and when specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares or
Warrant Shares, prior to registration of the Conversion Shares or Warrant Shares
under the 1933 Act), will be given by the Company to its transfer agent and that
the Securities shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section shall affect in any way
the Buyer's obligations and agreement set forth in Section 2(g) hereof to comply
with all applicable prospectus delivery requirements, if any, upon resale of the
Securities. If a Buyer provides the Company with an opinion of counsel in form,
substance and scope customary for opinions of counsel in comparable
transactions, that registration of a resale by such Buyer of any of the
Securities is not required under the 1933 Act or the Buyer provides the Company
with reasonable assurances that such Securities may be sold under Rule 144, the
Company shall permit the transfer, and, in the case of the Conversion Shares or
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such Buyer.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the necessity
of showing economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Preferred
Shares and the Warrants to a Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date of each of the following conditions
thereto, provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion:
a. The applicable Buyer shall have executed this Agreement, the
Registration Rights Agreement and the Escrow Agreement, and delivered the same
to the Company and the Escrow Agent.
b. The applicable Buyer shall have delivered the Purchase Price to
the Escrow Agent in accordance with Section 1(b) above, and an aggregate
Purchase Price of at least $15,000,000 shall have been received by the Escrow
Agent.
c. The Certificate of Designation shall have been filed with the
Secretary of State of the State of Massachusetts.
d. The representations and warranties of the applicable Buyer shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date which representations and warranties
shall be correct as of such date), and the applicable Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the applicable Buyer at or prior to the Closing Date.
e. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Preferred Shares
and the Warrants at the Closing is subject to the satisfaction, at or before the
Closing Date of each of the following conditions, provided that these conditions
are for each such Buyer's respective benefit and may be waived by each such
Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement, the Registration
Rights Agreement and the Escrow Agreement, and delivered the same to the Buyer.
b. The Certificate of Designation shall have been filed with the
Secretary of State of the State of Massachusetts, and evidence thereof
reasonably satisfactory to the applicable Buyer shall have been delivered to
such Buyer.
c. The Company shall have delivered to the Escrow Agent duly
executed certificates (in such denominations as the applicable Buyer shall
reasonably request) representing the Preferred Shares and the Warrants being so
purchased in accordance with Section 1(b) above.
d. The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date which representations and warranties
shall be true and correct as of such date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. The Buyers shall have
received a certificate or certificates, executed by the Chief Executive Officer
or the Treasurer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by such Buyer
including, but not limited to certificates with respect to the Company's
Certificate of Incorporation, By-laws, Board of Directors' resolutions relating
to the transactions contemplated hereby and the incumbency and signatures of
each of the officers of the Company who shall execute on behalf of the Company
any document delivered on the Closing Date.
e. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
f. Trading and listing of the Common Stock on Nasdaq shall not have
been suspended by the SEC or Nasdaq.
g. The Buyers shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyers and in substantially the same form as Exhibit "F"
attached hereto.
h. The Buyers shall have received an officer's certificate described
in Section 3(c) above, dated as of the Closing Date.
i. The Common Stock required to be authorized and reserved pursuant
to Section V(A) of the Certificate of Designation shall have been duly
authorized and reserved by the Company.
j. An aggregate Purchase Price of at least $20,000,000 shall have
been received by the Escrow Agent.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. This Agreement shall be governed by
and interpreted in accordance with the laws of New York State 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
New York, New York with respect to any dispute arising under this Agreement, the
agreements entered into in connection herewith or the transactions contemplated
hereby or thereby.
b. Counterparts; Signatures by Facsimile. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party. This Agreement, once executed by
a party, may be delivered to the other party hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall 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) or by facsimile, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
Genzyme Transgenics Corporation
Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to a Buyer: To the address set forth immediately below such Buyer's
name on the signature pages hereto.
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except as
provided herein or therein, neither the Company nor any Buyer shall assign this
Agreement, the Registration Rights Agreement or the Warrants or any rights or
obligations hereunder or thereunder without the prior written consent of the
other. Notwithstanding the foregoing, any Buyer may assign its rights hereunder
to any person that purchases Securities in a private transaction from a Buyer or
to any of its "affiliates," as that term is defined under the 1934 Act, without
the consent of the Company.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. The representations and warranties of the Company and
the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive
the closing hereunder notwithstanding any due diligence investigation conducted
by or on behalf of any Buyer. The Company agrees to indemnify and hold harmless
each Buyer and all such Buyer's respective officers, directors, employees,
partners, members, affiliates, and agents for loss or damage arising as a result
of or related to any breach or alleged breach by the Company of any of its
representations, warranties and covenants set forth in Sections 3 and 4 hereof
or any of its
covenants and obligations under this Agreement or the Registration Rights
Agreement, including advancement of expenses as they are incurred.
j. Publicity. The Company and each Buyer shall have the right to
review a reasonable period of time before issuance of any press releases, or
relevant portions of any SEC or Nasdaq filings, or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of the Buyers, to make
any press release or SEC or Nasdaq filings with respect to such transactions as
is required by applicable law and regulations (although the Buyers shall be
consulted by the Company in connection with any such press release prior to its
release and filing and shall be provided with a copy thereof and be given an
opportunity to comment thereon).
k. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. No Strict Construction. The language used in this Agreement will
be 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.
m. Equitable Relief. The Company recognizes that in the event that
it fails to perform, observe, or discharge any or all of its obligations under
this Agreement, any remedy at law may prove to be inadequate relief to the
Buyers. The Company therefore agrees that the Buyers shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
GENZYME TRANSGENICS CORPORATION
By:/s/ Xxxx X. Xxxxx
----------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, Finance
[SIGNATURES CONTINUED ONTO NEXT PAGE]
BUYERS:
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P.
Investment Manager
By: RGC General Partner Corp.
By: /s/ Xxxxx X. Block
------------------------
Name: Xxxxx X. Xxxxx
Its: Managing Director
Aggregate Subscription Amount: $10,000,000
No. of Shares of Preferred Stock: 10,000
No. of Warrants: 200,000
RESIDENCE: Cayman Islands
ADDRESS:
x/x Xxxx Xxxx Xxxxxxx Xxxxxxxxxx, X.X.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attn: Xxxxx Xxxxx
[SIGNATURES CONTINUED ONTO NEXT PAGE]
BUYER SIGNATURES CONTNUED:
SHEPHERD INVESTMENTS INTERNATIONAL, LTD.
By:/s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Managing Member, Staro Asset Management, LLC
Investment Manager, Shepherd Investments International, Ltd.
DATE: 3-20-98
Aggregate Subscription Amount: $5,000,000
No. of Shares of Preferred Stock: 5,000
No. of Warrants: 100,000
RESIDENCE: British Virgin Islands
ADDRESS: c/o Staro Asset Management, LLC
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000; and
Tel: (000) 000-0000 x00
Attn: Mr. Xxxxx Xxxxxxxx
XXXXX INTERNATIONAL
By:/s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Managing Member, Staro Asset Management, LLC
Investment Manager, Xxxxx International
DATE:3-20-98
Aggregate Subscription Amount: $5,000,000
No. of Shares of Preferred Stock: 5,000
No. of Warrants: 100,000
RESIDENCE: Bermuda
ADDRESS: c/o Staro Asset Management, LLC
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000; and
Tel: (000) 000-0000 x00
Attn: Mr. Xxxxx Xxxxxxxx
Exhibit A
Certificate of Designation
Exhibit B
Stock Purchase Warrant
Exhibit C
Registration Rights Agreement
Exhibit D
Form of Escrow Agreement
ESCROW AGREEMENT
The undersigned parties hereby establish Chase Manhattan Bank and Trust
Company, N.A. Escrow No. C27381A (the "Escrow") and agree to be bound by this
Escrow Agreement, dated as of March 20, 1998, as follows:
1. Parties and Transaction. The following entities are parties to this Escrow
Agreement:
(a) Seller: Genzyme Transgenics Corporation
Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000 ("Seller").
(b) Buyers:
(i) RGC International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000;
(ii) Shepherd Investments International, Ltd.
c/o Staro Asset Management, LLC
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Mr. Xxxxx Xxxxxxxx
Tel: (000) 000-0000 x00
Fax: (000) 000-0000; and
(iii) Xxxxx International
c/o Staro Asset Management, LLC
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Mr. Xxxxx Xxxxxxxx
Tel: (000) 000-0000 x00
Fax: (000) 000-0000;
(each a "Buyer", and collectively "Buyers").
(c) Shoreline: Shoreline Pacific Institutional Finance, the Institutional
Division of Financial West Group, Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxxx, 00000, Attn: General Counsel, telephone number
(000) 000-0000, facsimile number (000) 000-0000 ("Shoreline").
Shoreline is acting as agent for Buyers and Seller in this transaction
and will be paid a commission of five percent 5% by Seller. No
commission is being charged to Buyers. Shoreline will not receive any
payment for order flow relating to any of the securities offered by
Seller in connection with this transaction, including any shares of
Seller's common stock.
(d) Escrow Holder: Chase Manhattan Bank and Trust Company, N.A., a
subsidiary of Chase Manhattan Corporation, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, telephone number: (000) 000-0000, facsimile
number: (000) 000-0000 ("Escrow Holder").
This Escrow Agreement contains the closing information for the transaction
effected between and on behalf of Buyers and Seller involving the sale by
Seller and the purchase by Buyers of 20,000 shares of Seller's Series A
Convertible Preferred Stock ("Preferred Shares"), at a purchase price of
$1,000 per share, for an aggregate purchase price of Twenty Million Dollars
($20,000,000) U.S., pursuant to the Securities Purchase Agreement dated as of
March 20, 1998 ("Purchase Agreement"), by and among Seller and Buyers.
Seller represents that said Preferred Shares are issued by Seller pursuant to
Section 4(2) of the Securities Act of 1933, as amended and/or Regulation D
thereunder. Upon request of any party hereto, Escrow Holder will furnish the
date and time this transaction took place.
In the event funds transfer instructions are given by any party to this
Agreement (other than in writing at the time of execution of the Agreement),
whether in writing, by telecopier or otherwise, the Escrow Agent is
authorized to seek confirmation of such instructions by telephone call-back
to the person or persons designated above, and the Escrow Agent may rely upon
the confirmations of anyone purporting to be the person or persons so
designated. The persons and telephone numbers for call-backs may be changed
only in a writing actually received and acknowledged by the Escrow Agent.
The parties to this Agreement acknowledge that such security procedure is
commercially reasonable.
2. Deliveries.
(a) Deliveries By Seller. Seller shall deliver the following documents
to Escrow Holder or to Shoreline, as provided herein, no later 12:00 P.M.
Pacific Standard Time on the "Closing Date," as such term is defined below:
(1) Seller shall deliver to Escrow Holder, with a copy to
Shoreline, a copy of this Escrow Agreement, duly executed by Seller (which
delivery may be made by facsimile so long as a manually executed original of
the Escrow Agreement is delivered to Escrow Holder by Seller by overnight
courier within one (1) business day following the Closing Date).
(2) Seller shall deliver to Escrow Holder Twenty Thousand (20,000)
Preferred Shares in the name of each Buyer and in face amounts and
denominations more particularly set forth in the Closing Schedule annexed
hereto as Exhibit C (the "Preferred Share Certificates"). The Preferred
Share Certificates shall each bear substantially the following legend:
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 have been acquired for
investment and 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.
A copy of the form of Seller's Preferred Share Certificate is attached hereto as
Exhibit A and is incorporated herein by this reference.
(b) Deliveries By Buyer. Each Buyer shall deliver the following to Escrow
Holder or to Shoreline, as provided herein, not later than 12:00 P.M. Pacific
Standard Time on the Closing Date:
(1) Each Buyer shall deliver to Escrow Holder, with a copy to
Shoreline, a copy of this Escrow Agreement, duly executed by such Buyer (which
delivery may be made by facsimile so long as a manually executed original of the
Escrow Agreement is delivered to Escrow Holder by Buyer by overnight courier
within one (1) business day following the Closing Date).
(2) Each Buyer shall wire funds in the amount specified for such
Buyer on Exhibit C hereof to Escrow Holder at the account set forth below:
[ESCROW HOLDER'S WIRING INSTRUCTIONS]
(3) Each Buyer shall deliver to Escrow Holder, with copy to
Shoreline, a written confirmation in the form attached hereto as Exhibit B (the
"Closing Confirmation", delivery of which may be made by facsimile so long as a
manually executed original thereof is delivered to the Escrow Agent by Buyer by
overnight courier within one (1) business day of the Closing Date), stating
that, subject to Escrow Holder's receipt of the items to be delivered by Seller
specified in Section 2(a) hereof, all of the conditions to the Closing in
Section 7 of the Purchase Agreement have been satisfied in full or waived as of
the date of delivery of such confirmation with respect to Buyer.
3. Closing. The closing of the purchase by Buyers (the "Closing") is
scheduled to occur on March 20, 1998 or on such other date as Seller, Buyers,
and Shoreline shall agree (the "Closing Date"). At the Closing, Escrow Holder
shall undertake the following:
(a) Original Deliveries to Buyer. Escrow Holder shall deliver to each
Buyer at the
addresses noted in Exhibit C hereto, by overnight courier, the original
Preferred Share Certificates.
(b) Deliveries to Shoreline. Escrow Holder shall deliver to Shoreline, by
wire transfer, its commission in the amount of One Million Dollars ($1,000,000)
U.S. The wiring instructions for Shoreline are as follows:
[SHORELINE WIRING INSTRUCTIONS]
(c) Deliveries to Seller. Escrow Holder shall deliver to Seller, by wire
transfer, the funds delivered to it by Buyer less (i) the commission payable to
Shoreline specified in Section 3(b), and (ii) Escrow Holder's fees and charges
as specified in Section 5. The wiring instructions for Seller are as follow:
[SELLER WIRE INSTRUCTIONS]
4. Authorization to Escrow Holder to Close. By their signatures appearing
below, and subject to the provisions of Section 6(k) hereof, each Buyer, Seller
and Shoreline each authorize Escrow Holder to close the Escrow upon occurrence
of the following:
(a) Escrow Holder's receipt from Seller of all documents as set forth in
Section 2(a) hereof;
(b) Escrow Holder's receipt from each Buyer of wire transfers in the
amounts set forth in the Closing Schedule annexed hereto as Exhibit C and all
documents as set forth in Section 2(b) hereof;
(c) Escrow Holder's receipt of a Closing Confirmation from each Buyer;
and
(d) Escrow Holder's notification from Shoreline that copies of the
documents required to be received from Seller and Buyers pursuant to the
Purchase Agreement have been received by Shoreline and receipt from Shoreline of
written notice to close the Escrow (the "Shoreline Closing Notice"), which
notice may be delivered by facsimile transmission, provided that a manually
executed original thereof shall be delivered to Escrow Holder within one (1)
business day following the Closing.
Each party understands and agrees that its signature appearing below confirms
its approval of
the documents and instruments delivered to Escrow Holder and that, except for
delivery of the Closing Confirmation, no further approval of any of the
documents and instruments is required by any party. Each Buyer and Seller each
agree that Escrow Holder is authorized to close the Escrow upon receipt of the
items specified in this Section 4.
5. Costs and Charges Due to Escrow Holder. Seller, each Buyer and Shoreline
each hereby authorize Escrow Holder to make the following charges:
(a) Escrow Holder's charges shall be borne by and billed to Seller, and
Escrow Holder shall debit Seller and credit itself with its customary fees, not
to exceed in the aggregate $1,000. Neither Buyer nor Shoreline shall have any
liability to pay Escrow Holder's charges; provided however, that if the Closing
does not occur and fees are due to Escrow Holder as a result thereof, Shoreline
will bear all of Escrow Holder's reasonable charges incurred in connection
herewith, up to a maximum of $500.00, plus any reasonable out of pocket
expenses.
6. Additional Provisions.
(a) Indemnification. Seller, each Buyer and Shoreline acknowledge and
agree that Escrow Holder is acting as an escrow agent in this transaction and in
no other capacity. Except for the negligence or willful misconduct of Escrow
Holder, Seller, each Buyer and Shoreline each hereby agree to indemnify and to
hold Escrow Holder harmless from any claim, liability, cost, expense or damage,
including reasonable attorneys' fees and costs, incurred by Escrow Holder in
connection with any action taken or not taken by Escrow Holder pursuant to this
Escrow Agreement. Seller, each Buyer and Shoreline, jointly and severally,
shall reimburse Escrow Holder for all of its reasonable expenses covered by the
foregoing indemnification as and when such expenses are incurred.
(b) Facsimile Signatures. Facsimile signatures on this Escrow Agreement
and the documents referred to herein are binding upon any party submitting same.
(c) Notices. Any notice, request, demand, instruction or other
communication given hereunder by any party must be in writing and will be
validly and timely given or made to another party if (i) delivered personally,
(ii) deposited in the United States mail, certified or registered, with postage
prepaid and return receipt requested, (iii) delivered by overnight courier, or
(iv) sent by telecopier, to each of the parties at the addresses and facsimile
numbers contained in Section 1 hereof. If such notice is served personally,
such notice will
be deemed to be given at the time of such personal delivery. If notice is
served by mail, such notice will be deemed to be given two days after the
deposit of same in any United States mail post office box. If such notice is
served by overnight courier, such notice will be deemed to be given on the next
business day following the acceptance of such notice for delivery by such
overnight courier. If such notice is served by telecopier, such notice will be
deemed to be given upon confirmation of transmission. Any person entitled to
receive notice under this agreement may change the address or telecopier number
to which such notice may be sent, by giving notice thereof pursuant to this
Section 6(c).
(d) Attorneys' Fees. Should any legal action be brought for the
enforcement of this Escrow Agreement or any term hereof, or due to any alleged
dispute, breach, default or misrepresentation in connection with any provisions
herein contained, the prevailing party shall be entitled to its reasonable
attorneys' fees and costs and other costs incurred in any such action or
proceeding and including any such action which results in an arbitration of the
matters herein, in addition to such other relief as may be granted by the courts
or arbitration proceedings.
(e) Applicable Law. The existence, validity, and construction of this
Escrow Agreement and all matters pertaining hereto shall be determined in
accordance with the laws of the State of New York.
(f) Further Assurances. Each of the parties agrees that it will, without
further consideration, execute, acknowledge and deliver such other documents and
take such other actions as may be reasonably requested by the other party in
order to consummate the purposes and subject matter hereof.
(g) Assignment. No party hereto shall have any right whatsoever to
voluntarily assign its rights or delegate its duties hereunder to any third
party, without the prior written consent of the other parties.
(h) Validity. If any provision of this Escrow Agreement may be prohibited
by law or otherwise held invalid, such prohibition or invalidity shall be
effective only to the extent of such prohibition or invalidity and shall not
invalidate or otherwise render ineffective the remaining provisions of this
Escrow Agreement.
(i) Counterparts. This Escrow Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
(j) Survival. The representations, warranties and covenants contained in
this Escrow Agreement shall survive the Closing, if any.
(k) Timing. If at any time any party hereto has made written demand upon
Escrow Holder for the return of documents and/or funds deposited by such party,
Escrow Holder may withhold and stop all further proceedings in this Escrow upon
notice to the parties, and may then return all documents and/or funds to the
party from which received within two business days of receipt of said notice,
without liability for interest on funds held or for damages. Additionally,
should the Closing not occur by 5 PM Central Time on March 27, 1998, then Escrow
Holder shall, on the next business day, return to each Buyer by wire transfer
any and all funds received by Escrow Holder from such Buyer(s) and return to
Seller by overnight mail service all Preferred Share Certificates received from
Seller.
(l) Reliance Upon Provided Information. It is understood that the Escrow
Agent and the beneficiary's banks in any funds transfer may rely solely upon any
account numbers or similar identifying number provided by any of the parties
hereto to identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an
order it executes using any such identifying number, even where its use may
result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary's bank, or an intermediary bank
designated.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
(m) Representation or Warranties of Escrow Holder. Escrow Holder shall
make no representation or warranty with respect to the genuineness or any other
matter concerning any document or instrument deposited herein and shall have no
liability to any other party hereto with respect to such items; provided,
however, that Escrow Holder shall inspect the Preferred Share Certificates to
(i) confirm that required number of Preferred Share Certificates have been
delivered by Seller, in the denominations and face amounts set forth on the
Closing Schedule annexed hereto as Exhibit C, and (ii) that the legend appearing
on the Preferred Share Certificates conforms to the legend language set forth in
Section 2(a)(2) above.
THE COMPANY:
GENZYME TRANSGENICS CORPORATION
By:______________________________
Name:
Title:
DATE:_________________________
BUYERS:
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P.
Investment Manager
By: RGC General Partner Corp.
By:_____________________________
Name:
Title:
DATE:_________________________
[SIGNATURES CONTINUED ONTO NEXT PAGE]
BUYERS:
SHEPHERD INVESTMENTS INTERNATIONAL, LTD.
By:
Name:
Managing Member, Staro Asset Management, LLC
Investment Manager, Shepherd Investments International, Ltd.
DATE:
XXXXX INTERNATIONAL
By:
Name:
Managing Member, Staro Asset Management, LLC
Investment Manager, Xxxxx International
DATE:
[SIGNATURES CONTINUED ONTO NEXT PAGE]
SHORELINE:
SHORELINE PACIFIC INSTITUTIONAL FINANCE,
THE INSTITUTIONAL DIVISION
OF FINANCIAL WEST GROUP
By:
Xxxxxx X. Xxxxxxx
President
DATE:
ESCROW HOLDER:
CHASE MANHATTAN BANK AND TRUST COMPANY, N.A.,
a subsidiary of Chase Manhattan Corporation
By:
Chii Xxxx Xxx
Assistant Vice President
DATE:
EXHIBIT A
Form of Preferred Share Certificate
EXHIBIT B
[INVESTOR'S LETTERHEAD]
[DATE]
Facsimile No. (000) 000-0000
Xx. Xxxx Xxxx Lei
Assistant Vice President
Chase Manhattan Bank and Trust Company, N.A.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Genzyme Transgenics Corporation Financing; Closing Confirmation
Dear Xx. Xxx:
Please accept this letter as confirmation from [INVESTOR] that, subject to your
receipt of the items specified in Section 2(a) of the Escrow Agreement dated
[DATE], the conditions to the Closing in Sections 6 and 7 of the Securities
Purchase Agreement have been satisfied in full or waived as of the date hereof.
Accordingly, this shall serve as our Closing Confirmation as required pursuant
to Section 4(c) of said Escrow Agreement.
Please call me if you have any questions or require further information.
Sincerely,
Name:
Title:
cc: Shoreline Pacific
CLOSING SCHEDULE - EXHIBIT C
INVESTOR/CERTIFICATE DELIVERY ADDRESS: AGGREGATE NO. OF PREFERRED SHARE CERTIFICATE
PREFERRED SHARES DENOMINATIONS:
PURCHASED/AGGREGATE
PURCHASE PRICE:
RGC International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P. 10,000 Preferred Shares 10 Preferred Share certificates each representing
Attn: Xxxx X. Xxxxxxxx 1,000 Preferred Shares/$1,000,000
0 Xxxx Xxxxx Xxxx, Xxxxx 000 $10,000,000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Shepherd Investments International,
Ltd.
c/o Staro Asset Management 5,000 Preferred Shares 5 Preferred Share certificates each representing
Mr. Xxx Xxxxx, CFO 1,000 Preferred Shares/$1,000,000
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000 x0,000,000
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxx International
c/o Staro Asset Management 5,000 Preferred Shares 5 Preferred Share certificates each representing
Mr. Xxx Xxxxx, CFO 1,000 Preferred Shares/$1,000,000
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000 x0,000,000
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Exhibit E
Form of Investor Questionnaire
INVESTOR QUESTIONNAIRE
and
REPRESENTATION AGREEMENT
Explanatory Note: The purpose of this Investor Questionnaire and Representation
Agreement is to determine whether an investor meets the accreditation standards
established for the offer and sale of Series A Convertible Preferred Stock (the
"Preferred Shares") of Genzyme Transgenics Corporation (the "Company") and to
obtain information necessary for the Company to file their registration
statement with respect to the common shares issuable upon conversion of the
Preferred Shares (the "Conversion Shares"). In order to meet such accreditation
standards, the Company must determine whether an investor is "accredited" as
that term is defined and construed pursuant to Regulation D under the Securities
Act of 1933, as amended (the "Act"). Neither the Preferred Shares nor any shares
of the Company's common stock issuable upon the conversion of the Preferred
Shares (collectively, the "Securities") have been registered under the Act or
qualified under state securities laws in reliance upon exemptions from such
registration and qualification requirements for transactions not involving a
public offering. Information supplied through this Questionnaire will be used to
ensure compliance with the requirements of such exemptions. Special care must be
taken to correctly identify the full legal name of the investing entity.
Name of Investor:
Address:
Telephone & Fax:
The undersigned Investor represents and warrants to the Company that:
(a) The information contained herein is complete and accurate and may be
relied upon by the Company;
and
(b) Investor will notify the Company immediately of any change in any of such
information occurring prior to the Investor's purchase of the Preferred
Shares.
1. FOR ALL INVESTORS: (complete as necessary and initial each item (a)
through (d) below):
Initial ____ (a) The undersigned is the "beneficial owner" (as that term
is defined in Rule 13d-3 under the Securities Exchange Act of
1934) of ____________ shares of the Company's common stock
(exclusive of the shares of the Company's common stock underlying
the Preferred Shares (the "Additional Shares"). [You must include
the number of shares of common stock beneficially owned. If none,
state "none."]
Initial ____ (b) The undersigned understands that ownership of the
Additional Shares will be reported in the Registration Statement.
The undersigned requests that footnote or other disclosure be made
of the following information concerning the undersigned's
beneficial ownership of the Additional Shares:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Initial ____ (c) The undersigned represents and warrants that it does not
have, and during the past three years has not had, any position,
office or relationship (other than as a security holder) with the
Company or any of its affiliates.
Initial ____ (d) The undersigned (i) has read the section entitled "Plan
of Distribution" attached to this Questionnaire as Xxxxxxxx 0,
(xx) understands that the section will be included in the
Registration Statement and (iii) represents and warrants that all
sales made by the undersigned pursuant to the Registration
Statement will be made in compliance with the methods of
distribution described in the section.
2. FOR CORPORATIONS, BUSINESS TRUSTS, OR PARTNERSHIPS:
Initial ____ (a) The undersigned certifies that it was not formed for the
specific purpose of acquiring the Securities and that it has total
assets in excess of $5,000,000. or
Initial ____ (b) The undersigned certifies that all of its equity owners
are accredited investors (i.e., each (i) has an individual net
worth, or a net worth combined with his or her spouse, of at least
$1,000,000; or (ii) had individual income of more than $200,000 in
the two calendar years preceding the year in which this
Questionnaire is submitted and reasonably expects to have
individual income in excess of $200,000 during the calendar year
in which this Questionnaire is submitted; or (iii) together with
his or her spouse, had joint income of more than $300,000 in the
two calendar years preceding the year in which this Questionnaire
is submitted and reasonably expects to have joint income in excess
of $300,000 during the calendar year in which this Questionnaire
is submitted). Please list below the names of all equity owners
and the manner in which they qualify (check the applicable
category):
$200,000 (individual)
$1,000,000 or $300,000 (joint)
Names of All Equity Owners Net Worth Minimum Income
-------------------------- --------- --------------
() ()
______________________________________
() ()
______________________________________
() ()
______________________________________
______________________________________
() ()
______________________________________
() ()
______________________________________
3. FOR TRUSTS:
Initial ____ (a) The undersigned financial institution certifies that it
is (i) a bank as defined in Section 3(a)(2) of the Act, or any
savings and loan association, or other financial institution as
defined in Section 3(a)(5) of the Act; (ii) acting in its
fiduciary capacity as trustee; and (iii) subscribing for the
purchase of the Preferred Shares on behalf of the subscribing
trust.
or
Initial ____ (b) The undersigned certifies that the subscribing trust has
total assets in excess of $5,000,000, and that the person making
the investment decision on behalf of the trust has such knowledge
and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of an investment in the
Securities.
or
Initial ____ (c) The undersigned certifies that it is a revocable trust
that may be amended or revoked at any time by the grantors
thereof, and all of the grantors are accredited investors as
described in 2(b) above. Please list below the names of all
grantors and the manner in which they qualify (check the
applicable category below):
$200,000 (individual)
$1,000,000 or $300,000 (joint)
Names of All Grantors Net Worth Minimum Income
--------------------- --------- --------------
() ()
______________________________________
() ()
______________________________________
() ()
______________________________________
4. FOR EMPLOYEE BENEFIT PLANS (INCLUDING XXXXX PLANS):
Initial ____ (a) The undersigned is an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the decision to invest in the Company was
made by a plan fiduciary (as defined in Section 3(21) of ERISA),
which is either a bank, savings and loan association, insurance
company or registered investment advisor. With respect to
undersigned, none of the Company, Shoreline Pacific Institutional
Finance, the Institutional Division of Financial West Group
("Shoreline Pacific"), counsel for the Company nor, to the
knowledge of the undersigned, any of their affiliates, is
currently, has within the prior 12 months or will (other than as
may occur through the Purchase Agreement relating to the Preferred
Shares) exercise, or have exercised, any discretionary authority
or control over plan management or plan assets; render, or have
rendered, investment advice
with respect to plan assets for a direct or indirect fee or other
compensation; or have, or have had, any discretionary authority or
responsibility in plan administration. Please state the name of
each plan fiduciary with respect to the plan:
__________________________________________________________________
__________________________________________________________________
or
Initial ____ (b) The undersigned is an employee benefit plan within the
meaning of ERISA and has total assets in excess of $5,000,000.
With respect to undersigned, none of the Company, Shoreline
Pacific, counsel for the Company nor, to the knowledge of the
undersigned, any of their affiliates, is currently, has within the
prior 12 months or will (other than as may occur through the
Purchase Agreement relating to the Preferred Shares) exercise, or
have exercised, any discretionary authority or control over plan
management or plan assets; render, or have rendered, investment
advice with respect to plan assets for a direct or indirect fee or
other compensation; or have, or have had, any discretionary
authority or responsibility in plan administration.
or
Initial ____ (c) The undersigned is an employee benefit plan within the
meaning of ERISA, the plan is self-directed, and the investment
decision is being made by a plan participant who is an accredited
investor with a net worth of at least $1,000,000 or with annual
income of at least $200,000 (individual) or $300,000 (joint). With
respect to undersigned, none of the Company, Shoreline Pacific,
counsel for the Company nor, to the knowledge of the undersigned,
any of their affiliates, is currently, has within the prior 12
months or will (other than as may occur through the Purchase
Agreement relating to the Preferred Shares) exercise, or have
exercised, any discretionary authority or control over plan
management or plan assets; render, or have rendered, investment
advice with respect to plan assets for a direct or indirect fee or
other compensation; or have, or have had, any discretionary
authority or responsibility in plan administration. Please list
below the names of all such participants and the manner in which
they qualify (check the applicable category below):
$200,000 (individual)
$1,000,000 or $300,000 (joint)
Names of All Participants Net Worth Minimum Income
------------------------- --------- --------------
() ()
______________________________________
() ()
______________________________________
() ()
______________________________________
and (for all employee benefit plans)
Initial ____ (d) The undersigned is an employee benefit plan within the
meaning of ERISA and (i) the investment is not a "prohibited
transaction" within the
meaning of ERISA, the Internal Revenue Code, or the regulations
promulgated thereunder, respectively, and such purchase is a
"prudent investment" within the meaning of ERISA; and (ii) the
undersigned agrees to indemnify and hold harmless the Company and
its agents, successors and assigns from and against any and all
liability, loss, cost and expense (including attorney's fees)
resulting from any adverse claim or determination by the
Department of Labor or the Internal Revenue Service respecting the
propriety, suitability or legality of the investment.
5. FOR 501(c)(3) ORGANIZATIONS:
Initial ____ (a) The undersigned hereby certifies that it is an
organization described in section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, not formed for the specific
purpose of acquiring the Securities, with total assets in excess
of $5,000,000.
DATED: ___________________, 19__
INVESTOR:
________________________________
(Print Name of Investor)
________________________________
(Signature)
________________________________
(Print Name of Signatory)
________________________________
(Print Title of Signatory)
APPENDIX 1
PLAN OF DISTRIBUTION
The Conversion Shares may be sold from time to time by the Selling Shareholders
or their pledgees or donees. Such sales may be made in the over-the-counter
market or in negotiated transactions, at prices and on terms then prevailing or
at prices related to the then current market price or at negotiated prices. The
Conversion Shares may be sold by means of (a) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus and/or (b) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers engaged
by Selling Shareholders may arrange for other brokers or dealers to participate.
Brokers or dealer will receive commissions or discounts from Selling
Shareholders in amounts to be negotiated immediately prior to the sale which
amounts will not be greater than that normally paid in connection with ordinary
trading transactions.
Exhibit F
Form of Legal Opinion
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxxxx 00000
TELEPHONE: (000) 000-0000 FACSIMILE: (000) 000-0000
Xxxxx 00, 0000
XXX International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
Shepherd Investments International, Ltd.
c/o Staro Asset Management, LLC
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxx 00000
Xxxxx International
c/o Staro Asset Management, LLC
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxx 00000
Shoreline Pacific Institutional Finance
Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Genzyme Transgenics Corporation
Ladies and Gentlemen:
We have acted as counsel to Genzyme Transgenics Corporation, a
Massachusetts corporation (the "Company"), in connection with (i) the execution
and delivery by the Company of the Securities Purchase Agreement dated as of
March 20, 1998 (the "Securities Purchase Agreement"), among RGC International
Investors, LDC, Shepherd Investments International, Ltd. and Xxxxx International
(collectively, the "Purchasers") and the Company and (ii) the transactions
contemplated to be consummated by the Company under the Securities Purchase
Agreement on the date hereof. We are rendering this opinion pursuant to Section
7(g) of the Securities Purchase Agreement. Capitalized terms used and not
otherwise defined herein shall have the same meanings as are ascribed thereto in
the Securities Purchase Agreement.
As counsel in this capacity, we have examined the following: (i) the
Securities Purchase Agreement, (ii) the Certificate of Designation, (iii) the
Registration Rights Agreement, (iv) the Warrants, (v) the Escrow Agreement,
(vi) the Common Stock Purchase Warrant issued to Shoreline Pacific
Institutional Finance Company (the "Shoreline Warrant"), (vii) Irrevocable
Instructions to Transfer Agent, (viii) a copy of the Restated Articles of
Organization and Bylaws of the Company, including any amendments thereto to
date, (ix) records of certain proceedings and actions of the Company, (x)
certificates of public officials, and (xi) such other documents, records and
items as we have deemed necessary or relevant for purposes of the opinions
hereinafter expressed. Items (i) through (vii) above are collectively
referred to as the "Transaction Documents."
For purposes of this opinion, we have also made the following assumptions
and have not made any factual, legal or other inquiry or investigation with
respect thereto:
(i) that the Transaction Documents have been duly authorized, executed and
delivered by the Purchasers and each other party thereto (other than the
Company);
(ii) that all persons signing the Transaction Documents on behalf of the
Purchasers and each other party thereto (other than the Company) have the legal
existence, power, authority and right so to sign;
(iii) that each of the agreements made by each of the parties in each
Transaction Document executed by the Purchasers is authorized by all appropriate
corporate or other actions of the Purchasers and each other party thereto (other
than the Company) and is in compliance with all applicable laws and regulations
affecting the Purchasers;
(iv) the genuineness of all signatures on documents not signed in our
presence (other than those of the officers of the Company), and the authenticity
of all documents submitted to us as originals and the conformity with original
documents of all documents submitted to use as copies;
(v) that (w) each Transaction Document is enforceable against each
Purchaser and each other party thereto (other than the Company); (x) all actions
required to be taken and all conditions and requirements required to be
fulfilled under the Transaction Documents in order to allow each Purchaser
(other than conditions and requirements to be fulfilled by the Company) to
enforce its rights thereunder have been duly and effectively taken and
fulfilled; and (y) each Purchaser has complied with all laws that may be
applicable to it with respect to the execution and delivery of the Transaction
Documents, and purchasing the Preferred Stock and Warrants and other actions
taken or that may be taken by it thereunder;
(vi) that the representations and warranties made by each Purchaser within
the Securities Purchase Agreement and the other Transaction Documents are true
and complete in all material respects, and do not fail to state any fact or
information the statement of which is necessary to make them not misleading in
any material respect; and
(vii) that there are no documents or agreements other than the Transaction
Documents between the Purchasers and the Company or others which expand or
otherwise modify the obligations of the Company with respect to the transactions
contemplated by the Transaction Documents and would have an effect on the
opinions set forth below.
For purposes of this opinion, we have relied upon the accuracy of: (i) the
representations and warranties of each of the parties set forth in the
Transaction Documents, (ii) the representations of officers and directors of the
Company, and (iii) the certificates of public officials. In addition to the
assumptions set forth above, this opinion is subject to the following
qualifications and exceptions:
(a) enforcement may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, preference, reorganization, moratorium
or other similar laws of general application affecting creditors' rights
(including equitable subordination) and (ii) the application of the rules
of equity including those respecting availability of specific
performance and general principles of public policy (regardless of whether
enforcement is sought in equity or at law);
(b) we express no opinion as to (i) the enforceability of the choice
of New York law by a federal court or by a state court outside the State
of New York, (ii) conflicts of law principles generally; (iii) the
validity, binding effect or enforceability of any provision of the
Transaction Documents purporting to (A) prohibit oral amendment or waiver
of such documents or limiting the effect of a course of dealings between
the parties or (B) indemnify any person for its own negligence, gross
negligence or wilful misconduct or release such person from the
consequences thereof, and (iv) the enforceability of any provision in the
Transaction Documents purporting to relate to delay by any party to the
Transaction Documents to exercise any right, remedy or option under the
provisions thereof not operating as a waiver;
(c) with respect to our opinions as to the good standing and foreign
qualification of the Company we have relied solely on good standing
certificates delivered to us by public officials from the relevant
jurisdictions;
(d) the qualification that any right to indemnification and
contribution contained in the Transaction Documents may be limited by
United States federal or state securities laws or the policies underlying
such laws; and
(e) we express no opinion as to (i) the enforceability of any
monetary fees payable by the Company pursuant to the Certificate of
Designation or Registration Rights Agreement in connection with the
Company's failure to timely perform certain actions specified therein and
(ii) the treatment of the Preferred Stock in any bankruptcy, liquidation,
insolvency or similar proceeding.
We express no opinion as to the laws of any jurisdiction other than (i)
the laws of the State of New York (for the purposes of the enforceability
opinion in paragraph 5 below only), (ii) the laws of the Commonwealth of
Massachusetts and (iii) the federal laws of the United States of America to the
extent specifically referred to herein. We express no opinion as to any
ordinances, administrative decisions or the rules and regulations of counties,
towns, municipalities and special political subdivisions.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts, and has the
requisite corporate power to own and operate its properties and assets and to
carry on its business as presently conducted. Each subsidiary incorporated under
the laws of a state of the United States of the Company (each, a "Domestic
Subsidiary") set forth on Schedule 3(a) to the Securities Purchase Agreement is
a corporation in good standing under the laws of the jurisdiction in which it is
incorporated. The Company and each Domestic Subsidiary is duly qualified as a
foreign corporation to do business and is in good standing in all of the
jurisdictions indicated on Schedule 3(a) to the Securities Purchase Agreement.
2. The offer and sale of the Preferred Stock, the Warrants and the
Shoreline Warrant in conformity with the terms of the Transaction Documents
constitute, and the issuance of the Conversion Shares and the offer and sale of
the Warrant Shares and the shares of Common
Stock issuable on exercise of the Shoreline Warrant (the "Shoreline Shares") in
conformity with the terms of the Transaction Documents will constitute,
transactions exempt from the registration requirements of Section 5 of the
Securities Act.
3. No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with (i) the valid execution and delivery of the Transaction
Documents, (ii) the offer, sale or issuance of the Preferred Stock, Warrants,
the Shoreline Warrant, the Conversion Shares, the Warrant Shares and the
Shoreline Shares (iii) the consummation of any other transaction contemplated by
the Transaction Documents, with the exception of: (1) acceptance of the
Certificate of Designation by the Secretary of State of the Commonwealth of
Massachusetts; (2) the filing of a Form D with the SEC, (3) the filing of a Form
10b-17 with Nasdaq, (4) the filing one or more Registration Statements pursuant
to the Registration Rights Agreement, and (5) to the extent that the Company is
obligated to pay certain amounts to the Purchasers in excess of $2,000,000, such
payments will cause a default under loan agreements with BankBoston N.A.
4. The Company has all requisite corporate power and authority to execute
and deliver the Transaction Documents and to carry out all its obligations
thereunder, including the sale and issuance of the Preferred Stock, Warrants,
the Shoreline Warrant, the Conversion Shares, the Warrant Shares and the
Shoreline Shares in accordance with the terms of the Transaction Documents.
5. Each of the Transaction Documents has been duly and validly authorized
by all necessary corporate action, and has been executed and delivered by, and
constitutes a valid and binding agreement of, the Company and is enforceable
against the Company in accordance with its terms.
6. The authorized capital stock of the Company is as stated in Section
3(c) of the Securities Purchase Agreement. To our knowledge, there have not been
any shares of the capital stock of the Company issued which are not validly
issued, fully paid and non-assessable. All issued and outstanding shares of
common stock are free of any preemptive or similar rights contained in the
Articles of Organization or Bylaws of the Company or, to our knowledge, in any
agreement by which the Company is bound.
7. Upon the closing under the Securities Purchase Agreement, the Preferred
Stock, the Warrants and the Shoreline Warrant will be validly issued, fully
paid, nonassessable, and free of any preemptive or similar rights contained in
the Articles of Organization or Bylaws of the Company or, to our knowledge, of
any agreement by which the Company is bound. The Conversion Shares, the Warrant
Shares and the Shoreline Shares have been duly and validly reserved, and when
issued in accordance with the terms of the Certificate of Designation, the
Warrants and the Shoreline Warrant, respectively, will be validly issued, fully
paid, nonassessable, and free of any preemptive or similar rights contained in
the Articles of Organization or Bylaws of the Company or, to our knowledge, of
any agreement by which the Company is bound.
8. The execution and delivery of, and compliance with, the Transaction
Documents, including the consummation of the issuance of the Preferred Stock,
Warrants, the Shoreline Warrant, the Conversion Shares, the Warrant Shares and
the Shoreline Shares, as contemplated by such documents, do not and will not
conflict with or result in a breach of default by the Company of any of the
terms or provisions of: (i) the Articles of Organization or Bylaws of the
Company, (ii) to our knowledge, any existing applicable decree, judgment or
order of any court, federal or state regulatory body, administrative agency, or
other governmental body having jurisdiction over the Company or any of its
property or assets, or (iii) to our knowledge, conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company is a party (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect) and except
that the payment of certain amounts to the Purchasers in excess of $2,000,000
will cause a default under loan agreements with BankBoston N.A.
9. To our knowledge except as disclosed in the Schedules to the Securities
Purchase Agreement, but without investigation of court dockets, there is no
litigation pending or threatened which could or which would impair the ability
of the Company to issue and deliver the Preferred Stock, the Warrants, the
Shoreline Warrant, the Conversion Shares, the Warrant Shares, or the Shoreline
Shares or to comply with the provisions of the Transaction Documents or
otherwise have a Material Adverse Effect.
10. The Company's Common Stock is quoted on the Nasdaq National Market. To
our knowledge, no suspension of trading in the Common Stock on the Nasdaq
National Market is in effect, nor is any such suspension threatened on the date
hereof.
This opinion is furnished to the Purchasers and Shoreline solely for their
benefit in connection with the sale and issuance of the Preferred Stock,
Warrants and Conversion Shares as contemplated by the Transaction Documents and
may not be relied upon by any other person (other than the Company) or for any
other purpose without our prior written consent. This opinion is limited to
matters expressly set forth herein and no opinion may be inferred or implied
beyond the matters expressly stated in this opinion on the date hereof. We shall
have no obligation to update any of the matters set forth in this opinion.
Very truly yours,
XXXXXX & DODGE LLP
