EXHIBIT II
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THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS SUBSCRIPTION
AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR
TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.
SERIES A PREFERRED STOCK
SECURITIES PURCHASE AGREEMENT
NU-TECH BIO-MED, INC.
THIS AGREEMENT is made this 6th day of November 1996, between NU-TECH
BIO-MED, INC., NASDAQ Symbol "NTBM" (the "Company"), a Delaware corporation,
with its principal office at 00 Xxxxxx Xxxx, Xxxxxxx, XX 00000, and XXXXXXXX
FUND LTD. (the "Purchaser"), with its principal office at 0 Xxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx.
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and the Purchaser agree as follows:
Section 1. Certain Definitions For purposes of this Agreement:
"Closing Date" means the date agreed to by the parties for the
delivery of the stock certificate against a wire transfer of the funds to the
Company.
"Closing" means the completion of the purchase and sale of the
Shares on the Closing Date.
"Common Stock" means the Common Stock of the Company, $.01 par
value.
"Conversion Date" means the date on which the Purchaser has
telecopied the Notice of Conversion to the Company.
"Conversion Shares" means the common stock issued upon the
conversion of the Series A Convertible Preferred Stock.
"Convertible Preferred Stock" means the Shares of Series A Preferred
Stock of the Company convertible into common stock of the Company as
hereinafter provided.
PAGE 1
"Conversion Price" means an amount equal to the lesser of (i) a
twenty-five (25%) percent discount off the five (5) day average closing bid
price of the Common Stock as reported by NASDAQ for the previous five (5)
business days ending on the day before the Conversion Date; or (ii) $17.50.
In the event that the Company has not complied with Section 7.2 of the
Agreement and the registration statement is not effective within one hundred
twenty (120) days from the Closing Date, the discount used in calculating the
Conversion Price in the event that the formula used is (i) above the discount
will be thirty-five (35%) percent, or if (ii) is used, the price will be
$15.75.
"Purchase Price" means the aggregate purchase price of the Shares
purchased.
"Shares" means the purchased Convertible Preferred Shares.
Section 2. Authorization and Sale of Shares
2.1 Authorization. Subject to the terms and conditions of this
Agreement, the Company has authorized the sale and issuance of the Shares.
2.2 Agreement to Sell and Purchase the Shares. The Company will
sell and the Purchaser will buy Shares in reliance upon the representations
and warranties of the Company and Purchaser contained in this Agreement, upon
the terms and conditions hereinafter set forth, 2.50 shares of Preferred
Shares for an aggregate purchase price of Two Hundred and Fifty Thousand
($250,000) Dollars based on U.S. $1,000 per share. Such purchase and sale
shall occur on the Closing Date.
2.3 Time and Place of Closing. The Closing shall be held at the
offices of Xxxxxxx X. Xxxxxxxxx, P.C. ("Escrow Agent"), 00 Xxxxxxxx, Xxx Xxxx,
XX 00000, as promptly as practicable as agreed to by the parties to this
Agreement.
2.4 Payment and Delivery. At or prior to the Closing, the
following shall occur:
(a) Purchaser shall remit by wire transfer the Purchase Price to
Escrow Agent as per separate Escrow Agreement, as payment in full for the
Shares.
(b) Company shall deliver or cause to be delivered to Escrow Agent
a certificate representing the Shares, registered in the name of Purchaser (or
any nominee designated by Purchaser at least three days before the Closing
Date), free and clear of all liens, claims, charges and encumbrances.
PAGE 2
(c) Wire instructions for Xxxxxxx X. Xxxxxxxxx, P.C. are as
follows:
Chase Manhattan Bank, N.A.
ABA #000000000
For the Account of United States Trust Company of New York
Account #000-0-000000
In Favor of Xxxxxxx X. Xxxxxxxxx, P.C. Attorney Trust Account
Account #59-02347
Section 3. General Representations and Warranties of the Company.
The Company hereby represents and warrants to, and covenants with, the
Purchaser that the following are true and correct as of the date hereof and as
of the Closing Date.
3.1 Organization; Qualification. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware and is
in good standing under such laws. The Company has all requisite corporate
power and authority to own, lease and operate its properties and assets, and
to carry on its business as presently conducted. The Company is qualified to
do business as a foreign corporation in each jurisdiction in which the
ownership of its property or the nature of its business requires such
qualification, except where failure to so qualify would not have a material
adverse effect on the Company.
3.2 Capitalization. The authorized capital stock of the Company
consists of 12,000,000 Shares of Common Stock, $.01 par value, and 1,000,000
Shares of Preferred Stock, $.01 par value, 14,000 of which have been
designated Series A Convertible Preferred Stock. All issued and outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. The Company will reserve from its authorized
but unissued shares of Common Stock a sufficient number of shares of Common
Stock to permit the conversion in full of the outstanding Shares. As of the
Closing Date, the Company had reserved sufficient shares of Common Stock for
issuance upon exercise of the Shares.
3.3 Authorization. The Company has all requisite corporate right,
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares and the performance
of the Company's obligations hereunder has been taken. This Agreement has
been duly executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to the indemnification provisions set forth
in Section 7.4 of this Agreement. Upon their issuance and delivery pursuant
to this Agreement, the Securities will be validly issued, fully paid and
PAGE 3
nonassessable and will be free of any liens or encumbrances; provided,
however, that the Shares are subject to restrictions on transfer under state
and/or federal Shares laws. The issuance and sale of the Shares will not give
rise to any preemptive right or right of first refusal or right of
participation on behalf of any person.
3.4 No Conflict. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit, under, any provision of the Articles of Incorporation, and any
amendments thereto, Bylaws, Stockholders Agreements and any amendments thereto
of the Company or any material mortgage, indenture, lease or other agreement
or instrument, permit, concession, franchise, license, judgment, order, decree
statute, law, ordinance, rule or regulation applicable to the Company, its
properties or assets.
3.5 Accuracy of Reports and Information. The Company is in full
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Action"). The Company his registered its Common
Stock pursuant to Section 12 of the Exchange Act and the Common Stock is
listed and trades on Nasdaq Small Cap Market.
The Company has filed all material required to be filed pursuant to
all reporting obligations, under either Section 13(a) or 15(d) of the Exchange
Act for a period of at least twelve (12) months immediately preceding the
offer to sale of the Shares (or for such shorter period that the Company has
been required to file such material).
3.6 SEC Filings/Full Disclosure. None of the Company's filings
with the Securities and Exchange Commission since July 1, 1995 contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made, not misleading. The
Company has, since July 1, 1995, timely filed all requisite forms, reports and
exhibits thereto with the Securities and Exchange Commission.
There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been disclosed in
writing to the Purchaser could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) or in the earnings,
business affairs, business prospects, properties or assets of the Company, or
(ii) could reasonably be expected to materially and adversely affect the
ability of the Company to perform its obligations pursuant to this Agreement.
3.7 Absence of Undisclosed Liabilities. The Company has no
material liabilities or obligations, absolute or contingent (individually or
in the aggregate), except as set forth in the Financial Statements or as
incurred in the ordinary course of business after the date of the Financial
Statements.
PAGE 4
3.8 Governmental Consent. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Shares, or
the consummation of any other transaction contemplated hereby, except the
filing with the SEC of a registration statement on Form S-3 for the purpose of
registering the Common Stock underlying the Shares.
3.9 Intellectual Property Rights. Except as disclosed in the Form
10-K or Form 10-Qs and Form 8-Ks filed by the Company since July 1, 1995 (the
"SEC Reports"), the Company has sufficient trademarks, trade names, patent
rights, copyrights and licenses to conduct its business as contemplated in the
SEC Reports. To the Company's knowledge, neither the Company nor its products
is infringing or will infringe any trademark, trade name, patent right,
copyright, license, trade secret or other similar right of others currently in
existence; and there is no claim being made against the Company regarding any
trademark, trade name, patent, copyright, license, trade secret or other
intellectual property right which could have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Company.
3.10 Material Contracts. Except as set forth in the SEC Reports,
the agreements to which the Company is a party described in the SEC Reports
are valid agreements, in full force and effect, the Company is not in material
breach or material default (with or without notice or lapse of time, or both)
under any of such agreements, and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.
3.11 Litigation. There is no action, proceeding or investigation
pending, or to the Company's knowledge threatened, against the Company which
might result, either individually or in the aggregate, in any material adverse
change in the business, prospects, conditions, affairs or operations of the
Company. The Company is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency
or instrumentality. There is no action, suit, proceeding or investigation by
the Company currently pending or which the Company currently intends to
initiate.
3.12 Title to Assets. Except as set forth in SEC Reports, the
Company has good and marketable title to all properties and material assets
described in the SEC Reports as owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company.
3.13 Subsidiaries. Except as disclosed in the SEC Reports, the
Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, association or other business
entity.
PAGE 5
3.14 Required Governmental Permits. The Company is in possession
of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities which are material to the conduct of its business, all
of which are valid and in full force and effect.
3.15 Listing. The Company will maintain the listing of its Common
Stock on the Nasdaq Small Cap Market.
3.16 Other Outstanding Securities/Financing Restrictions. Except
as disclosed in the SEC Reports, there are no other outstanding securities
debt or equity presently convertible into Common Shares.
3.17 Legal Opinion. Purchaser shall, upon purchase of the Shares,
receive an opinion letter from counsel to the Company, and the Company
represents that it will immediately obtain such an opinion from counsel to the
satisfaction of the Transfer Agent, to the effect that:
(i) The Company is duly incorporated and validly existing
in the jurisdiction of its incorporation. The Company and/or its
subsidiaries are duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions where the Company
and/or its subsidiaries owns or leases properties, maintains employees or
conducts business, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect on the Company, and has
all requisite corporate power and authority to own its properties and
conduct its business.
(ii) There is no action, proceeding or investigation
pending, or to such counsel's knowledge, threatened against the Company
which might result, either individually or in the aggregate, in any
material adverse change in the business, prospects, conditions, affairs
or operations of the Company.
(iii) The Company is not a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality.
(iv) There is no action, suit, proceeding or investigation
by the Company currently pending or which the Company currently intends
to initiate.
(v) All issued and outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and
nonassessable.
(vi) The Convertible Preferred Shares, which shall be issued
at the closing, are properly issued in accordance with the law of the
Company's State of Incorporation.
PAGE 6
(vii) The Common Stock is registered pursuant to Section
12(b) or Section 12(g) of the Securities Exchange Act of 1934, as
amended.
(viii) This Securities Purchase Agreement, the issuance of
Convertible Preferred Shares and the issuance of the Conversion Shares,
have been duly approved by all required corporate action and that all
such securities, upon delivery, shall be validly issued and outstanding,
fully paid and nonassessable.
(ix) The issuance of the Conversion Shares in accordance
with the terms and conditions of the Certificate of Designation and this
Agreement, will not violate the applicable listing agreement between the
Company and any securities exchange or market on which the Company's
securities are listed.
Section 4. Representations, Warranties and Covenants of the
Purchaser. The Purchaser represents and warrants to, and covenants with, the
Company that the following are true and correct as of the date hereof and as
of the Closing Date.
4.1 Authority. The Purchaser's signatory has all right, power,
authority and capacity to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Purchaser and will constitute the legal, valid and
binding obligations of the Purchaser, enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to the indemnification provisions set forth
in Section 7.4 of this Agreement.
4.2 Investment Experience. Purchaser is an "accredited investor"
as defined in Rule 501(a) under the Securities Act. Purchaser is aware of the
Company's business affairs and financial condition and has had access to and
has acquired sufficient information about the Company, including the SEC
Reports, to reach an informed and knowledgeable decision to acquire the
Shares. Purchaser has such business and financial experience as is required
to give it the capacity to protect its own interests in connection with the
purchase of the Shares.
4.3 Investment Intent. Without limiting its ability to resell the
Shares and underlying Common Stock pursuant to an effective registration
statement, Purchaser represents that it is purchasing the Shares for its own
account as principal for investment purposes. Purchaser understands that its
acquisition of the Shares has not been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things,
the bona fide nature of Purchaser's investment intent as expressed herein.
Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Shares except in compliance with
PAGE 7
the Securities Act and any applicable state securities laws, and the rules and
regulations promulgated thereunder.
4.4 Registration or Exemption Requirements. Purchaser further
acknowledges and understands that the Shares may not be resold or otherwise
transferred except in a transaction registered under the Securities Act and
any applicable state securities laws or unless an exemption from such
registration is available. Purchaser understands that the certificate(s)
evidencing the Shares will be imprinted with a legend that prohibits the
transfer of the Shares unless (i) they are registered or such registration is
not required, and (ii) if the transfer is pursuant to an exemption from
registration other than Rule 144 under the Securities Act and, if the Company
shall so request in writing, an opinion of counsel reasonably satisfactory to
the Company is obtained to the effect that the transaction is so exempt.
4.5 No Legal, Tax or Investment Advice. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
4.6 Purchaser Review. Purchaser hereby represents and warrants
that the Purchaser has carefully examined the SEC Reports, and the financial
statements contained therein filed with the SEC pursuant to the Securities
Exchange Act since July 1, 1995. The Purchaser acknowledges that the Company
has made available to the Purchaser all documents and information that it has
requested relating to the Company and has provided answers to all of its
questions concerning the Company and the Shares. Nothing stated in the
previous two sentences, however, shall be deemed to affect the representations
and warranties of the Company contained in this Agreement.
4.7 Certain Risks. The Purchaser recognizes that the purchase of
the Shares involves a high degree of risk in that:
(i) an investment in the Company is highly speculative and
only investors who can afford the loss of their entire investment should
consider investing in the Company and the Shares;
(ii) a purchaser may not be able to liquidate its investment;
(iii) transferability of the Shares is extremely limited;
(iv) in the event of disposition, Purchaser could sustain the
loss of its entire investment;
(v) the Shares represent non-voting equity securities, and
the right to convert into and purchase shares of voting equity securities
in a corporate entity;
PAGE 8
(vi) no return on investment, whether through distributions,
appreciation, transferability or otherwise, and no performance by,
through or of the Company, has been promised, assured, represented or
warranted by the Company, or by any director, officer, employee, agent
or representative thereof;
(vii) while the Common Stock is presently quoted and traded
on the Nasdaq Small Cap Market and while the Purchasers are beneficiaries
of certain registration rights provided herein, the Shares subscribed for
and that may be purchased under this Agreement and the Common Stock
issuable upon conversion of the Shares:
(a) are not registered under applicable federal or state
securities laws, and thus may not be sold, conveyed,
assigned or transferred unless registered under such
laws or unless an exemption from registration is
available under such laws, as more fully described
below; and
(b) are not quoted, traded or listed for trading or
quotation on the Nasdaq Small Cap Market, or any other
organized market or quotation system, and there is
therefore no present public or other market for such
Shares or the common stock, nor can there be any
assurance that the common stock will continue to be
quoted, traded or listed for trading or quotation on the
Nasdaq Small Cap Market or on any other organized market
or quotation system.
4.8 No Registration, Review or Approval. The Purchaser acknowledges
and understands that the limited private offering and sale of Shares pursuant
to this Agreement has not been reviewed or approved by the SEC or by any state
securities commission, authority or agency, and is not registered under the
Act or under the securities or "blue sky" laws, rules or regulations of any
state. The Purchaser acknowledges, understands and agrees that the Shares are
being offered and sold hereunder pursuant to (i) a private placement exemption
to the registration provisions of the Act pursuant to Section 3(b) or Section
4(2) of such Act and Regulation D promulgated under such Act, and (ii) a
similar exemption to the registration provisions of applicable state
securities laws.
4.9 Legend. The certificate or certificates representing the
Shares shall be subject to a legend restricting transfer under the Securities
Act of 1933, such legend to be substantially as follows:
"NEITHER THIS PREFERRED STOCK NOR ANY SHARES OF COMMON
STOCK ISSUABLE UPON THE CONVERSION OF THIS PREFERRED STOCK
PAGE 9
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES
LAWS. THIS PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS PREFERRED STOCK MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE
SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR WITHOUT
THE PRIOR WRITTEN CONSENT OF NU-TECH BIO-MED, INC.'S COUNSEL THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.
"NOTWITHSTANDING THE FOREGOING, THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET FORTH IN
THAT CERTAIN PREFERRED STOCK SECURITIES PURCHASE AGREEMENT BY AND BETWEEN
THE HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH IS ON FILE AT THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICE."
The legend(s) endorsed on a stock certificate pursuant to this
Section 4.7 shall be removed and the Company shall issue a replacement
certificate without such legend to the holder of such certificate if the
Shares represented by such certificate are registered under the Securities Act
or if such holder provides to the Company an opinion of counsel, acceptable to
the Company's counsel, to the effect that a public sale, transfer or
assignment of such Shares may be made without registration.
4.10 Restrictions on Conversion of Shares. The Purchaser or any
subsequent holder of the shares (the "Holder") shall be prohibited from
converting any portion of the Shares which would result in the Purchaser or
the Holder being deemed the beneficial owner, in accordance with the
provisions of Rule 13d-3 of the Securities Exchange Act of 1934, as amended,
of 4.99% or more of the then issued and outstanding Common Stock of the
Company.
Section 5. Conditions to the Purchaser's Obligation to Purchase.
The Company understands that the Subscriber's obligation to purchase the Stock
is conditioned upon:
(a) Acceptance by Purchaser of this Subscription Agreement for the
sale of the Stock, as evidenced by the execution of this Agreement by its
authorized officers;
(b) Delivery of the Shares against payment:
(c) The delivery at the closing of a certificate from an authorized
officer of the Company certifying that all representations and warranties of
the Company are true and correct as of the Closing Date (in the form annexed
hereto as Exhibit A1);
(d) The delivery of a copy of a filed Certificate of Designation
(in the form annexed hereto as Exhibit B) with proof of filing; and
PAGE 10
(e) The delivery of a Demand Registration Rights Agreement executed
by the Company (in the form annexed hereto as Exhibit C).
Section 6. Conditions to Company's Obligation to Sell. Purchaser
understands that the Company's obligation to sell the Stock is conditioned
upon:
(a) The receipt and acceptance by the Company of this Subscription
Agreement for all of the Stock as evidenced by execution of this Subscription
Agreement by the President or any Vice President of the Company;
(b) Delivery to the Company by Purchaser of good funds as payment
in full for the purchase of the Shares; and
(c) The delivery at the closing of a certificate from an authorized
officer or representative of Subscriber certifying that all representations
and warranties of the Purchaser are true and correct as of the Closing Date
(in the form annexed hereto as Exhibit A2).
Section 7. Registration of the Shares: Compliance with the
Securities Act.
7.1 Definitions. For the purpose of this Section 7:
(a) the term "Registration Statement" shall mean any registration
statement required to be filed by Section 7.2 below, and shall include any
preliminary prospectus, final prospectus, exhibit or amendment included in or
relating to such registration statement; and
(b) the term "untrue statement" shall include any untrue statement
or alleged untrue statement, or any omission or alleged omission to state in
the Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
7.2 Registration Procedures and Expenses. The Company has entered
into a Demand Registration Rights Agreement with the Purchaser, whereby a
majority of the holders of the Shares have a right to demand that the Company:
(a) promptly after the exercise of the Demand Registration Rights
Agreement and in sufficient time to have such registration effective within
one hundred twenty (120) days from the Closing Date, file with the SEC a
registration statement under the Securities Act on a form which is appropriate
to register the Common Stock underlying the Shares;
(b) use its best efforts, subject to receipt of necessary
information from the Purchaser, to cause such Registration Statement to become
effective as promptly after filing as practicable;
PAGE 11
(c) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective until
termination of such obligation as provided in Section 7.9 below;
(d) furnish to the Purchaser with respect to Common Stock registered
on the Registration Statement (and to each underwriter, if any, of such Common
Stock) such number of copies of prospectuses in conformity with the
requirements of the Securities Act and such other documents as the Purchaser
may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Common Stock by the Purchaser; provided,
however, that the obligation of the Company to deliver copies of prospectuses
to the Purchaser shall be subject to the receipt by the Company of reasonable
assurances from the Purchaser that the Purchaser will comply with the
applicable provisions of the Securities Act and of such other securities laws
as may be applicable in connection with any use of such prospectuses;
(e) file such documents as may be required of the Company for normal
securities law clearance for the resale of the Common Stock in which states of
the United States as may be reasonably requested by the Purchaser; provided,
however, that the Company shall not be required in connection with this
paragraph (e) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction;
(f) bear all expenses in connection with the procedures in
paragraphs (a) through (e) of this Section 7.2 and the registration of the
Common Stock on such Registration Statement and the satisfaction of the blue
sky laws of such states, including the reasonable fees and expenses of legal
counsel to the Purchaser in connection with the procedures in paragraph (a)
through (e) of this Section 7.2, other than underwriting discounts and selling
commissions or expenses required by law to be borne by Purchaser.
7.3 Underwriter. The Company understands that the Purchaser
disclaims being an "underwriter" (as such term is defined under the Securities
Act and the rules and regulations promulgated thereunder (an "Underwriter")),
but Purchaser being deemed an Underwriter shall not relieve the Company of any
obligation it has hereunder.
7.4 Indemnification. Each of the Company and the Purchaser agrees
to indemnify the other and to hold the other harmless from and against any and
all losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
7.5 Information Available. So long as any registration statement is
effective covering the resale of the Common Stock underlying the Shares, the
Company will furnish to Purchaser:
PAGE 12
(a) as soon as possible after available (but in the case of the
Company's Annual Report to Stockholders, within 150 days after the end of each
fiscal year of the Company), one copy of (i) its Annual Report to Stockholders
(which Annual Report shall contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America
by a national firm of certified public accountants); (ii) if not included in
substance in the Annual Report to Stockholders, its annual report on Form 10-K
within 100 days after the end of each fiscal year of the Company, (iii) each
of its Quarterly Reports to Stockholders, and its quarterly report on Form
1O-Q, and (iv) a full copy of the registration statement covering the Common
Stock underlying the Shares (the foregoing, in each case, excluding exhibits);
and
(b) upon the reasonable request of Purchaser, such other
information that is generally available to the public.
7.6 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Shares to the public without registration, the Company
agrees to use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
after the effective date on which the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act;
(c) to furnish to Purchaser forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of said Rule 144, and of the Securities Act and the Exchange Act, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession
of or reasonably obtainable by the Company as Purchaser may reasonably request
in availing itself of any rule or regulation of the SEC allowing Purchaser to
sell any such Shares without registration.
7.7 Temporary Cessation of Offers and Sales by Purchaser. The
Purchaser acknowledges that there may occasionally be times when the Company
may be required to suspend the use of the prospectus forming part of the
Registration Statement until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the
Commission, until the prospectus is supplemented or amended to comply with the
Securities Act, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Company agrees
to file any necessary amendments, supplements and reports as soon as
practicable under the circumstances. Purchaser hereby covenants that it xxxx
XXXX 13
not sell any Common Stock pursuant to said prospectus during a period of not
more than 45 days commencing at the time at which the Company gives the
Purchaser notice of the suspension of the use of said prospectus and ending at
the time the Company gives the Purchaser notice that the Purchaser may
thereafter effect sales pursuant to said prospectus, as the same may have been
supplemented or amended.
7.8 Transfer of Common Stock After Registration. Purchaser hereby
covenants with the Company not to make any sale of the Common Stock except
either (i) in accordance with the Registration Statement, in which case
Purchaser covenants to comply with the requirement of delivering a current
prospectus, or (ii) in accordance with Rule 144, in which case Purchaser
covenants to comply with Rule 144.
7.9 Termination of Obligations. The obligations of the Company
pursuant to Sections 7.2, 7.3 and 7.6 hereof shall cease and terminate upon
the earlier to occur of (i) such time as all of the Common Stock have been
re-sold, or (ii) such time as all of the Common Stock may be re-sold in any
three-month period pursuant to Rule 144 under the Securities Act.
Section 8. Use of Proceeds. The proceeds of this Offering have been
allocated only generally. Therefore, prospective purchasers must rely on the
Company's management to specifically allocate the proceeds. The Company has
identified a clinical laboratory which it believes is suitable for the
Company's purposes. The Proposed Acquisition has been operating since 1992
and currently generates approximately $85,000,000 in annual revenues; however,
the Proposed Acquisition is incurring ongoing and significant losses which the
Company believes is at the rate of approximately $25,000,000 per year. The
Proposed Acquisition is also in default on approximately $80,000,000 in senior
secured debt (the "Senior Debt") and approximately $40,000,000 in subordinated
debt. The Company is currently negotiating with the holders of the Senior
Debt and the management of the Proposed Acquisition to acquire a 51% interest
in the Proposed Acquisition. No agreement has been reached with these parties
and there can be no assurance that such an agreement will ever be consummated.
However, the Company believes that if an agreement is reached with the
Proposed Acquisition and the Senior Debt holders, it will involve the purchase
by the Company of $10,000,000 of Senior Debt in advance of the closing of the
Acquisition. The Company intends to utilize the proceeds of this Offering to
purchase the Senior Debt if an agreement is reached for the Proposed
Acquisition. Thereafter, the Company anticipates that all agreements
regarding the Acquisition will be subject to the approval of the United States
Bankruptcy Court or some other entity representing the rights of other
creditors of the Proposed Acquisition. Accordingly, even if an agreement is
reached with the Senior Debt holders and the Proposed Acquisition, and the
$10,000,000 of Senior Debt purchased, there can be no assurance the
Acquisition will be consummated. Under such circumstances, the Company will
be a creditor of the Proposed Acquisition holding Senior Debt in default.
Investors in this Offering should consider this risk when evaluating an
investment in the Shares.
PAGE 14
In the event the Company does not consummate the Proposed
Acquisition, the Company intends to evaluate other possible transactions.
Section 9. Legal Fees and Expenses. Each of the parties shall pay
its own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Agreement
and the transactions contemplated hereby.
Section 10. Conversion. Conversion of the Cumulative Preferred
Stock may be made at the Conversion Price, at the option of the Purchaser, as
follows:
(1) Up to one-third of the Shares after forty-five (45) days
from Issue Date;
(ii) Up to two-thirds of the Shares after seventy-five (75) days
from Issue Date;
(iii) The remainder of the Shares after one hundred five
(105) days from the Issue Date.
In the event that any Shares remain outstanding two hundred seventy
(270) days from the Closing Date, at the option of the Company, and upon
thirty (30) days prior notice to the Purchaser, the Shares shall be converted
to Common Stock on that day at the applicable Conversion Price. In the event
that the Common Stock is not registered within sixty (60) days of the Closing
Date, this conversion date will be extended one day for each day that the
registration statement for the Common Stock is not effective, after sixty (60)
days from the Closing Date.
10.1 Notice of Conversion. Conversion of the Shares to Common
Stock may be exercised in whole or in part by Purchasers telecopying an
executed and completed Notice of Conversion (in the form annexed hereto as
Exhibit D) to the Company and delivering the original Notice of Conversion and
the certificate representing the shares to the Company by express courier
within three (3) business days of exercise. Each date on which a Notice of
Conversion is telecopied to and received by the Company in accordance with the
provisions hereof shall be deemed a Conversion Date. The Company will
transmit the certificates representing the Common Stock issuable upon
conversion of all or any part of the Shares (together with the Common Stock
issuable upon conversion of all or any part of the Shares (together with the
certificates representing portions of the Shares not so converted) to the
Purchaser via express courier within three (3) business days after the Company
has received the original Notice of Conversion and shares certificate being so
converted. The Notice of Conversion and certificate representing the portion
of the Shares converted shall be delivered as follows:
To the Company:
Nu-Tech Bio-Med, Inc.
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: J. Xxxxxx Xxxxxxxxxx
Fax (000) 000-0000
PAGE 15
or to such other person at such other place as the Company shall designate to
the Purchaser in writing.
In the event that the Shares are not converted within ten (10)
business days of receipt by the Company of a valid Conversion Notice and
certificates representing the Shares to be converted (such date of receipt
referred to as the "Conversion Date"), the Company shall pay to the Purchaser,
by wire transfer, as liquidated damages for such failure and not as a penalty,
an amount in cash equal to one (1%) percent per day of the purchase price of
the Shares to be converted which shall run from the initial Conversion Date.
Section 11. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first class
registered or certified airmail, postage prepaid, and shall be deemed given
when so mailed:
(a) if to the Company, to
Nu-Tech Bio-Med, Inc.
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: J. Xxxxxx Xxxxxxxxxx
Fax (000) 000-0000
copy to:
Xxxxxxxxx & Digiola, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
or to such other person at such other place as the Company shall designate to
the Purchaser in writing;
(b) if to the Purchaser, to
XXXXXXXX CAPITAL MANAGEMENT, LTD.
Xxxxxxxx Xxxxx
0 Xx. Xxxxx'x Xxxxxx
Xxxxxx XXxX0XX
Xxxxxxx
copy to:
or at such other address or addresses as may have been furnished to the
Company in writing; or
PAGE 16
(c) if to any transferee or transferees of a Purchaser, at
such address or addresses as shall have been furnished to the Company at the
time of the transfer or transfers, or at such other address or addresses as
may have been furnished by such transferee or transferees to the Company in
writing.
Section 12. Miscellaneous.
12.1 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement or any kind not expressly set
forth in this Agreement shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
12.2 Amendments. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and by
Purchaser.
12.3 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not
be deemed to be part of this Agreement.
12.4 Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
12.5 Governing Law/Jurisdiction. This Agreement will be construed
and enforced in accordance with and governed by the laws of the State of New
York, except for matters arising under the 1933 Act, without reference to
principles of conflicts of law. Each of the parties consents to the
jurisdiction of the courts of or located in the State of New York,
specifically the Southern District of New York and/or the Supreme Court of the
State of New York in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions. Each party hereby agrees that if
another party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such
a judgment. Each party to this Agreement irrevocably consents to the service
of process in any such proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its address
set forth herein. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.
PAGE 17
12.6 Recovery of Attorney's Fees. Should any party bring an action
to enforce the terms of this Agreement then, if Purchaser prevails in such
action it should be entitled to recovery of its attorney's fees from the
Company, and if the Company prevails in such action it shall be entitled to
recovery of its attorney's fees from the Purchasers.
12.7 Fees. Notwithstanding Section 11.6, the Company acknowledges
that Purchaser shall have no responsibility for the payment of any of its fees
in connection with this offering.
12.8 Counterparts/Facsimile. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other party. In lieu of the original, a facsimile
transmission or copy of the original shall be as effective and enforceable as
the original.
12.9 Publicity. The Purchaser shall not issue any press releases
or otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the
Company, except as may be required by applicable law or regulation.
12.10 Survival. The representations and warranties in this
Agreement shall survive Closing.
PAGE 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized representatives the day and year first
above written.
NU-TECH BIO-MED, INC.
By /s/ Pres.
________________________
Officer
[PURCHASER]
By /s/
_________________________
Officer Xxxxxxxx Xxxxxxx
17/10/96
FOR AND ON BEHALF OF
XXXXXXXX CAPITAL MANAGEMENT LTD.
INVESTMENT MANAGER TO:
XXXXXXXX FUND LTD.
Offshore Delivery
Instructions:
Xx. Xxxxxxxx Xxxxxxx
Xxxxxxxx Capital Management Ltd
Xxxxxxxx Xxxxx
0 Xx. Xxxxx'x Xxxxxx
Xxxxxx XX0X0XX
Xxxxxxx
PAGE 19
