Exhibit 4.2
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SECURITIES PURCHASE AGREEMENT
Among
ALLIANCE PHARMACEUTICAL CORP.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of August 22, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale.....................................................1
1.2 Closings..............................................................2
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company............5
2.2 Representations and Warranties of the Purchasers....................14
ARTICLE III
OTHER AGREEMENTS
3.1 Transfer Restrictions...............................................15
3.2 Stop Transfer Instruction...........................................17
3.3 Furnishing of Information...........................................17
3.4 Blue Sky Laws.......................................................17
3.5 Integration.........................................................18
3.6 Listing and Reservation of Debenture Shares.........................18
3.7 Notice of Breaches..................................................19
3.8 Form D..............................................................20
3.9 Use of Proceeds.....................................................20
3.10 Transactions with Affiliates........................................20
3.11 Transfer Agent Instructions.........................................20
3.12 Press Release; Filing of Form 8-K...................................21
3.13 Ordinary Course Brokerage and Trading...............................21
3.14 Best Efforts........................................................21
3.15 Corporate Existence.................................................21
3.16 No Violation of Applicable Law......................................21
3.17 Subsequent Registrations............................................22
3.18 Trading Restrictions................................................22
ARTICLE IV
CONDITIONS
4.1 First Closing Conditions............................................22
4.2 Second Closing......................................................26
ARTICLE V
INDEMNIFICATION
5.1 Indemnification.....................................................29
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement...................................................31
6.2 Notices............................................................31
6.3 Amendments; Waivers................................................32
6.4 Headings...........................................................33
6.5 Successors and Assigns.............................................33
6.6 No Third-Party Beneficiaries.......................................33
6.7 Governing Law......................................................33
6.8 Survival...........................................................33
6.9 Counterparts.......................................................34
6.10 Publicity..........................................................34
6.11 Severability.......................................................34
6.12 Remedies...........................................................34
6.13 Independent Nature of Purchasers' Obligations and Rights...........35
6.14 Payment Set Aside..................................................35
6.15 Further Assurances.................................................35
6.16 Fees and Expenses..................................................35
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is dated as of
August 22, 2000 among Alliance Pharmaceutical Corp., a New York corporation (the
"COMPANY"), and the various purchasers identified and listed on Schedule I
hereto (each referred to herein as a "PURCHASER" and, collectively, the
"PURCHASERS").
WHEREAS, the Company and the Purchasers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D as promulgated by the United States
Securities and Exchange Commission (the "COMMISSION") under Section 4(2) of the
Securities Act of 1933, as amended (the "SECURITIES ACT");
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, an aggregate of $10,000,000
principal amount of the Company's 5% convertible debentures due 2004, and under
certain conditions a second tranche of 5% convertible debentures due four years
after issuance (collectively, the "DEBENTURES," each of which a "DEBENTURE"), in
the form of EXHIBIT A annexed hereto, convertible into shares of the Company's
common stock, par value $0.01 per share (the "COMMON STOCK"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form of EXHIBIT B attached hereto (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter, the Company and the Purchasers hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1. PURCHASE AND SALE.
a. On the First Closing Date (as defined below), subject to the terms
and conditions set forth herein, the Company shall issue and sell to each
Purchaser and each Purchaser, severally and not jointly, shall purchase from the
Company the principal amount of Debentures as set forth on Schedule I. The
aggregate principal amount of Debentures purchased by the Purchasers shall be
$10,000,000.
b. On Second Closing Date (as defined below), subject to the terms and
conditions set forth herein, the Company shall issue and sell to the Purchasers
an additional $10,000,000 principal amount of the Debentures.
1.2. CLOSINGS.
a. THE FIRST CLOSING. The closing of the purchase and sale of the
initial $10,000,000 aggregate principal amount of Debentures (the "FIRST
CLOSING") shall take place at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or by transmission by
facsimile and overnight courier, immediately following the execution hereof or
such later date or different location as the parties shall agree, but not prior
to the date that the conditions set forth in Section 4.1 have been satisfied or
waived by the appropriate party (the "FIRST CLOSING DATE"). At the First
Closing:
(i) Each Purchaser shall deliver, as directed by the Company, its
portion of the purchase price as set forth next to its name on SCHEDULE I
in United States dollars in immediately available funds to an account or
accounts designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser a Debenture, in
the form of EXHIBIT A hereto, representing the principal amount purchased
by such Purchaser as set forth on SCHEDULE I hereto;
(iii) The parties shall execute (except for the opinion referred
to in Section 4.1(c)(i)) and deliver each of the documents referred to in
Section 4.1 hereof.
b. PURCHASERS CALL OPTION. Subject to the terms and conditions set
forth in Section 4.2 and elsewhere in this Agreement, each Purchaser shall have
the right (the "PURCHASERS CALL Option") at any time within a four-year period
commencing on the First Closing Date to deliver a written notice to the Company
(a "PURCHASERS CALL OPTION NOTICE") requiring the Company to issue and sell (in
which event such Purchaser shall purchase) up to its pro rata portion of an
additional $10,000,000 principal amount of a four (4) year Debenture at a
conversion price of $16.00 per share, provided that the Company shall not be
required to issue and sell debentures in an aggregate amount of less than
$5,000,000. The closing of the purchase and sale of the additional Debentures
(such closing or the closing under the Company Put Option Notice (defined
below), the "SECOND CLOSING") under the Purchasers Call Option Notice shall take
place in the same manner as the First Closing, on such date indicated on the
Purchasers Call Option Notice but no earlier than ten (10) Business Days and no
later than twenty (20) Business Days after the date of delivery of the
Purchasers Call Option Notice (such date or the date of the Second Closing under
the Company Put Option Notice, the "SECOND CLOSING DATE"); provided that in no
case shall the Second Closing take place unless and until the conditions listed
in Section 4.2 have been satisfied or waived by the appropriate party. Upon the
occurrence of any Change of Control, the Company shall take appropriate action
to ensure that the Purchasers shall have the right to exercise the Purchasers
Call Option after the Change of Control. At the Second Closing:
(i) Each Purchaser shall deliver, as directed by the Company, its
portion of the purchase price as set forth next to its name on a schedule
similar to SCHEDULE I (the "SECOND CLOSING SCHEDULE"), to be attached to
the Purchasers Call Option Notice, in United States dollars in immediately
available funds to an account or accounts designated in writing by the
Company;
(ii) The Company shall deliver to each Purchaser a Debenture, in
the form of EXHIBIT A hereto (which shall mature four (4) years from the
date it is issued and in which the conversion price shall be $16.00 per
share (such price, as may be adjusted pursuant to the terms of the
Debenture)), representing the principal amount purchased by such Purchaser
as set forth on the Second Closing Schedule.
(iii) The parties shall execute and deliver each of the documents
referred to in Section 4.2 hereof.
c. COMPANY PUT OPTION. Subject to the terms and conditions in Section
4.2 and elsewhere in this Agreement, after the Optional Conversion Date of the
Optional Conversion of the Debentures (as defined in Article VI of the
Debentures), the Company shall have the one time right (the "COMPANY PUT
OPTION") at any time subsequent to the First Closing to deliver a written notice
to the Purchasers (a "COMPANY PUT OPTION NOTICE") requiring the Purchasers to
exercise in full the Purchasers Call Option, provided that for at least twenty
five (25) out of thirty (30) consecutive Trading Days (as defined in the
Debentures) prior to the exercise of the Company Put Option the Per Share Market
Value (as defined in the Debentures) was more than $26.64 dollars (such price,
as may be adjusted pursuant to the terms of the Debentures), the "PUT TRIGGER
PRICE," and the occurrence of thirty (30) consecutive Trading Days at such
price, a "PUT TRIGGER"). The Company must exercise its Company Put Option by
delivering the Company Put Option Notice to each Holder within ten (10) Business
Days of the occurrence of a Put Trigger (such deadline, the "PUT NOTICE DATE").
If the Company does not deliver the Company Put Option Notice by the Put Notice
Date, then the Company shall not have the right to effect a Company Put Option
until a Put Trigger occurs again after such Put Notice Date. An example of how
the Company Put Option operates is as follows: Thirty (30) consecutive Trading
Days occur during which the Per Share Market Value of the Common Stock is
greater than the Put Trigger Price. The Put Notice Date is ten (10) Business
Days after the end of the thirty (30) day trading period. If the Company
delivers the Company Put Option Notice by the Put Notice Date, it has properly
exercised its Company Put Option. If the Company fails to deliver the Put Option
Notice by the Put Notice Date, then there must again occur a consecutive thirty
(30) day trading period in which the Per Share Market Value is in excess of the
Put Trigger Price before the Company may again exercise its Company Put Option.
The Second Closing under this Company Put Option Notice shall take place on such
date indicated in the Company Put Option Notice but no earlier than ten (10)
Business Days after the Purchasers' receipt of the Company Put Option Notice;
PROVIDED THAT in no case shall the Second Closing take place unless and until
the conditions listed in Section 4.2 have been satisfied or waived by the
appropriate party. Five (5) Business Days after receipt of the Company Put
Option Notice, the Purchasers shall deliver to the Company a Second Closing
Schedule, indicating the principal amount of Debentures that each Purchaser
shall purchase for an aggregate total of $10,000,000. At the Second Closing
under the Company Put Option Notice:
(i) Each Purchaser shall deliver, as directed by the Company, its
portion of the purchase price as set forth next to its name on the Second
Closing Schedule, in United States dollars in immediately available funds
to an account or accounts designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser a Debenture, in
the form of EXHIBIT A hereto, representing the principal amount purchased
by such Purchaser as set forth on the Second Closing Schedule;
(iii) The parties shall execute and deliver each of the documents
referred to in Section 4.2 hereof.
d. LIQUIDATED DAMAGES. In addition to any other rights available to
the Purchasers, if the Company defaults in its obligation to deliver to each
Purchaser the Debenture required to be delivered to it at the Second Closing,
the Company shall pay such Purchaser, upon the Purchaser's demand, as liquidated
damages by cash or wire transfer in immediately available funds to the account
of such Purchaser, or as otherwise directed by such Purchaser, the difference
between the Per Share Market Value (as defined in the Debentures) on the Second
Closing Date and the Conversion Price (as defined in the Debentures) multiplied
by the number of shares of Common Stock into which the Debentures that should
have been delivered at the Second Closing could have been converted.
e. ADJUSTMENT OF PUT TRIGGER PRICE. The Put Trigger Price shall be
adjusted from time to time in the same manner and for the same reasons that
Conversion Price is subject to adjustment pursuant to Section 4.5(a), (b) and
(c) of the Debenture, including without limitation, for stock splits, reverse
stock splits, stock dividends and the like. The adjustment shall automatically
be effected on the record date established for purposes of determining the event
that causes the adjustment to the Put Trigger Price, and will reset if such
event does not transpire. Notice of adjustment to the Put Trigger Price need not
be given when such adjustment occurs, but must be stated in the Notice of
Company Put Option Notice.
f. REGISTRATION. The shares of Common Stock underlying the Debentures
issued pursuant to either the Purchasers Call Option or the Company Put Option
shall be deemed Registrable Securities (as defined in the Registration Rights
Agreement) and the Registration Rights Agreement shall apply to such Registrable
Securities mutatis mutandis, PROVIDED, HOWEVER, that with regard to Debentures
issuable pursuant to the Company Put Option, the Debenture Shares shall have
been registered prior to the issuance of any such Debenture (see Section
4.2(b)(v)(B)), PROVIDED FURTHER, that with specific regard to Debentures
issuable pursuant to the Purchasers Call Option, in subsection (i) of the
definition of "Effectiveness Period" in the Registration Rights Agreement, the
90th day shall be changed to the 60th day.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties as of the date
hereof to each of the Purchasers:
a. ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New York, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Except as set forth on Schedule 2.1(a), the Company has no subsidiaries
(collectively, the "SUBSIDIARIES"). A "Subsidiary" for purposes of this
Agreement means any entity in which the Company, directly or indirectly, owns
the majority of such entity's capital stock or holds an equivalent equity or
similar interest, but does not include an entity in which the Company holds a
warrant or similar right to acquire controlling equity in the entity and does
not otherwise have a controlling equity interest in the entity. Each of the
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the full corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not, individually or in
the aggregate, (x) materially adversely affect the legality, validity or
enforceability of any of this Agreement or the Transaction Documents (as defined
in Section 2.1(b)) or any of the transactions contemplated hereby or thereby,
(y) have or result in a material adverse effect on the results of operations,
assets, prospects, or financial condition of the Company and its Subsidiaries,
taken as a whole or (z) materially impair the Company's ability to perform fully
on a timely basis its obligations under any Transaction Document (any of (x),
(y) or (z), being a "Material Adverse Effect"). The Company has furnished to
each of the Purchasers, as requested, true and correct copies of the Company's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's Bylaws, as in effect on
the date hereof (the "BYLAWS").
b. AUTHORIZATION; ENFORCEMENT. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement, the Debenture and the Registration Rights
Agreement (collectively, the "TRANSACTION DOCUMENTS"), and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of each
of this Agreement and the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action and no further action is
required by the Company, its Board of Directors or its stockholders. Each of
this Agreement and the Transaction Documents has been duly executed by the
Company and when delivered in accordance with the terms hereof will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application and
except that rights to indemnification and contribution may be limited by Federal
or state securities laws or public policy relating thereto. Neither the Company
nor any Subsidiary is in any material violation of any of the provisions of its
respective certificate of incorporation, bylaws or other charter documents such
that any right of a holder of the Debentures would be affected.
c. CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company is as set forth in Schedule 2.1(c). All of such outstanding
shares of capital stock have been, or upon issuance will be, validly authorized
and issued, fully paid and nonassessable and were issued in accordance with the
registration provisions of the Securities Act, or pursuant to valid exemptions
therefrom. Except as disclosed in Schedule 2.1(c) or the SEC Documents (as
defined in Section 2.1(k) hereof), (i) no shares of the Company's capital stock
are subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company, nor is any holder of the
Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any Transaction
Document, (ii) there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, or giving any Person
(as defined below) any right to subscribe for or acquire, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings 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 or options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iii) there are no outstanding debt
securities of the Company or any of its Subsidiaries, (iv) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the Securities
Act (except the Registration Rights Agreement), (v) there are no outstanding
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the shares of Common Stock as described in this Agreement, (vii) the Company
does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement and (viii) except as specifically
disclosed in the SEC Documents, no Person (as defined below) or group of related
Persons, to the knowledge of the Company, beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")) or has the right to acquire by agreement with or
by obligation binding upon the Company beneficial ownership of in excess of 5%
of the Common Stock. "PERSON" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
d. AUTHORIZATION AND VALIDITY; ISSUANCE OF SHARES. The shares of
Common Stock issuable upon conversion of the Debentures (the "DEBENTURE SHARES")
are and will at all times hereafter continue to be duly authorized and reserved
for issuance and the Debenture Shares will be validly issued, fully paid and
non-assessable, free and clear of all liens, encumbrances and Company rights of
first refusal, other than liens and encumbrances created by the Purchasers
(collectively, "LIENS") and will not be subject to any preemptive or similar
rights. The issuance by the Company of the Debentures and the Debenture Shares
is exempt from registration under the Securities Act, assuming the accuracy of
the Purchasers' representations and warranties herein.
e. NO CONFLICTS. The execution, delivery and performance of this
Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including the issuance of the Debenture Shares) do not and will not (i)
conflict with or violate any provision of the Certificate of Incorporation,
Bylaws or other organizational documents of the Company or any of the
Subsidiaries, (ii) subject to obtaining the consents referred to in Section
2.1(f), 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, patent, patent license or instrument (evidencing a Company
or Subsidiary debt or otherwise) to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or any Subsidiary is subject
(including Federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) applicable to the Company or any of its Subsidiaries, or by
which any material property or asset of the Company or any Subsidiary is bound
or affected.
f. CONSENTS AND APPROVALS. Except as specifically set forth on
Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, regulatory or self regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement or the Transaction Documents, other than (i) the filing of a
registration statement with the Commission (ii) the application(s) or any
letter(s) acceptable to the Nasdaq National Market ("NASDAQ") for the listing of
the Debenture Shares with Nasdaq (and with any other national securities
exchange or market on which the Common Stock is then listed) and (iii) any
filings, notices or registrations under applicable state securities laws
(together with the consents, waivers, authorizations, orders, notices and
filings referred to on Schedule 2.1(f), the "REQUIRED APPROVALS").
g. LITIGATION; PROCEEDINGS. Except as specifically set forth on
Schedule 2.1(g), there is no action, suit, notice of violation, proceeding or
investigation 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 their respective properties or assets before or by any
court, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of this Agreement or the Transaction
Documents or (ii) could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
h. NO DEFAULT OR VIOLATION. Neither the Company nor any Subsidiary (i)
is in default under or in violation of any indenture, loan or other credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties or assets is bound and which is required to be
included as an exhibit to any SEC Document or will be required to be included as
an exhibit to the Company's next filing under either the Securities Act or
Exchange Act, (ii) is in violation of any order of any court, arbitrator or
governmental body applicable to it, (iii) is in violation of any statute, rule
or regulation of any governmental authority to which it is subject, (iv) is in
default under or in violation of its Certificate of Incorporation, Bylaws or
other organizational documents, respectively, or (v) is in default under or in
violation of any of the listing requirements of Nasdaq as in effect on the date
hereof and is not aware of any facts which would reasonably lead to delisting or
suspension of the Common Stock by Nasdaq in the foreseeable future, except in
each case referred to in the preceding clauses (i) through (iv) where such
violations have not resulted or would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect. The business of
the Company and its Subsidiaries is not being conducted in violation of any law,
ordinance, rule or regulation of any governmental entity, except where such
violations have not resulted or would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is in breach of any agreement where such
breach, individually or in the aggregate, would have a Material Adverse Effect.
i. DISCLOSURE; ABSENCE OF CERTAIN CHANGES. This Agreement, the
Schedules to this Agreement, the Transaction Documents, the SEC Documents and
any other written or formally presented information, report, financial
statement, exhibit, schedule or document furnished by or on behalf of the
Company in connection with the negotiation of the transactions contemplated
hereby have not contained, do not contain, and will not contain at the time it
was or is so furnished any untrue statement of a material fact or omitted, omits
or will omit at such time to state any material fact necessary in order to make
the statements made herein and therein, in light of the circumstances under
which they were made, not misleading. Except as disclosed on Schedule 2.1(i) or
in SEC Documents filed on XXXXX at least five Business Days prior to the date
hereof, since June 30, 2000, there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition, liabilities or results of operations or, insofar as can reasonably be
foreseen, prospects of the Company or the Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings. Except as disclosed on Schedule
2.1(i), no event, liability, development or circumstance has occurred or exists,
or is contemplated to occur, with respect to the Company or its Subsidiaries or
their respective businesses, properties, operations or financial condition or,
insofar as can reasonably be foreseen, prospects, that would be required to be
disclosed by the Company under applicable securities laws on a registration
statement (including by way of incorporation by reference) filed with the
Commission, on the date this representation is made or deemed to be made,
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly disclosed.
j. PRIVATE OFFERING. Subject to the accuracy and completeness of the
representations and warranties of the respective Purchasers contained in Section
2.2 hereof, the Company and all Persons acting on its behalf have not made,
directly or indirectly, and will not make, offers or sales of any securities or
solicited any offers to buy any security under circumstances that would require
registration of the Debentures or the Debenture Shares or the issuance of such
securities under the Securities Act. The offer, sale and issuance of the
Debentures and the Debenture Shares to the Purchasers will not be integrated
with any other offer, sale and issuance of the Company's securities (past,
current, or future) under the Securities Act or any regulations of any exchange
or automated quotation system on which any of the securities of the Company are
listed or designated or for purposes of any stockholder approval provision
applicable to the Company or its securities. Subject to the accuracy and
completeness of the representations and warranties of the respective Purchasers
contained in Section 2.2 hereof, the offer, sale and issuance by the Company to
the Purchasers of the Debentures and the Debenture Shares are exempt from the
registration requirements of the Securities Act.
k. SEC DOCUMENTS; FINANCIAL STATEMENTS. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Exchange Act. The
Company, during the last twelve (12) months, has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Exchange Act, including
pursuant to Section 13, 14 or 15(d) thereof (the foregoing materials and all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by reference
therein being collectively referred to herein as the "SEC DOCUMENTS"), on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such extension. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, 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. All agreements to which the Company or any
Subsidiary is a party or to which the property or assets of the Company or any
Subsidiary are subject and which are required to be filed as exhibits to the SEC
Documents have been filed as exhibits to the SEC Documents as required and
neither the Company nor any Subsidiary nor to the Company's knowledge, any other
party is in material breach of any such agreement. 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 Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial year-end
audit adjustments. Neither the Company nor any of its Subsidiaries or any of
their officers, directors, employees or agents have provided the Purchasers with
any material, nonpublic information. The Company acknowledges that the
Purchasers will be trading in the securities of the Company in reliance on the
foregoing representation and warranty.
l. INVESTMENT COMPANY. The Company is not, and is not controlled by or
under common control with an affiliate (an "AFFILIATE") of an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
m. BROKER'S FEES. No fees or commissions or similar payments with
respect to the transactions contemplated by this Agreement or the Transaction
Documents have been paid or will be payable by the Company to any broker,
financial advisor, finder, investment banker, or bank, other than as set forth
in Schedule 2.1(m). The Purchasers shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other Persons
introduced or retained by the Company for fees of a type contemplated in this
Section 2.1(m) that may be due in connection with the transactions contemplated
by this Agreement and the Transaction Documents.
n. FORM S-3 ELIGIBILITY. The Company is, and at the Closing Date will
be, eligible to register securities (including the Debenture Shares) for resale
with the Commission under Form S-3 (or any successor form) promulgated under the
Securities Act.
o. LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The principal
markets on which the Common Stock is currently traded is Nasdaq. The Company has
not in the three years preceding the date hereof received notice (written or
oral) from Nasdaq (or any stock exchange, market or trading facility on which
the Common Stock is or has been listed (or on which it has been quoted)) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such market or exchange. The Company is not aware of any facts
that would reasonably lead to delisting or suspension of the Common Stock by
Nasdaq. After giving effect to the transactions contemplated by this Agreement
and the Transaction Documents, the Company is and will be in compliance with all
such maintenance requirements.
p. INTELLECTUAL PROPERTY RIGHTS. The Company and each of its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trademark applications, trade names and service marks, whether or not
registered, and all patents, patent applications, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and intellectual
property rights (collectively, "INTELLECTUAL PROPERTY RIGHTS") which are
necessary for use in connection with their respective businesses as now
conducted and as described in the SEC Documents.
q. EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries
is involved in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. Neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that relations with their employees are
good. Since June 30, 2000, no executive officer (as defined in Rule 501(f) under
the Securities Act) has notified the Company that such officer intends to leave
the Company or otherwise terminate such officer's employment with the Company.
r. REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as described
on Schedule 2.1(r) hereto, (i) the Company has not granted or agreed to grant to
any Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction Document.
s. TITLE. Except as disclosed on Schedule 2.1(s), the Company and each
of its Subsidiaries have good and marketable title in fee simple to all real
property and 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,
except for liens that do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting
and, to the Company's best knowledge, enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and the Subsidiaries.
t. PERMITS. The Company and each of its Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals, orders
and permits necessary to own, lease and operate their respective properties and
to conduct their respective businesses as currently conducted except where the
failure to possess such permits would not, individually or in the aggregate,
have a Material Adverse Effect ("MATERIAL PERMITS"), and there is no proceeding
pending, or, to the knowledge of the Company, threatened relating to the
revocation, modification, suspension or cancellation of any Material Permit.
Neither the Company nor any of the Subsidiaries is in any material respect, in
conflict with or default or violation of any Material Permit.
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 materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its Subsidiaries, taken as a whole.
v. INTERNAL ACCOUNTING CONTROLS. The Company and each of the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with United States 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. TAX STATUS; FIRPTA. The Company and each of its Subsidiaries has
made or filed all federal and state 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, in accordance with standard accounting
practices, 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 is not a "United States real property
holding corporation" within the meaning of Section 847(c)(2) of the Internal
Revenue Code of 1986, as amended.
x. TRANSACTIONS WITH AFFILIATES. The Company has reported, in
accordance with law, any transactions with officers, directors or employees of
the Company who are parties 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 such employee or, to the knowledge of the Company, any corporation,
partnership, trust or entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
y. APPLICATION TO TAKEOVER PROTECTION. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or the laws of the state of incorporation which is or could become applicable to
the Purchasers or the Transaction Documents as a result of the transactions
contemplated by this Agreement or the Transaction Documents. None of the
transactions contemplated by this Agreement or the Transaction Documents,
including the conversion of the Debentures, will trigger any poison pill
provisions of any of the Company's stockholders' rights or similar agreements.
z. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permits, licenses or other approvals except where the
failure of any of the foregoing would not result in a Material Adverse Effect.
aa. FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee form corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
bb. SOLICITATION MATERIALS. The Company has not (i) distributed any
offering materials in connection with the offering and sale of the Debentures,
other than the SEC Documents, the Schedules to this Agreement, any amendments
and supplements thereto and the materials listed on Schedule 2.1(bb), or (ii)
solicited any offer to buy or sell the Debentures by means of any form of
general solicitation or advertising. Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Debentures.
cc. ACKNOWLEDGEMENT OF DILUTION. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Debenture Shares upon conversion of the Debentures. The Company
further acknowledges that its obligation to issue Debenture Shares upon
conversion of the Debentures in accordance with this Agreement and the
Debentures is absolute and unconditional (but subject to the terms and
conditions of the Debentures and this Agreement) regardless of the dilutive
effect that such issuance may have on the ownership interests of other
stockholders of the Company.
dd. ACKNOWLEDGEMENT REGARDING PURCHASERS' PURCHASE OF DEBENTURES. The
Company acknowledges and agrees that the Purchasers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no
Purchaser 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 statement made by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchasers' purchase of the securities. The Company further
represents to each Purchaser that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.
ee. SENIORITY; EXCLUSIVITY. No class of equity securities of the
Company will be senior to the Debentures in right of payment, whether upon
liquidation, dissolution or otherwise. So long as any Debenture issued hereunder
remains outstanding, the Company shall not exchange, redeem or convert any of
the Company's capital stock for indebtedness, including convertible debt, of the
Company. Except as expressly permitted in this Agreement, the Company shall not
issue and sell any Debentures, other than to the Purchasers pursuant to this
Agreement, without the prior written consent of each of the Purchasers.
2.2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
a. ORGANIZATION; AUTHORITY. Such Purchaser is a corporation or a
limited duration company or a limited liability company or limited partnership
duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with the requisite power and
authority, corporate or otherwise, to enter into and to consummate the
transactions contemplated hereby and by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The purchase by such
Purchaser of the Debentures hereunder has been duly authorized by all necessary
action on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed and delivered by such
Purchaser and constitutes the valid and legally binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
b. INVESTMENT INTENT. Such Purchaser is acquiring the Debentures for
its own account and not with a present view to or for distributing or reselling
the Debentures the Debenture Shares or any part thereof or interest therein in
violation of the Securities Act; provided, however, that by making the
representations herein, such Purchaser does not agree to hold any of the
Debentures or the Debenture Shares for any minimum or other specific term and
reserves the right to dispose of the Debentures at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act.
c. PURCHASER STATUS. At the time such Purchaser was offered the
Debentures, and at the Closing Date, (i) it was and will be an "accredited
investor" as defined in Rule 501 under the Securities Act and (ii) such
Purchaser, either alone or together with its representatives, had and will have
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective
investment in the Debentures.
d. RELIANCE. Such Purchaser understands and acknowledges that (i) the
Debentures are being offered and sold to such Purchaser without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder and (ii) the availability
of such exemptions depend in part on, and the Company will rely upon the
accuracy and truthfulness of, the representations set forth in this Section 2.2
and such Purchaser hereby consents to such reliance.
e. INFORMATION. Such Purchaser 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 Debentures
which have been requested by such Purchaser or its advisors. Such Purchaser and
its advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigation
conducted by Purchaser or any of its advisors or representatives shall modify,
amend or affect Purchaser's right to rely on the Company's representations and
warranties contained in Section 2.1 above or representations and warranties of
the Company contained in any other Transaction Document. Such Purchaser
understands that its investment in the Debentures involves a significant degree
of risk.
f. GOVERNMENTAL REVIEW. Such Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Debentures.
g. RESIDENCY. Such Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on Schedule II hereto.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2. The Company
further acknowledges that, to the best of its knowledge, the Purchasers,
collectively, are not acting as a group pursuant to Rule 13d of the Exchange
Act.
ARTICLE III
OTHER AGREEMENTS
3.1. TRANSFER RESTRICTIONS.
a. If any Purchaser should decide to dispose of the Debentures or the
Debenture Shares held by it, such Purchaser understands and agrees that it may
do so only pursuant to an effective registration statement under the Securities
Act, to the Company or pursuant to an available exemption from the registration
requirements of the Securities Act or Rule 144 promulgated under the Securities
Act ("RULE 144"). The Company shall announce any material non-public information
that it legally is required to announce on or prior to the Effectiveness Date
(as defined in the Registration Rights Agreement) of the registration statement
filed pursuant to the Registration Rights Agreement and shall not enter into any
subsequent non-disclosure agreements that would prevent it from announcing any
such information that otherwise legally is required to be announced on or prior
to the Effectiveness Date, unless confidential treatment for such information is
granted by the Commission. In connection with any transfer of any Debentures or
Debenture Shares other than pursuant to an effective registration statement,
Rule 144 or to the Company, the Company may require the transferor thereof to
provide to the Company a written opinion of counsel experienced in the area of
United States securities laws selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
customary for opinions of counsel in comparable transactions, to the effect that
such transfer does not require registration of such transferred securities under
the Securities Act; provided, however, that if the Debentures or Debenture
Shares may be sold pursuant to Rule 144(k), no written opinion of counsel shall
be required from the Purchaser if such Purchaser provides reasonable assurances
that such security can be sold pursuant to Rule 144(k). Notwithstanding the
foregoing, the Company hereby consents to and agrees to register any transfer by
any Purchaser to an Affiliate of such Purchaser, provided that the transferee
certifies to the Company that it is an "accredited investor" as defined in Rule
501(a) under the Securities Act. Any such transferee shall agree in writing to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Transaction Documents. If a Purchaser provides the
Company with an opinion of counsel, the form and substance of which opinion
shall be customary for opinions of counsel in comparable transactions, to the
effect that a public sale, assignment or transfer of the Debentures and the
Debenture Shares may be made without registration under the Securities Act or
the Purchaser provides the Company with reasonable assurances that the
Debentures and the Debenture Shares can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold, the Company shall permit the transfer, and, in the
case of the Debenture Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. 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.
b. Each Purchaser agrees to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Debentures and the Debenture
Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
Neither the Debentures nor the Debenture Shares shall contain the
legend set forth above (or any other legend) (i) if in the written opinion of
counsel to the Company experienced in the area of United States securities laws
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission) or (ii) if such Debentures or Debenture Shares may be sold
pursuant to Rule 144(k). The Company agrees that it will provide each Purchaser,
upon request, with a certificate or certificates representing Debentures or
Debenture Shares, free from such legend at such time as such legend is no longer
required hereunder. If such certificate or certificates had previously been
issued with such a legend or any other legend, the Company shall, upon request
and delivery of such certificate or certificates to the Company for such
Purchaser, reissue to such Purchaser such certificate or certificates free of
any legend.
3.2. STOP TRANSFER INSTRUCTION. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company which
enlarge the restrictions on transfer set forth in Section 3.1.
3.3. FURNISHING OF INFORMATION. As long as any Purchaser owns the
Debentures or the Debenture Shares, the Company will cause the Common Stock to
continue at all times to be registered under Section 12(g) of the Exchange Act,
will timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to Section 13, 14 or 15(d) of the Exchange Act and,
unless filed by XXXXX, promptly furnish, but in no event later than two (2)
Business Days after the filing thereof with the Commission, such Purchaser with
true and complete copies of all such filings, and will not take any action or
file any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such reporting and filing obligations. As
long as any Purchaser owns the Debentures or the Debenture Shares, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
also agrees to send the following to each Purchaser prior to and during the
Effectiveness Period (as defined in the Registration Rights Agreement): (i) on
the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of its Subsidiaries and (ii) copies of any notices
and other information sent to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders. The Company further covenants that it will take such further
action as any holder of the Debentures or the Debenture Shares may reasonably
request, all to the extent required from time to time to enable such Person to
sell the Debentures or the Debenture Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in Section 3.1(b). Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized officer as
to whether it has complied with such requirements.
3.4. BLUE SKY LAWS. In accordance with the Registration Rights Agreement,
the Company shall if required under applicable law (i) qualify the Debenture
Shares under the securities or "blue sky" laws of such jurisdictions as the
Purchasers may request (or obtain an exemption from such qualification), (ii)
shall provide evidence of any such action so taken to each Purchaser on or prior
to the Closing Date and (iii) shall continue such qualification at all times
through the resale of all Debenture Shares, but in any event not past the fourth
anniversary of the Closing Date.
3.5. INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Debentures or the Debenture Shares in a manner that would require the
registration under the Securities Act of the sale of the Debentures or the
Debenture Shares to any Purchaser or cause the offering of such securities to be
integrated with any other offering of securities by the Company for the purpose
of any stockholder approval provision applicable to the Company or its
securities.
3.6. LISTING AND RESERVATION OF DEBENTURE SHARES.
a. The Company shall (i) not later than the time the Company filed the
registration statement on Form S-3 to register the Debenture Shares for resale,
prepare and file with Nasdaq (as well as any other national securities exchange
or market on which the Common Stock is then listed) additional shares listing
applications or letters acceptable to Nasdaq covering and listing a number of
shares of Common Stock which is at least equal to the maximum number of
Debenture Shares then issuable, assuming that the payment of all interest
payments on the Debentures for a period of one year and all future dividends on
such shares then outstanding were made in shares of Common Stock, (ii) take all
steps necessary to cause the Debenture Shares to be approved for listing on
Nasdaq (as well as on any other national securities exchange or market on which
the Common Stock is then listed) as soon as possible thereafter, (iii) maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all such Debenture Shares, and (iv) provide to the Purchasers evidence of such
listing. Neither the Company nor any of its Subsidiaries shall take any action
that would result in the delisting or suspension of the Common Stock on Nasdaq.
The Company shall promptly provide to each Purchaser copies of any notices it
receives from Nasdaq regarding the continued eligibility of the Common Stock for
listing on such automated quotation system, so long as such notice does not
include material, nonpublic information. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section
3.6(a).
b. The number of shares of Common Stock initially included in the
Initial Registration Statement (as defined in the Registration Rights Agreement)
shall be determined pursuant to Section 2(a) of the Registration Rights
Agreement.
c. The Company at all times shall reserve a sufficient number of
shares of its authorized but unissued Common Stock to provide for the full
conversion of the outstanding Debentures (including the payment of all interest
thereon for a one year period). Shares of Common Stock reserved for issuance
upon conversion of the Debentures shall be allocated pro rata to each of the
Purchasers in accordance with the amount of Debentures issued and delivered to
such Purchaser at the Closing. If at any time the number of shares of Common
Stock authorized and reserved for issuance is insufficient to cover the number
of Debenture Shares issued and issuable upon conversion of the Debentures (based
on the Conversion Price (as defined in the Debenture) in effect from time to
time without regard to any limitation on conversions or exercises and the number
of shares of Common Stock issuable upon the payment of interest on the principal
amount of the Debentures then outstanding for a one year period, the Company
will promptly take all corporate action necessary to authorize and reserve such
number of shares of Common Stock of such shares, including, without limitation,
calling a special meeting of stockholders to authorize additional shares to meet
the Company's obligations under this Section 3.6(c), in the case of an
insufficient number of authorized shares, and using its best efforts to obtain
stockholder approval of an increase in such authorized number of shares. In
addition, if on the actual date of an adjustment of the Conversion Price
pursuant to Section 4.5 of the Debenture, the registration statements are
insufficient to register such number of shares of Common Stock, the Company
shall immediately, but in no more than five (5) Business Days thereafter, file a
registration statement sufficient to register such additional shares of Common
Stock. All calculations of the above amount shall be made without regard to any
limitation on conversions of Debentures.
3.7. NOTICE OF BREACHES.
a. The Company and each Purchaser shall give prompt written notice to
the other of any breach by it of any representation, warranty or other agreement
contained in this Agreement or in the Transaction Documents, as well as any
events or occurrences arising after the date hereof and prior to the Closing
Date, which would reasonably be likely to cause any representation or warranty
or other agreement of such party, as the case may be, contained herein to be
incorrect or breached as of the Closing Date, provided such notice will not
constitute material non-public information unless, after being told by the
Company that the notice would constitute material non-public information, the
Purchaser agrees to receive such notice. However, no disclosure by either party
pursuant to this Section 3.7 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Transaction Documents.
b. Notwithstanding the generality of Section 3.7(a), the Company shall
promptly notify, provided such notification will not constitute material
non-public information, each Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company or any Subsidiary to the effect
that the consummation of the transactions contemplated hereby and by the
Transaction Documents violates or would violate any written agreement or
understanding between such lender and the Company or any Subsidiary, and the
Company shall promptly furnish by facsimile to the Purchasers a copy of any
written statement in support of or relating to such claim or notice.
c. The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the Transaction Documents
shall not be imputed to, and shall have no effect upon, any other Purchaser or
affect the Company's obligations under this Agreement or any Transaction
Document to any non-defaulting Purchaser.
3.8. FORM D. a. The Company agrees to file a Form D with respect to the
Debentures as required by Rule 506 under Regulation D and to provide a copy
thereof to each Purchaser promptly after such filing.
3.9. USE OF PROCEEDS. The Company shall use the proceeds from the sale of
the Debentures for working capital, including ongoing Company obligations in
clinical trials.
3.10. TRANSACTIONS WITH AFFILIATES. So long as any Debentures are
outstanding, the Company shall not, and shall cause each of its Subsidiaries not
to, enter into, amend, modify or supplement, or permit any Subsidiary to enter
into, amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any Subsidiary's officers, directors or persons
who were officers or directors at any time during the previous two years,
stockholders who beneficially own 5% or more of the Common Stock, or Affiliates
or any individual related by blood, marriage or adoption to any such individual
or with any entity in which any such entity or individual owns a 5% or more
beneficial interest (each a "RELATED PARTY"), except for (a) customary
employment arrangements and benefit programs on reasonable terms, (b) any
agreement, transaction, commitment or arrangement on an arms-length basis on
terms no less favorable than terms which would have been obtainable from a
Person other than such Related Party, or (c) any agreement, transaction,
commitment or arrangement which is approved by a majority of the disinterested
directors of the Company. For purposes hereof, any director who is also an
officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. "AFFILIATE" for purposes of this section only means,
with respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a 5% or more equity interest in that person or entity, (ii)
has 5% or more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) shares common control with that person or entity.
"CONTROL" or "CONTROLS" for purposes of this section means that a person or
entity has the power, direct or indirect, to conduct or govern the policies of
another person or entity.
3.11. TRANSFER AGENT INSTRUCTIONS. At each Closing the Company shall issue
irrevocable instructions to its transfer agent (and shall issue to any
subsequent transfer agent as required), to issue certificates, registered in the
name of each such Purchaser or its respective nominee(s), for the Debenture
Shares in such amounts, in accordance with the terms of the Debentures, as
specified from time to time by each Purchaser to the Company in a form
acceptable to such Purchasers (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS").
The Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 3.11, and stop transfer
instructions to give effect to Section 3.1 hereof (in the case of the Debenture
Shares, prior to registration of the Debenture Shares under the Securities Act)
will be given by the Company to its transfer agent and that the Debentures and
the Debenture Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Transaction Documents. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Purchasers by violating
the intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 3.11 will be inadequate and agrees, in the event of a beach
or threatened breach by the Company of the provisions of this Section 3.11, that
the Purchasers, shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
3.12. PRESS RELEASE; FILING OF FORM 8-K. Subject to the provisions of
Section 6.10 hereof, on or before the fifth (5th) Business Day following the
Closing Date, the Company shall (i) file a press release in form and substance
reasonably acceptable to the Purchasers (except as otherwise required by law)
and (ii) file a Form 8-K with the Commission describing the terms of the
transaction contemplated by this Agreement and the Transaction Documents in the
form required by the Exchange Act.
3.13. ORDINARY COURSE BROKERAGE AND TRADING. Subject to compliance with all
applicable securities laws and Nasdaq regulations, no Purchaser shall be
prohibited from engaging in its ordinary course brokerage and trading activities
in respect of the Company's Common Stock; PROVIDED that the personnel engaged in
such activities have not been involved with the transactions contemplated hereby
and have not been provided with confidential information with respect to the
Company.
3.14. BEST EFFORTS. Each of the parties hereto shall use its best efforts
to satisfy each of the conditions to be satisfied by it as provided in Article
IV of this Agreement.
3.15. CORPORATE EXISTENCE. Until such time, while the Debentures are
outstanding, as all of the Purchasers provide the Company with written notice
that they do not beneficially own any Debentures, the Company shall maintain its
corporate existence 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 in connection herewith and
(ii) is a publicly traded corporation whose common stock is listed for trading
on the Nasdaq or any subsequent Market (as defined in the Debentures).
3.16. NO VIOLATION OF APPLICABLE LAW. Notwithstanding any provision of this
Agreement to the contrary, if the redemption of Debentures or Debenture Shares
otherwise required under this Agreement or the Registration Rights Agreement
would be prohibited by the relevant provisions of the Business Corporation Law
of the State of New York, such redemption shall be effected as soon as it is
permitted under such law; provided, however, that from the fifth (5th) day after
such redemption notice until such redemption price is paid in full, interest on
any such unpaid amount shall accrue and be payable at the rate of 15% per annum
in accordance with the Debentures.
3.17. SUBSEQUENT REGISTRATIONS. Other than Debenture Shares and other
Registrable Securities (as defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement, the Company
shall not, for a period of not less than 90 Trading Days after the date that the
Registration Statement is declared effective by the Commission, without the
prior written consent of Purchasers holding a majority of the principal amount
of the Debentures, (i) except for securities issuable in connection with the
transactions identified on Schedule 3.17 hereto, issue or sell any of its or any
of its Affiliates' equity or equity-equivalent securities unless such issuance
or sale is equal to or at a premium to the Per Share Market Value (as defined in
the Debenture) on the date of such issuance or sale, (ii) except in connection
with the transactions identified on Schedule 3.17 hereto, register for resale
any securities of the Company if the Per Share Market Value is twelve dollars
($12.00) or less or (iii) except in connection with the transactions identified
on Schedule 3.17 hereto, have a registration statement declared effective
covering an issuance by the Company of any of its securities if the Per Share
Market Value is twelve dollars ($12.00) or less. Any days that any Purchaser is
unable to sell Debenture Shares under an effective Registration Statement shall
be added to such 90 Trading Day period for the purposes of (i), (ii) and (iii)
above.
3.18. TRADING RESTRICTIONS. Each Purchaser represents and agrees: (i) that
it has not and will not maintain a short position within twenty (20) days of the
First Closing, (ii) that all short positions taken in the Company's Common
Stock, by such Purchaser, will be covered within thirty (30) Trading Days, (iii)
that if such Purchaser exercises the Purchasers Call Option, then within twenty
(20) days of the Second Closing Date, such Purchaser will not short the
Company's Common Stock at a price below the applicable Conversion Price (as set
forth in the Debenture) and (iv) upon notice from the Company that the Company,
in its good faith belief, is planning to consummate a transaction pursuant to
which there will be a reset event pursuant to Section 4.5(e) of the Debenture,
the Purchasers shall not hold a short position below the applicable Conversion
Price for the lesser of twenty (20) days and the closing of such transaction.
ARTICLE IV
CONDITIONS
4.1. FIRST CLOSING CONDITIONS.
a. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL THE
DEBENTURES. The obligation of the Company to sell the Debentures is subject to
the satisfaction or waiver (with prior written notice to each Purchaser) by the
Company, at or before the First Closing Date of each of the following
conditions:
(i) ACCURACY OF THE PURCHASERS' REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each Purchaser in this Agreement
shall be true and correct in all material respects as of the date when made
as though made at that time (except for representations and warranties that
speak as of a specific date) and as of the First Closing;
(ii) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or before the
First Closing; and
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Transaction Documents.
b. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE THE DEBENTURES AT THE FIRST CLOSING. The obligation of each Purchaser
hereunder to acquire and pay for the Debentures at the First Closing is subject
to the satisfaction or waiver (with prior written notice to the Company and each
other Purchaser) by such Purchaser, at or before the First Closing Date, of each
of the following conditions:
(i) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company set forth in this Agreement
and in the Registration Rights Agreement shall be true and correct in all
material respects as of the date when made as though made at that time
(except for representations and warranties that speak as of a specific
date) and as of the First Closing Date;
(ii) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or before the First
Closing Date;
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(iv) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading in
the Common Stock shall not have been suspended by the Commission, on Nasdaq
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
(v) LISTING OF COMMON STOCK. The Common Stock shall have been at
all times since the date of this Agreement and on the Closing Date listed
for trading on the Nasdaq;
(vi) REQUIRED APPROVALS. All Required Approvals, other than those
relating solely to Closing Dates other than the First Closing Date, shall
have been obtained and copies thereof delivered to the Purchasers other
than those relating solely to Closing Dates other than the First Closing
Date;
(vii) SHARES OF COMMON STOCK. The Company shall have duly
reserved the number of Debenture Shares required by this Agreement and the
Transaction Documents to be reserved upon the conversion of the Debentures
acquired by the Purchaser on the First Closing Date;
(viii) ADVERSE CHANGES. Since the date of the financial
statements included in the Company's Quarterly Report on Form 10-Q or
Annual Report on Form 10-K, whichever is more recent, last filed prior to
the date of this Agreement, no event which had a Material Adverse Effect
shall have occurred which is not disclosed on any Schedule hereto (for
purposes hereof, changes in the market price of the Common Stock may be
considered in determining whether there has occurred an event which has had
a Material Adverse Effect);
(ix) LITIGATION. No litigation shall have been instituted or
threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have had a Material Adverse Effect;
(x) CHANGE OF CONTROL. No Change of Control shall have occurred
between the date hereof and the First Closing Date. "Change of Control"
means the occurrence of any of (i) an acquisition after the date hereof by
an individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the Purchasers or any of
their Affiliates, of in excess of 33% of the voting securities of the
Company, (ii) a replacement of more than one-half of the members of the
Company's Board of Directors that is not approved by those individuals who
are members of the Board of Directors on the date hereof, or successors on
a continuing Board of Directors, in one or a series of related
transactions, (iii) the merger of the Company with or into another entity
where the shareholders of the Company own less than 50% of the outstanding
voting power of the surviving corporation, (iv) the consolidation or sale
of all or substantially all of the assets of the Company in one or a series
of related transactions, or (v) the execution by the Company of an
agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii), (iii) or
(iv); and
(xi) TRANSFER AGENT INSTRUCTIONS. The Irrevocable Transfer Agent
Instructions, in a form reasonably acceptable to the Purchasers, shall have
been delivered to and acknowledged in writing by the Company's transfer
agent with a copy forwarded to each Purchaser.
(xii) RESOLUTIONS. The Board of Directors of the Company shall
have adopted resolutions consistent with Section 2.1(b) and in a form
reasonably acceptable to each Purchaser (the "Resolutions").
c. DOCUMENTS AND CERTIFICATES. At the First Closing, the Company shall
have delivered to the Purchasers, the following in form and substance reasonably
satisfactory to the Purchasers:
(i) OPINION. An opinion of the Company's legal counsel in the
form attached hereto as Exhibit C dated as of the First Closing Date;
(ii) DEBENTURE. A Debenture(s) representing the principal amount
of Debentures purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such Purchaser,
each in form satisfactory to the Purchaser;
(iii) REGISTRATION RIGHTS. The Company shall have executed and
delivered the Registration Rights Agreement;
(iv) OFFICER'S CERTIFICATE. An Officer's Certificate dated the
First Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations, warranties and
covenants as of such First Closing Date and confirming the compliance by
the Company with the conditions precedent set forth in this Section 4.1 as
of the First Closing Date;
(v) SECRETARY'S CERTIFICATE. A Secretary's Certificate dated the
First Closing Date and signed by the Secretary or Assistant Secretary of
the Company certifying (A) that attached thereto is a true and complete
copy of the Certificate of Incorporation of the Company, as in effect on
the First Closing Date, (B) that attached thereto is a true and complete
copy of the by-laws of the Company, as in effect on the First Closing Date
and (C) that attached thereto is a true and complete copy of the
Resolutions duly adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement and
of the Transaction Documents, and that such Resolutions have not been
modified, rescinded or revoked;
(vi) CERTIFICATE OF INCORPORATION. The Company shall have
delivered to each of the Purchasers a copy of a certificate evidencing the
incorporation and good standing of the Company, in such corporation's state
of incorporation issued by the Secretary of State of such state of
incorporation as of a date within ten days of the First Closing Date;
(vii) TRANSFER AGENT LETTER. The Company shall have delivered to
each Purchaser a letter from the Company's transfer agent certifying the
number of shares of Common Stock outstanding as of a date within five days
of the First Closing Date;
4.2. SECOND CLOSING.
a. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL THE
DEBENTURES. The obligation of the Company to sell the Debentures is subject to
the satisfaction or waiver (with prior written notice to each Purchaser) by the
Company, at or before the Second Closing Date of each of the following
conditions:
(i) FIRST CLOSING. The First Closing shall have occurred for an
aggregate amount of $10,000,000.
(ii) MINIMUM ISSUANCE. An aggregate amount of at least five
million dollars ($5,000,000) in Debentures has been requested to be issued
in the Second Closing.
(iii) ACCURACY OF THE PURCHASERS' REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each Purchaser in this Agreement
shall be true and correct in all material respects as of the date when made
as though made at that time (except for representations and warranties that
speak as of a specific date) and as of the Second Closing;
(iv) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or before the
Second Closing; and
(v) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Transaction Documents.
b. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE. The obligation of each Purchaser hereunder to acquire and pay for the
Debentures at the Second Closing is subject to the satisfaction or waiver (with
prior written notice to the Company and each other Purchaser) by such Purchaser,
at or before the Second Closing Date, of each of the following conditions:
(i) FIRST CLOSING. The First Closing shall have occurred;
(ii) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company set forth in this
Agreement and the Registration Rights Agreement shall be true and correct
in all respects as of the date when made and as of the Second Closing Date
as though made at that time, except for changes made to the Schedules to
update them since the First Closing and except for other exceptions to the
representations and warranties necessary to update then since the First
Closing (in either case with information about matters that do not have a
Material Adverse Effect);
(iii) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the
Transaction Documents to be performed, satisfied or complied with by the
Company at or before to the Second Closing;
(iv) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(v) REGISTRATION STATEMENTS FOR DEBENTURES AND WARRANTIES OF
FIRST CLOSING. (A) The Registration Statement with respect to the Debenture
Shares with respect to the Debenture(s) sold at the First Closing shall
have been declared effective under the Securities Act by the SEC; (B) a
Registration Statement with respect to the Debenture Shares with respect to
the Debenture(s) to be sold at the Second Closing shall have been declared
effective under the Securities Act; and (C) on the Second Closing Date such
Registration Statements shall be effective, not subject to any stop order
and not be subject to any suspension of the Registration Rights Agreement,
and shall have been effective and shall not have been subject to any stop
order for the thirty (30) Business Days prior to the Second Closing Date
and no stop order shall be pending or threatened at the Second Closing
Date.
(vi) ADVERSE CHANGES. Since the date of the financial statements
included in the Company's Quarterly Report on Form 10-Q or Annual Report on
Form 10-K, whichever is more recent, last filed prior to the date of this
Agreement, no event which had a Material Adverse Effect shall have occurred
which is not disclosed on any Schedule hereto or otherwise in writing to
each of the Purchasers;
(vii) LITIGATION. No litigation shall have been instituted or
threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect;
(viii) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading in
the Common Stock shall not have been suspended by the Commission, on Nasdaq
during the sixty (60) days prior to the Second Closing (except for any
suspension of trading of limited duration solely to permit dissemination of
material information regarding the Company);
(ix) LISTING OF COMMON STOCK. The Debenture Shares shall on the
Second Closing Date be, listed for trading on Nasdaq, or other exchange
acceptable to Purchasers;
(x) REQUIRED APPROVALS. All Required Approvals shall have been
obtained and copies thereof delivered to the Purchasers.
(xi) SHARES OF COMMON STOCK. The Company shall have duly reserved
the number of Debenture Shares required by this Agreement to be reserved
for issuance upon the conversion of the Debentures purchased on the First
Closing Date and on the Second Closing Date.
(xii) PERFORMANCE OF CONVERSION/EXERCISE OBLIGATIONS. The Company
shall have delivered Debenture Shares upon any demand for conversion of any
of the Debentures and otherwise performed its obligations in accordance
with the terms, conditions and timing requirements of the Transaction
Documents.
(xiii) CHANGE OF CONTROL. Subject to Section 4.2(c), no Change of
Control in the Company shall have occurred;
(xiv) TRANSFER AGENT INSTRUCTIONS. The Irrevocable Transfer Agent
Instructions, in a form reasonably acceptable to the Purchasers, shall have
been delivered to and acknowledged by the Company's transfer agent with a
copy forwarded to each Purchaser;
(xv) MINIMUM PER SHARE MARKET VALUE. On the date of the Company
Put Option Notice, the Per Share Market Value was more than fifteen dollars
($15.00); and
(xvi) OPTIONAL CONVERSION. The Company shall have exercised the
Optional Conversion (as defined in the Debentures).
c. DOCUMENTS AND CERTIFICATES. On the Second Closing Date, the Company
shall have delivered to the Purchasers, the following in form and substance
reasonably satisfactory to the Purchasers:
(i) OPINION. An opinion of the Company's legal counsel, in
substantially the form attached hereto as Exhibit C dated as of the Second
Closing Date;
(ii) DEBENTURE(S). A Debenture(s) representing the Debenture(s)
purchased by such Purchaser as set forth next to such Purchaser's name on
the Second Closing Schedule registered in the name of such Purchaser, each
in form satisfactory to the Purchaser;
(iii) OFFICER'S CERTIFICATE. The Company shall deliver to the
Purchasers an Officer's Certificate dated the Second Closing Date and
signed by an executive officer of the Company confirming the accuracy of
the Company's representations, warranties and covenants as of such Second
Closing Date and confirming the compliance by the Company with the
conditions precedent set forth in this Section 4.2(b) as of the Second
Closing Date;
(iv) SECRETARY'S CERTIFICATE. A Secretary's Certificate dated the
Second Call Option Closing Date and signed by the Secretary or Assistant
Secretary of the Company certifying (A) that attached thereto is a true and
complete copy of the Certificate of Incorporation of the Company, as in
effect on the Second Closing Date, (B) that attached thereto is a true and
complete copy of the bylaws of the Company, as in effect on the Second
Closing Date and (C) that attached thereto is a true and complete copy of
the resolutions duly adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of the Agreement and
the Transaction Documents and that such resolutions have not been modified,
rescinded or revoked;
(v) CERTIFICATE OF INCORPORATION. The Company shall have
delivered to each of the Purchasers a copy of a certificate evidencing the
incorporation and good standing of the Company, in such corporation's state
of incorporation issued by the Secretary of State of such state of
incorporation as of a date within ten days of the Second Closing Date;
(vi) TRANSFER AGENT LETTER. The Company shall have delivered to
each Purchaser a letter from the Company's transfer agent certifying the
number of shares of Common Stock outstanding as of a date within five days
of the Second Closing Date; and
(vii) OTHER DOCUMENTS. The Company shall have delivered to each
Purchaser such other documents relating to the transactions contemplated by
the Transaction Documents as the Purchasers or its counsel may reasonably
request.
ARTICLE V
INDEMNIFICATION
5.1. INDEMNIFICATION.
a. Except to the extent that matters which could be covered by this
Section 5 are covered by Section 5 of the Registration Rights Agreement, in
consideration of the Purchasers, execution and delivery of this Agreement and
the Transaction Documents and acquiring the Debentures and Debenture Shares
thereunder and in addition to all of the Company's other obligations under this
Agreement and the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Purchaser, its past and present Affiliates and
their successors and assigns (in accordance with the provisions of Section 6.5
hereof), each other holder of the Debenture Shares and all of their
stockholders, officers, directors, employees and direct or indirect investors
and any of the foregoing Person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses,
proceedings, costs (as incurred), penalties, fees (including legal fees and
expenses), liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including interest, penalties and
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or in the Transaction Documents, or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement or the Transaction Documents, or any other certificate, instrument or
document contemplated hereby or thereby, or (c) any cause of action, suit or
claim brought or made, other than by the Company, against such Indemnitee and
arising out of or resulting from (i) any wrongful action or inaction by the
Company in connection with the execution, delivery, performance or enforcement
of this Agreement or the Transaction Documents, assuming that the Purchaser
seeking indemnification has not committed a material breach of its
representations, warranties or obligation under this Agreement or the
Transaction Documents, which breach is the cause of the Company's wrongful
action or inaction, (ii) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of the issuance of the
Debentures or (iii) solely the status of such Purchasers or holders of the
Debentures or the Debenture Shares as an investor in the Company. The
indemnification obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliate of the Purchasers and
partners, directors, agents, employees and controlling Persons (if any), as the
case may be, of the Purchasers and any such affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling Persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
this Agreement or any of the Transaction Documents except to the extent that any
losses, claims, damages, liabilities or expenses incurred by the Company result
from the breach of representations, warranties or obligation or the gross
negligence or willful misconduct of such Purchaser or entity in connection with
the transactions contemplated by this Agreement or the Transaction Documents. To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
b. All fees and expenses (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) of the Indemnitees
shall be paid to the Indemnities as incurred, within ten (10) Business Days of
written notice thereof to the Company, which notice shall be delivered no more
frequently than on a monthly basis (regardless of whether it is ultimately
determined that an Indemnitee is not entitled to indemnification hereunder;
PROVIDED, that the Company may require such Indemnitee to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnitee is not entitled to indemnification hereunder), PROVIDED,
HOWEVER, that the Company shall only be required to pay the legal fees of one
legal counsel, which counsel shall be Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
ARTICLE VI
MISCELLANEOUS
6.1. ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules hereto and the Transaction Documents contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
6.2. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by 8:00 p.m. EST where such
notice is received) or the first business day following such delivery (if
received after 8:00 p.m. EST where such notice is received); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
Alliance Pharmaceutical Corp.
0000 Xxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
With a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
If to the Transfer Agent:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
If to _____________________:
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With a copy to:
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Each party shall provide written notice to the other party of any
change in address or facsimile number in accordance with the provisions hereof.
6.3. AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and each of the Purchasers or, in the case of a waiver, by the
Company (if a waiver of the Company' rights) or Purchasers holding a majority of
the then outstanding principal amount of Debentures or who will be purchasing
the majority of the principal amount of the Debentures (if a waiver of the
Purchasers' rights). No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. Notwithstanding the foregoing, no such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Debentures outstanding without the consent of the Company and those Holders who
might be adversely affected by such an amendment. The Company shall not offer or
pay any consideration to a Purchaser for consenting to such an amendment or
waiver unless the same consideration is offered to each Purchaser and the same
consideration is paid to each Purchaser which consents to such amendment or
waiver.
6.4. HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
6.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each of the Purchasers, except pursuant to
a merger by operation of law. The Purchasers may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
Company, provided, that any assignees must make the representations and
warranties set forth in Section 2.2 and otherwise comply with the terms of this
Agreement otherwise applicable to its assignor. This provision shall not limit a
Purchaser's right to transfer securities in accordance with all of the terms of
this Agreement or the Transaction Documents.
6.6. NO 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.
6.7. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
6.8. SURVIVAL. The representations and warranties of the Company and the
Purchasers contained in Sections 2.1 and 2.2, the agreements and covenants set
forth in Section 3, and the indemnification provisions set forth in Section 5,
shall survive the Closing and any conversion of the Debentures regardless of any
investigation made by or on behalf of the such Purchaser or by or on behalf of
the Company, except that, in the case of representations and warranties such
survival shall be limited to the period of four (4) years following the Closing
Date on which they were made or deemed to have been made (other than with
respect to any claim by a third party against the party to this Agreement who
seeks to assert a claim based on such representations and warranties). This
section shall have no effect on the survival of the indemnification provisions
of the Registration Rights Agreement.
6.9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
6.10. PUBLICITY. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other party with prior notice of such public statement. The Company
shall not publicly or otherwise disclose the names of any of the Purchasers
without such Purchaser's prior written consent. The Purchasers and their
affiliated companies shall, without further cost, have the reasonable right to
use in its advertising, marketing or other similar materials the Company's logo
and trademarks and all or parts of the Company's press releases that focus on
the transaction forming the subject matter of this Agreement or which make
reference to the transaction. The Purchasers understand that this grant by the
Company only waives objections that the Company might have to the use of such
materials by the Purchasers and in no way constitutes a representation by the
Company that references in such materials to the activities of third-parties
have been cleared or constitute a fair use.
6.11. SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
6.12. REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchasers
will be entitled to specific performance of the obligations of the Company under
this Agreement or the Transaction Documents without the showing of economic loss
and without any bond or other security being required. Each of the Company and
the Purchasers (severally and not jointly) agree that monetary damages would not
be adequate compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
6.13. INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
6.14. PAYMENT SET ASIDE. To the extent that the Company makes a payment or
payments to the Purchasers hereunder or pursuant to the Transaction Documents or
the Purchasers enforce or exercise their rights hereunder or thereunder, and
such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
6.15. 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.
6.16. FEES AND EXPENSES. Except as set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement; PROVIDED, HOWEVER, that the Company shall pay the
Purchasers an aggregate fee of $50,000 at the First Closing. The Company shall
pay all stamp and other taxes and duties levied in connection with the issuance
of the Debenture Shares pursuant hereto.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
ALLIANCE PHARMACEUTICAL CORP.
By:
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Name:
Title:
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By:
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SCHEDULE I
PRINCIPAL AMOUNT OF NUMBER OF SHARES
NAME OF PURCHASER DEBENTURES AT CLOSING DATE UNDERLYING DEBENTURES
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SCHEDULE II
NAME OF PURCHASER ADDRESS
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Exhibit A
Form of Convertible Debenture
(attached)
Exhibit B
Form of Registration Rights Agreement
(attached)
Exhibit C
Company's Legal Opinion
(attached)
