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Exhibit 1
$60,000,000
9% CONVERTIBLE SUBORDINATED NOTES DUE 2004
HYBRIDON, INC.
PURCHASE AGREEMENT
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New York, New York
March 26, 1997
Forum Capital Markets L.P.
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
Hybridon, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell to Forum Capital Markets L.P. (the "Initial Purchaser") $50,000,000
aggregate principal amount of its 9% Convertible Subordinated Notes due 2004
(the "Notes") to be issued pursuant to the provisions of an indenture dated as
of the date hereof (the "Indenture") between the Company and State Street Bank
and Trust Company, as trustee (the "Trustee"). Such $50,000,000 aggregate
principal amount of Notes are hereafter referred to as the "Firm Notes." Upon
the request of the Initial Purchaser, as provided in Section 2(b) of this
Agreement, the Company shall also issue and sell to the Initial Purchaser up to
an additional $10,000,000 aggregate principal amount of Notes for the purpose of
covering over-allotments, if any. Such $10,000,000 aggregate principal amount of
Notes are hereinafter referred to as the "Option Notes." The Firm Notes and the
Option Notes collectively constitute all of the Notes. The shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), issuable
upon conversion of the Notes are hereinafter referred to as the "Conversion
Shares."
The Company also proposes to sell to the Initial Purchaser, for nominal
consideration, warrants (the "Warrants") pursuant to a warrant agreement (the
"Warrant Agreement") for the purchase of an aggregate of up to 427,807 shares of
Common Stock (the "Warrant Shares") at an exercise price per share of $7.0125,
subject to adjustment as provided in the Warrant Agreement. The Notes, the
Conversion Shares, the Warrants and the Warrant Shares are hereinafter referred
to collectively as the "Securities."
The Notes will be offered and sold to the Initial Purchaser without being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance on an exemption therefrom. The Company has prepared a preliminary
offering circular dated March 12, 1997 (the "Preliminary Offering Circular"),
and a final offering circular dated March 26, 1997 (the "Offering Circular"),
setting forth information regarding the Company and the Securities. The Company
hereby confirms that it has authorized the use of the Preliminary Offering
Circular and the Offering Circular in connection with the offering and sale of
the Notes (the "Offering").
Holders (including subsequent transferees) of the Notes and Conversion
Shares will have the registration rights set forth in the Registration Rights
Agreement (the "Registration Rights Agreement") between the Initial Purchaser
and the Company, dated concurrently herewith. Pursuant to the Registration
Rights Agreement, the Company has agreed to file with the Securities and
Exchange Commission (the "Commission") a shelf registration statement pursuant
to Rule 415 under the Securities Act (the "Shelf Registration Statement") to
cover public resales of the Notes and the Conversion Shares by the holders
thereof.
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Offering Circular. For purposes hereof,
"Rules and Regulations" means the rules and regulations adopted by the
Commission under the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), as applicable.
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the Initial Purchaser as of the date hereof,
and as of the Closing Date and each Option Closing Date (as defined in Section
2(b) hereof), if any, as follows:
(a) The Offering Circular does not, and at the Closing Date and any
Option Closing Date will not, and any amendment or supplement thereto, if any,
as of its date, will not, contain any untrue statement of a material fact or
omit to state any 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. The preceding sentence does not apply to
information contained in or omitted from the Preliminary Offering Circular or
the Offering Circular (or any supplement or amendment thereto) in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of the Initial Purchaser specifically for use therein (the "Initial
Purchaser's Information"). The parties acknowledge and agree that the Initial
Purchaser's Information consists solely of the last paragraph at the bottom of
the front cover page concerning the terms of the offering by the Initial
Purchaser, the legends concerning over-allotment and trading activities of the
Initial Purchaser and its affiliates on page 3 and the paragraphs under the
caption "Plan of Distribution" in the Offering Circular. No order suspending or
preventing the sale of the Securities in any jurisdiction has been issued or
threatened or, to the knowledge of the Company, is contemplated.
(b) The Company is subject to Section 13 or 15(d) of the Exchange Act.
The documents incorporated by reference into the Offering Circular (the
"Incorporated Documents"), when they were filed with the Commission (or, if any
amendment with respect to any such document was filed, when such amendment was
filed), complied in all material respects with the applicable requirements of
the Exchange Act and when read together with the Incorporated Documents and the
Offering Circular did not, as of such date, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and any
Incorporated Documents filed subsequent to the date of the Offering Circular
shall, when filed with the Commission, conform in all material respects to the
applicable requirements of the Securities Act, the Rules and Regulations and the
Exchange Act, as applicable. All reports and statements required to be filed by
the Company under the Securities Act and the Exchange Act have been filed,
together with all exhibits required to be filed therewith. The documents and
agreements so filed which are described in the Offering Circular are in full
force and effect on the date hereof (unless noted otherwise in the Offering
Circular) and neither the Company nor any of its direct and indirect
subsidiaries identified on Annex I hereto (collectively, the "Subsidiaries"),
nor, to the knowledge of the Company, any other party thereto is in breach of or
default under a material provision of any such document or agreement, which
breach or default, if left uncured, would have a material adverse effect on the
condition, financial or otherwise, results of operations, business or prospects
of the Company and the Subsidiaries, taken as a whole (a "Material Adverse
Effect"). The descriptions in the Offering Circular of agreements, contracts and
other documents to which the Company or any of the Subsidiaries is a party or by
which any of them is bound fairly present in all material respects the
information that would be required to be presented with respect thereto under
United States federal securities laws.
(c) The Company and each of the Subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, except to the extent such concept is
inapplicable in such jurisdiction. Each of the Company and the Subsidiaries is
duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations require such qualification or licensing (each of
which jurisdictions is designated on Annex I hereto), except where the failure
to be so qualified or licensed would not have a Material Adverse Effect or where
such concept is inapplicable in such jurisdiction. Each Subsidiary which
accounted for more than 5% of the Company's consolidated assets at December 31,
1996 or more than 10% of the Company's consolidated revenues during the 12
months then ended or which is reasonably expected to exceed such percentages
with respect to the Company's next four fiscal quarters ending after the date
hereof are indicated on Annex I hereto, and all such Subsidiaries are
hereinafter referred to collectively as the "Significant Subsidiaries." The
Company does not own or control, directly or indirectly, any corporation,
association or other
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entity. Except as set forth on Annex I, the Company owns, either directly or
through other Subsidiaries, all of the outstanding capital stock of each
Subsidiary, in each case free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever; and all outstanding capital stock of the
Subsidiaries has been duly authorized and validly issued and is fully paid and
non-assessable and not issued in violation of any preemptive rights or
applicable securities laws. Each of the Company and the Subsidiaries has all
requisite power and authority (corporate and other), and has obtained any and
all requisite authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies, to own or lease its properties and conduct its business as described in
the Offering Circular, except where the failure to have any such power,
authority, authorization, approval, order license, certificate, franchise or
permit would not have a Material Adverse Effect; each of the Company and the
Subsidiaries is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all federal, foreign, state and local laws, rules and regulations,
except where the failure to be in compliance would not have a Material Adverse
Effect; and neither the Company nor any of the Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect.
(d) The Company has an authorized capitalization as set forth in the
Offering Circular and will have the adjusted capitalization as of the period
indicated therein, based upon the assumptions set forth therein. Neither the
Company nor any of the Subsidiaries is a party to or bound by any instrument,
agreement or other arrangement, including, but not limited to, any voting trust
agreement, stockholders' agreement or other agreement or instrument, affecting
the securities or rights or obligations of securityholders of the Company or any
of the Subsidiaries or providing for any of them to issue, sell, transfer or
acquire any capital stock, rights, warrants, options or other securities of the
Company or any of the Subsidiaries, except for this Agreement, the Indenture,
the Warrant Agreement and as set forth in the Offering Circular (including the
notes to the financial statements set forth therein). The Company's capital
stock and the Securities conform in all material respects to all statements with
respect thereto contained in the Offering Circular. All issued and outstanding
equity securities of the Company have been duly authorized and validly issued
and are fully paid and non-assessable, as applicable; the holders thereof have
no rights of rescission with respect thereto and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any securityholder of the
Company or any of the Subsidiaries or similar contractual rights granted by the
Company or any of the Subsidiaries.
(e) The Notes will be issued pursuant to the terms and conditions of
the Indenture, and the Indenture and the Registration Rights Agreement each
conform to the description thereof contained in the Offering Circular. At the
Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act and the Rules and Regulations applicable
to an indenture which is qualified thereunder. The Notes have been duly
authorized and, when validly authenticated, issued, delivered and paid for in
the manner contemplated by the Indenture, will be duly authorized, validly
issued and outstanding obligations of the Company entitled to the benefits of
the Indenture. The Warrant Agreement will conform in all material respects to
the description thereof set forth in the Offering Circular. The Warrants have
been duly authorized and when validly issued, delivered and paid for in the
manner contemplated by the Warrant Agreement, will be duly authorized, validly
issued and outstanding obligations of the Company entitled to the benefits of
the Warrant Agreement. The Conversion Shares issuable upon conversion of the
Notes and the Warrant Shares issuable upon exercise of the Warrants will, upon
payment and issuance in accordance with the terms of the Warrant Agreement, be
duly authorized, fully-paid and non-assessable, and the Company has duly
authorized and reserved the Conversion Shares for issuance upon conversion of
the Notes and the Warrant Shares for issuance upon exercise of the Warrants. The
Securities are not and will not be subject to any preemptive or other similar
rights of any securityholder of the Company or any of the Subsidiaries; all
corporate action required to be taken on behalf of the Company for the
authorization, issue and sale of the Securities has been duly and validly taken;
and the certificates representing the any Conversion Shares or Warrant Shares
will comply with the requirements of the Delaware General Corporation Law. Upon
the issuance and delivery pursuant to the terms of this Agreement, the Indenture
and the Warrant Agreement of the Notes and the Warrants, the Initial Purchaser
will acquire good and marketable title thereto
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(subject to restrictions imposed by applicable federal and state securities
laws) free and clear of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever (other
than restrictions created by the Initial Purchaser).
(f) The consolidated financial statements of the Company and the
Subsidiaries together with the related notes thereto included in the Preliminary
Offering Circular and the Offering Circular fairly present the financial
position, income, changes in stockholders' equity, cash flow and results of
operations of the Company and the Subsidiaries at the respective dates and for
the respective periods to which they apply and such financial statements have
been prepared in conformity with generally accepted accounting principles and
the Rules and Regulations, consistently applied throughout the periods involved.
Except as described in or contemplated by the Offering Circular, (i) there has
been no material adverse change or development involving a prospective material
change in the condition, financial or otherwise, or in the earnings, business,
prospects or results of operations of the Company and the Subsidiaries, taken as
a whole, whether or not arising in the ordinary course of business, since the
date of the latest financial statements included in the Offering Circular (other
than the continued incurrence of losses by the Company in the ordinary course of
business) and (ii) the outstanding debt, the property, both tangible and
intangible, and the businesses of each of the Company and the Subsidiaries
conform in all material respects to the descriptions thereof contained in the
Offering Circular. Financial information set forth in the Offering Circular
under the headings "Summary Consolidated Financial Data," "Selected Consolidated
Financial Data," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" fairly present, on the basis
stated in the Offering Circular, the information set forth therein and have been
derived from or compiled on a basis consistent with that of the audited
financial statements included in the Offering Circular.
(g) Each of the Company and the Subsidiaries has filed all income and
franchise tax returns required to be filed (after giving effect to all
permissible extensions) through the date hereof by it in any jurisdiction, and
has paid all taxes shown to be due on such returns or claimed to be due from
such entities, other than those being contested in good faith, except where the
failure to so file or pay would not have a Material Adverse Effect. All tax
liabilities, including those being contested by the Company or the Subsidiaries
are adequately reserved for in the Company's financial statements (in accordance
with generally accepted accounting principles). No tax deficiency has been
asserted and no tax proceedings are pending or, to the knowledge of the Company,
is threatened against the Company or any of the Subsidiaries which, if adversely
determined would have a Material Adverse Effect, and to the knowledge of the
Company, no such deficiency or proceeding is contemplated.
(h) No transfer tax, stamp duty or other similar tax is payable by or
on behalf of the Initial Purchaser in connection with (i) the issuance by the
Company of the Securities, (ii) the purchase by the Initial Purchaser of the
Notes or the Warrants from the Company or (iii) the consummation by the Company
of any of its obligations under this Agreement, the Indenture or the Warrant
Agreement.
(i) Each of the Company and the Subsidiaries maintains liability,
casualty and other insurance (subject to customary deductions and retentions)
against such risk of the types and in the amounts customarily maintained by
companies of comparable size to the Company engaged in similar businesses in
similar industries, all of which insurance is in full force and effect.
(j) There is no action, suit, proceeding, litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened or
contemplated against (or circumstances that are reasonably likely to give rise
to the same), or involving the properties or businesses of, the Company or any
of the Subsidiaries which (i) questions the validity of the capital stock of the
Company or any of the Subsidiaries, this Agreement, the Indenture, the Warrant
Agreement, the Registration Rights Agreement or of any action taken or to be
taken by the Company or any of the Subsidiaries pursuant to or in connection
with this Agreement, the Indenture, the Warrant Agreement or the Registration
Rights Agreement or (ii) except as disclosed in or contemplated by the Offering
Circular, would have a Material Adverse Effect.
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(k) The Company has the legal right and corporate power and authority
to authorize, issue, deliver and sell the Securities, to enter into this
Agreement, the Indenture, the Warrant Agreement and the Registration Rights
Agreement and to consummate the transactions provided for in such agreements;
and this Agreement has been duly and properly authorized, executed and delivered
by the Company and when the Company has duly executed and delivered the Warrant
Agreement and the Registration Rights Agreement (assuming the due execution and
delivery thereof by the Initial Purchaser) and the Indenture (assuming the due
execution and delivery thereof by the Trustee), this Agreement, the Warrant
Agreement, the Registration Rights Agreement and the Indenture each will
constitute a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as rights to
indemnification may be limited by federal or state securities laws and except
for the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally. None of
the Company's issue and sale of the Securities, the execution or delivery of
this Agreement, the Indenture, the Warrant Agreement and the Registration Rights
Agreement, its performance hereunder and thereunder or its consummation of the
transactions contemplated herein and therein conflicts or will conflict with or
results or will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under, or results or
will result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind whatsoever upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of, (i) the certificate of incorporation or
by-laws of the Company or any of the Subsidiaries, (ii) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or other agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which it or any
Subsidiary is or may be bound or to which its or any of the Subsidiaries'
properties or assets is or may be subject, or any indebtedness, or (iii) any
statute, judgment, decree, order, rule or regulation directly applicable to the
Company or any of the Subsidiaries of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, having jurisdiction
over the Company or any of the Subsidiaries or any of their respective
activities or properties, which, with respect to the foregoing clauses (ii) and
(iii) only, breach, violation or default would have a Material Adverse Effect.
(l) Neither the Company nor any of the Subsidiaries (i) is in
violation of its certificate of incorporation or by-laws, (ii) is in default in
the performance of any obligation, agreement or condition contained in any
license, contract, indenture, mortgage, installment sale agreement, lease, deed
of trust, voting trust agreement, stockholders' agreement, note, loan or credit
agreement, purchase order, agreement or instrument evidencing an obligation for
borrowed money or other material agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries may be bound or to which the property or assets of the Company or
any of the Subsidiaries is subject or affected or (iii) is in violation in any
respect of any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject, except any violation or
default under the foregoing clauses (ii) or (iii) as would not have a Material
Adverse Effect.
(m) No consent, approval, authorization or order of, and no filing
with, any court, arbitrator, regulatory body, government agency or other body,
domestic or foreign, is required for the execution, delivery or performance of
this Agreement, the Indenture, the Warrant Agreement, the Registration Rights
Agreement or the transactions contemplated hereby or thereby, except such as
have been or may be obtained under the Securities Act (including the filing of
registration statements and filings to list the Notes on the Private Offerings,
Resale and Trading through Automated Linkages Market ("Portal") and the
Conversion Shares on the Nasdaq National Market) or may be required under state
securities or Blue Sky laws.
(n) Subsequent to the respective dates as of which information is set
forth in the Offering Circular, and except as may otherwise be indicated or
contemplated herein or therein, neither the Company nor any of the Subsidiaries
has (i) issued any securities (other than upon the issuance or exercise of
options pursuant to the Company's Stock Option Plan and Stock Purchase Plan or
the exercise of warrants outstanding on such respective dates, or incurred any
material liability or obligation, direct or contingent, for borrowed money not
in the ordinary course of business, (ii) entered into any material transaction
other than in the ordinary course of business or
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(iii) declared or paid any dividend or made any other distribution on or in
respect of its capital stock of any class and there has not been any change in
the capital stock (excluding changes contemplated by clause (i) hereof) or long
term debt of the Company and the Subsidiaries taken as a whole.
(o) The Company and the Subsidiaries are in compliance in all material
respects with all applicable federal, state, local and foreign laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours. To the knowledge of the Company, there are no
pending investigations involving the Company or any of the Subsidiaries by the
U.S. Department of Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and regulations. To
the knowledge of the Company, there is no unfair labor practice charge or
complaint against the Company or any of the Subsidiaries pending before the
National Labor Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or threatened against or involving the Company or
any of the Subsidiaries. Neither the Company nor any of the Subsidiaries is or
ever have been a party to any collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated by the Company or any of the
Subsidiaries. No material labor dispute with the employees of the Company or any
of the Subsidiaries exists or, to the knowledge of the Company, is imminent.
(p) No "employee pension benefit plan," "employee welfare benefit
plan" or "multi- employer plan" of the Company ("ERISA Plans") as such terms are
defined in Sections 3(2), 3(1) and 3(37), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any trust
created thereunder has engaged in a "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") which could subject the Company to any material tax penalty
on prohibited transactions and which has not adequately been corrected. No
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan which might reasonably be
expected to have a Material Adverse Effect.
(q) Neither the Company or any of the Subsidiaries, nor any of its
affiliates has taken or will take, directly or indirectly, any action designed
to or which has constituted or which might be expected to cause or result in,
under the Exchange Act or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities or otherwise.
(r) Except as described in or contemplated by the Offering Circular,
each of the Company and the Subsidiaries (i) owns or has the right to use all
patents, trademarks, service marks, trade names, copyrights, technology, and all
licenses and rights with respect to the foregoing, used in the conduct of its
business without, to the knowledge of the Company and the Subsidiaries,
infringing upon the right of any person, corporation or other entity, except
where the failure to so own or have such right would not, in the aggregate, have
a Material Adverse Effect and (ii) has no reason to believe, and has not
received any written notice, that the conduct of their respective businesses
infringe or conflict with any such rights of others with respect to any of the
foregoing.
(s) Each of the Company and the Subsidiaries has good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property which are material to its business and/or reflected as owned
by it in the financial statements included in the Offering Circular, in each
case free and clear of all liens, charges, claims, encumbrances, pledges,
security interests, defects and other restrictions except those disclosed in the
Offering Circular or those which are not material in amount and do not
materially adversely affect the use made or proposed to be made of such
property.
(t) Xxxxxx Xxxxxxxx LLP are independent certified public accountants
of the Company as required by the Securities Act and the Rules and Regulations.
(u) The Notes satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act. The Common Stock is registered pursuant to Section
12(g) of the Exchange Act, and is approved for listing
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on the Nasdaq National Market under the symbol "HYBN." The Company has taken
no action that was designed to terminate, or that is likely to have the affect
of terminating, trading of the Common Stock on the Nasdaq National Market, nor
has the Company received any notification that the Commission or the Nasdaq
National Market is contemplating terminating such trading.
(v) Neither the Company nor any of the Subsidiaries has, nor, to the
knowledge of the Company, has any officer, director or employee of the Company
or any of the Subsidiaries or any other person acting on behalf of the Company
or any of the Subsidiaries, for the benefit of the Company or any such
Subsidiaries at any time during the last five years, (i) made any unlawful gift
or contribution to any candidate for federal, state, local or foreign political
office, or failed to disclose fully any such gift or contribution in violation
of law, or (ii) made any payment to any federal, state, local or foreign
governmental officer or official, which would be reasonably likely to subject
the Company or any of the Subsidiaries to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign). Each of
the Company's and the Subsidiaries' internal accounting controls are sufficient
to cause the Company and the Subsidiaries to comply in all material respects
with the Foreign Corrupt Practices Act of 1977, as amended.
(w) [Intentionally omitted]
(x) The minute books of each of the Company and the Subsidiaries have
been made available to the Initial Purchaser, summarize in all material respects
all meetings and actions of the directors and stockholders of each of the
Company and the Subsidiaries since the time of their respective incorporation.
(y) Neither the Company nor any of the Subsidiaries has been notified
in writing that it is liable with respect to obligations under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any similar law ("Environmental Laws"), except for any liability as would not
have a Material Adverse Effect, and it is not aware of any facts or
circumstances which could reasonably be expected to result in any such
liability. The Company and the Subsidiaries are in substantial compliance with
all applicable existing Environmental Laws, except for such instances of
non-compliance which would not have a Material Adverse Effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulation under or
within the meaning of any other Environmental Law. To the Company's knowledge,
no disposal, release or discharge of "Hazardous Material" has occurred on, in,
at or about any of the facilities or properties of the Company or any of the
Subsidiaries, except for any such disposal, release or discharge which is in
compliance with Environmental Laws or which would not have a Material Adverse
Effect. Except as described in the Offering Circular, to the Company's
knowledge: (i) there has been no storage, disposal, generation, transportation,
handling or treatment of hazardous substances or solid wastes by the Company or
any of the Subsidiaries (or to the knowledge of the Company, any of its
predecessors in interest) at, upon or from any of the property now or previously
owned or leased by the Company or any of the Subsidiaries in violation of any
applicable law, ordinance, rule, regulation, order, judgment, decree or permit
or which would require remedial action which has not been taken, under any
applicable law, ordinance, rule, regulation, order, judgment, decree or permit,
except for such violations and failures to take remedial action which would not
result in, singularly or in the aggregate, a Material Adverse Effect; and (ii)
there has been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the environment
surrounding such property by the Company or any of the Subsidiaries of any solid
waste or Hazardous Materials, except for such spills, discharges, leaks,
emissions, injections, escapes, dumping or releases which would not result in,
singularly or in the aggregate, a Material Adverse Effect.
(z) The Company is not an "investment company" or a company controlled
by an "investment company" or, to the Company's knowledge, an "affiliated
person" of, or "promoter" or "principal
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underwriter" for, an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(aa) Neither the Company nor any affiliate (as such term is defined in
Rule 501(b) under the Securities Act) of the Company has, directly or through
any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any "security" (as defined in the Securities Act),
which is or will be integrated with the sale of the Notes in a manner that would
require the registration of the Notes under the Securities Act.
(bb) None of the Company, any affiliate (as such term is defined in
Rule 501(b) under the Securities Act) of the Company and any other person acting
on its or their behalf has engaged, in connection with the Offering, in any form
of general solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act.
(cc) Assuming (A) the accuracy of the representations, warranties and
agreements of the Initial Purchaser contained in Section 2 hereof and those
contained in any Purchase Letter, (B) the due performance by the Initial
Purchaser of the agreements set forth in Section 3 of this Agreement, (C)
compliance by the Initial Purchaser with the offering and transfer procedures
and restrictions described in the Offering Circular, (D) the accuracy of the
representations and warranties made in accordance with this Agreement and the
Offering Circular by purchasers to whom the Initial Purchaser initially resells
Notes and (E) that purchasers to whom the Initial Purchaser initially resells
Notes receive a copy of the Offering Circular prior to such sale, it is not
necessary, in connection with the issuance and sale of the Notes and the offer,
resale and delivery of the Notes in the manner contemplated by this Agreement
and the Offering Circular, to register the Notes or the Conversion Shares under
the Securities Act or to qualify the Indenture under the Trust Indenture Act.
2. Purchase by the Initial Purchaser.
----------------------------------
(a) On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions set forth herein, the
Company agrees to issue and sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Company, the Firm Notes at a purchase
price equal to 95% of the principal amount thereof.
(b) In addition, on the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions set forth
herein, the Company hereby grants an option to the Initial Purchaser to purchase
any or all of the Option Notes at a price equal to 95% of the principal amount
thereof plus accrued interest from the Closing Date to the applicable Option
Closing Date. Such option will expire 60 days after the date hereof, and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Notes upon written notice by the Initial Purchaser to
the Company setting forth the aggregate principal amount of Option Notes as to
which the Initial Purchaser is then exercising the option and the time and date
of delivery and payment therefor. Any such time and date of delivery and payment
(an "Option Closing Date") shall be determined by the Initial Purchaser, but
shall not be later than five full business days after the exercise of such
option unless otherwise agreed by the Company and the Initial Purchaser;
provided that the Option Closing Date may not occur prior to the Closing Date.
(c) The Initial Purchaser has advised the Company that it intends, as
promptly as it deems appropriate after the Company shall have furnished the
Initial Purchaser with copies of the Offering Circular, to resell the Notes
pursuant to the procedures and upon the terms set forth in the Offering Circular
and in compliance with applicable securities laws, including not to solicit any
offer to buy or offer to sell the Notes by means of any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act. The Initial Purchaser warrants
and agrees with the Company that it has solicited and will solicit offers (the
"Exempt Resales") for Notes only in compliance with applicable securities laws
and only from, and will offer Notes only to, persons
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that it reasonably believes to be (i) "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act ("QIBs")) in transactions that
meet the requirements for an exemption from the registration requirements of the
Securities Act under Rule 144A or (ii) to a limited number of "institutional
accredited investors" (as defined in Regulation D under the Securities Act and
of the types described in the Offering Circular ("Institutional Accredited
Investors")) that execute and deliver a letter containing certain
representations and agreements in the form attached as Annex A of the Offering
Circular. The QIBs and the Institutional Accredited Investors are referred to
herein as "Eligible Purchasers." The Initial Purchaser represents and warrants
that it is an Institutional Accredited Investor with such knowledge and
experience in financial and business matters as are necessary to evaluate the
merits and risks of an investment in the Notes, and is acquiring its interest in
the Notes not with a view to the distribution or resale thereof, except resales
in compliance with the registration requirements or exemption provisions of the
Securities Act and that neither it, nor anyone acting on its behalf, will offer
the Notes so as to bring the issuance and sale of the Notes within the
provisions of Section 5 of the Securities Act. The Company acknowledges and
agrees that the Initial Purchaser may sell Notes to any of its affiliates and
any such affiliate may sell Notes purchased by it to the Initial Purchaser. The
Initial Purchaser agrees that, prior to or simultaneously with the confirmation
of sale by it to any purchaser of any of the Notes purchased from the Company
pursuant hereto, such Initial Purchaser shall furnish to that purchaser a copy
of the Offering Circular (and any amendment thereof or supplement thereto that
the Company shall have furnished to the Initial Purchaser prior to the date of
such confirmation of sale).
(d) On the Closing Date, the Company shall in consideration of the
payment to it by the Initial Purchaser of $.0001 per Warrant, issue to the
Initial Purchaser the Warrants pursuant to the Warrant Agreement.
3. DELIVERY OF AND PAYMENT FOR THE NOTES. Delivery of, and payment for, the
Firm Notes shall be made at 10:00 a.m., New York City time, on April 2, 1997, or
at such other date or time as shall be agreed by the Initial Purchaser and the
Company (such date and time being referred to herein as the "Closing Date").
Delivery of, and payment for, the Firm Notes and the Option Notes shall be made
at the offices of Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, or
any such other place as shall be agreed by the Initial Purchaser and the
Company. On the Closing Date, the Company shall deliver or cause to be delivered
to the Initial Purchaser certificates for the Firm Notes against payment to or
upon the order of the Company of the purchase price by wire or book-entry
transfer of immediately available funds. On each Option Closing Date, the
Company shall deliver or cause to be delivered to the Initial Purchaser
certificates for the Option Notes purchased thereat against payment to or upon
the order of the Company of the purchase price by wire or book-entry transfer of
immediately available funds. Upon delivery, the Notes shall be in global form,
in such denominations and registered in such names, or otherwise, as the Initial
Purchaser shall have requested in writing not less than two full business days
prior to the Closing Date. The Company shall make the certificates for the Notes
available for inspection by the Initial Purchaser in New York, New York, not
later than one full business day prior to the Closing Date.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the Initial Purchaser as follows:
(a) During the period ending upon the completion of the distribution
of the Securities to advise the Initial Purchaser promptly and, if requested,
confirm such advice in writing, of the happening of any event of which the
Company is aware which makes any statement of a material fact made in the
Offering Circular untrue or that requires the making of any additions to or
changes in the Offering Circular (as amended or supplemented from time to time)
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; to advise the Initial Purchaser promptly
upon learning of any order preventing or suspending the use of the Preliminary
Offering Circular or the Offering Circular, of the suspension of the
qualification of the Notes for offering or sale in any jurisdiction and of
learning of the initiation or threatening of any proceeding for any such
purpose; and to use its reasonable best efforts to prevent the issuance of any
such order preventing or suspending the use of the Preliminary Offering Circular
or of the Offering Circular or suspending any
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such qualification and, if any such suspension is issued, to use its reasonable
best efforts to obtain the lifting thereof at the earliest possible time.
(b) To furnish promptly to the Initial Purchaser and counsel for the
Initial Purchaser, without charge, as many copies of the Preliminary Offering
Circular and the Offering Circular (and of any amendments or supplements
thereto) as may be reasonably requested; to furnish to the Initial Purchaser on
the date hereof a copy of the independent accountants' report included in the
Offering Circular signed by the accountants rendering such report; and the
Company hereby consents to the use of the Preliminary Offering Circular and the
Offering Circular, and any amendments and supplements thereto, in connection
with Exempt Resales of the Notes.
(c) If the delivery of the Offering Circular is required at any time
in connection with the sale of the Notes and if at such time the Company becomes
aware of any events that have occurred as a result of which the Offering
Circular as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when the Offering Circular is delivered, not misleading, or if for any other
reason it shall be necessary at such time to amend or supplement the Offering
Circular in order to comply with any law, to notify the Initial Purchaser
immediately after learning thereof, and to promptly prepare and furnish to the
Initial Purchaser an amended Offering Circular or a supplement to the Offering
Circular so that statements in the Offering Circular, as so amended or
supplemented, will not, in light of the circumstances under which they were made
when it is so delivered, be misleading, or so that the Offering Circular will
comply with applicable law. The Initial Purchaser's delivery of any such
amendment or supplement shall not constitute a waiver of any of the conditions
set forth in Section 6 hereof.
(d) During the five-year period following the Closing Date, provided
any of the Notes remain outstanding, to furnish to the Initial Purchaser all
reports, documents, information and financial statements filed by the Company
with the Commission pursuant to the Trust Indenture Act, the Exchange Act or the
Rules and Regulations.
(e) During the two-year period following the Closing Date or the last
Option Closing Date, if any, for so long as and at any time that it is not
subject to Section 13 or 15(d) of the Exchange Act, upon request of any holder
of the Notes, to furnish to such holder, and to any prospective purchaser or
purchasers of the Notes designated by such holder, information satisfying the
requirements of subsection (d)(4) of Rule 144(A) under the Securities Act. This
covenant is intended to be for the benefit of the holders from time to time of
the Notes, and prospective purchasers of the Notes designated by such holders.
(f) To use the proceeds from the sale of the Notes in the manner
described in the Offering Circular under the caption "Use of Proceeds."
(g) [intentionally omitted]
(h) To use reasonable efforts to do and perform all things required to
be done and performed under this Agreement by it that are within its control
prior to or after the Closing Date and to use reasonable efforts to satisfy all
conditions precedent on its part to the delivery of the Securities.
(i) Except following the effectiveness of the Shelf Registration
Statement, to not authorize or knowingly permit any person acting on its behalf
to solicit any offer to buy or offer to sell the Notes by means of any form of
general solicitation or general advertising (as such terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act; provided,
however, that nothing in this Section 4(i) shall impute any liability on the
Company for any actions of the Initial Purchaser.
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(j) To not, and to use reasonable efforts to ensure that no affiliate
(as such term is defined in Rule 501(b) under the Securities Act) of the Company
will, offer, sell or solicit offers to buy or otherwise negotiate in respect of
any "security" (as defined in the Securities Act) which could be integrated with
the sale of the Notes in a manner that would require the registration of the
Notes under the Securities Act.
(k) To not, so long as the Notes are outstanding, be or become (and
use its best efforts not to be or become owned by) an open-end investment
company, unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act, and to
not be or become (and use its best efforts not to be or become owned by) a
closed-end investment company required to be registered, but not registered
thereunder.
(l) To cooperate with the Initial Purchaser and counsel for the
Initial Purchaser to qualify the Notes for offering and sale under the
securities laws of such jurisdictions as the Initial Purchaser may reasonably
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Notes; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process or to subject it to taxation
in any jurisdiction where it is not so qualified or so subject.
(m) To comply with the Registration Rights Agreement and all
agreements set forth in the representation letters of the Company to The
Depository Trust Company relating to the approval of the Notes for "book-entry"
transfers.
(n) In connection with the Offering, until the Initial Purchaser shall
have notified the Company of the completion of the resale of the Notes, to not
and use reasonable efforts to not permit any affiliated purchasers (as defined
in Rule 10b-6 under the Exchange Act), either alone or with one or more other
persons, to bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Notes or Common Stock, or
attempt to induce any person to purchase any Notes; and to not and use
reasonable efforts to not permit any of its affiliated purchasers to make bids
or purchases for the purpose of creating actual, or apparent, active trading in
or of raising the price of the Notes.
(o) Prior to the Closing Date, to not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or earnings, business
affairs or business prospects, without prior consultation with the Initial
Purchaser, unless in the judgment of the Company and its counsel, and after
notification to the Initial Purchaser, such press release or communication is
required by law.
(p) To not take any action after the date hereof and prior to the
execution and delivery of the Indenture which, if taken after such execution and
delivery, would have violated any of the covenants contained in the Indenture.
(q) To not take any action prior to the Closing Date which in the
Company's reasonable judgment would require the Offering Circular to be amended
or supplemented pursuant to Section 4(c) hereof.
(r) Until April 1, 2005, to maintain a transfer agent and, if
necessary under the laws of the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for the Common
Stock.
(s) For a period ending on the earlier of five (5) years from the date
hereof or the date on which the aggregate principal amount of Notes outstanding
is less than $1,000,000, to use its best efforts to maintain the Portal (or
after the Shelf Registration Statement, Nasdaq Stock Market (or another national
securities exchange listing, if the Company is then listed thereon) listing of
the Notes, to the extent outstanding, and the
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Nasdaq National Market (or another national securities exchange or other Nasdaq
Stock Market, if the Common Stock is then listed thereon) listing of the Common
Stock.
(t) For three years from the date of issuance of the Notes, to not
issue any security that is directly or indirectly convertible into or
exchangeable for equity securities of the Company (or any security itself
convertible into or exchangeable for equity securities of the Company) which
provides for a conversion or exchange price which is calculated based upon the
future market value of the Common Stock unless at the time of the issuance of
the security an initial conversion or exchange price is established and the
formula for calculating an adjusted conversion or exchange price expressly
provides that such conversion or exchange price shall not be less than the
initial conversion or exchange price other than as a result of anti-dilution
adjustments to the conversion or the exchange price resulting from issuance of
equity securities by the Company.
5. Payment of Expenses.
-------------------
(a) The Company hereby agrees to pay all of the following
expenses and fees incident to the performance of the obligations of the Company
under this Agreement, the Indenture, the Warrant Agreement and the Registration
Rights Agreement, including, regardless of whether any sale of the Notes to the
Initial Purchaser is consummated: (i) the fees and expenses of accountants and
counsel for the Company, (ii) all costs and expenses incurred in connection with
the preparation, duplication, printing (including mailing and handling charges),
delivery and mailing (including the payment of postage with respect thereto) of
each Preliminary Offering Circular and the Offering Circular and any amendments
and supplements thereto, in quantities as hereinabove stated, (iii) the
printing, engraving, issuance and delivery of the certificates representing the
Notes, (iv) costs and expenses of travel, food and lodging of Company personnel
in connection with the "road show," information meetings and presentations, (v)
fees and expenses of the transfer agent and registrar, (vi) fees and expenses of
the Trustee, including the Trustee's counsel, in connection with the Indenture
and the Notes, (vii) the fees payable to the NASD, CUSIP Service Bureau and DTC
incurred in connection with the listing of the Notes and the Conversion Shares
for trading in the PORTAL Market, (viii) the fees payable to the Commission and
the Nasdaq National Market in connection with the filing of a registration
statement with respect to the Notes and the Conversion Shares and the listing of
the Conversion Shares on the Nasdaq National Market, (ix) all costs of placing
tombstone advertisements in The New York Times, The Wall Street Journal and The
Investment Dealers Digest and (x) all other costs and expenses incident to the
performance of its obligations hereunder which are not specifically otherwise
provided for in this Section. In addition, at the Closing, the Company will pay
or reimburse the Initial Purchaser for its reasonable and accountable
out-of-pocket expenses in connection with the Offering of up to $200,000,
provided, the Initial Purchaser will not incur any such expenses in excess of
$15,000 (other than legal fees and expenses) without the Company's prior
consent.
(b) If this Agreement is terminated for any reason, the Company
shall reimburse and indemnify the Initial Purchaser for its actual accountable
out-of-pocket expenses, up to the limits and subject to the conditions set forth
in the preceding paragraph.
6. CONDITIONS OF THE INITIAL PURCHASER'S OBLIGATIONS. The obligations of
the Initial Purchaser hereunder shall be subject to the continuing accuracy of
the representations and warranties of the Company herein as of the date hereof
and as of the Closing Date and each Option Closing Date, if any, as if they had
been made on and as of the Closing Date or each Option Closing Date, as the case
may be; and the performance by the Company on and as of the Closing Date and
each Option Closing Date, if any, of its covenants and obligations hereunder and
to the following further conditions:
(a) The Initial Purchaser shall not have advised the Company that
the Offering Circular, or any supplement or amendment thereto, contains an
untrue statement of fact which, in the opinion of Xxxxxx Xxxx & Xxxxxx LLP,
counsel for the Initial Purchaser, is material, or omits to state a fact which,
in the opinion of Xxxxxx Xxxx & Xxxxxx LLP, counsel for the Initial Purchaser,
is material and is required to be stated therein or is
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necessary to make the statements, in light of the circumstances under which they
were made, not misleading. No order suspending the sale of the Securities in any
jurisdiction shall have been issued on either the Closing Date or the relevant
Option Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(b) On or prior to the Closing Date and each Option Closing Date,
if any, the Initial Purchaser shall have received from Xxxxxx Xxxx & Xxxxxx LLP
such opinion or opinions with respect to the organization of the Company, the
validity of the Securities, the Offering Circular and other related matters as
the Initial Purchaser may request and Xxxxxx Xxxx & Xxxxxx LLP shall have
received such papers and information as they may reasonably request to enable it
to pass upon such matters.
(c) On the Closing Date and each Option Closing Date, if any, the
Initial Purchaser shall have received an opinion of Xxxx and Xxxx LLP, counsel
to the Company, dated the Closing Date, or such Option Closing Date, as the case
may be, addressed to the Initial Purchaser and in form and substance
satisfactory to the Initial Purchaser and Xxxxxx Xxxx & Xxxxxx LLP, to the
effect that:
i) (A) the Company has been duly incorporated and is validly
existing as a corporation in corporate and tax good standing under the
laws of its jurisdiction of incorporation, (B) the Company is duly
qualified to do business and in good standing as a foreign corporation
in the Commonwealth of Massachusetts and (C) the Company has all
requisite corporate power and authority necessary to own or lease its
properties and conduct its business as described in the Offering
Circular;
ii) the Company's authorized capital stock as of December 31,
1996 is as set forth under the heading "Capitalization" in the
Offering Circular;
iii the Securities and all other securities issued or issuable by
the Company which are described in the Offering Circular conform or,
when issued and paid for, will conform in all material respects to the
descriptions thereof contained in the Offering Circular; all issued
and outstanding capital stock of the Company has been duly authorized
and validly issued and is fully paid and non-assessable; to such
counsel's knowledge, none of such securities were issued in violation
of the preemptive rights of any securityholder of the Company or
similar contractual rights granted by the Company or applicable
securities laws; the Notes have been duly authorized and, when validly
issued, delivered and paid for by the Initial Purchaser in the manner
contemplated by this Agreement, will be duly authorized and
outstanding obligations of the Company and enforceable against the
Company in accordance with their terms, except to the extent that
enforceability thereof may be limited by (1) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally; or (2)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); the Warrants have
been duly authorized and, when validly issued, delivered and paid for
in the manner contemplated by the Warrant Agreement, will be duly
authorized, validly issued and outstanding obligations of the Company;
the shares of Common Stock issuable upon conversion of the Notes and
exercise of the Warrants have been duly authorized and reserved for
issuance upon conversion of the Notes and exercise of the Warrants, as
the case may be, and, when issued, delivered and paid for, will be
validly issued, fully paid and nonassessable; and the holders of
outstanding securities of the Company are not entitled to any
preemptive rights with respect to the Securities pursuant to the
Company's Certificate of Incorporation or By-laws, as amended, or any
other instrument known to such counsel; all corporate action required
to be taken for the authorization, issue and sale of the Securities
has been duly and validly taken;
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iv) to such counsel's knowledge, there is no action, arbitration,
suit, or other proceeding pending or threatened in writing or any
judgments outstanding against the Company or involving the properties
or business of the Company which (A) questions the validity of the
capital stock of the Company or of this Agreement, the Indenture, the
Warrant Agreement, the Registration Rights Agreement or of any action
taken or to be taken by the Company pursuant to or in connection with
any of the foregoing or (B) is not disclosed in the Offering Circular;
v) the Company has the corporate power and authority to execute,
deliver and perform each of this Agreement, the Indenture, the Warrant
Agreement and the Registration Rights Agreement and to consummate the
transactions provided for herein and therein; the execution and
delivery of this Agreement, the Indenture, the Warrant Agreement and
the Registration Rights Agreement have been duly authorized by all
requisite corporate action on the part of the Company and each of this
Agreement, the Indenture, the Warrant Agreement and the Registration
Rights Agreement has been duly executed and delivered by the Company;
vi) the execution and delivery by the Company of this Agreement,
the Indenture, the Warrant Agreement and the Registration Rights
Agreement, the performance by the Company hereunder or thereunder, the
compliance by the Company with the provisions thereof and the
consummation by the Company of the transactions contemplated hereby
and thereby, do not and will not conflict with or result in any breach
or violation of, constitute a default under or result in the creation
or imposition of any lien, charge, claim, pledge, security interest or
other encumbrance upon any property or assets of the Company pursuant
to the terms of (A) the charter or by-laws of the Company, (B) any
license, contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders' agreement, note, loan or credit agreement or
other agreement or instrument listed as an exhibit to any of the
Incorporated Documents or (C) any statute, rule or regulation (other
than federal or state securities laws) or, to the best of such
counsel's knowledge, any judgment, decree or order specifically naming
the Company of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body having
jurisdiction over the Company or any of its activities or properties.
Such counsel need express no opinion in this paragraph (vi) as to (A)
state securities or Blue Sky laws or (B) with respect to matters of
fact relating to compliance with any financial covenants, ratios or
tests or any aspect of the financial condition or results of
operations of the Company;
vii) to the knowledge of such counsel, based solely upon a review
of the exhibits to the Incorporated Documents and a certificate of the
Chief Executive Officer of the Company, the Company is not a party to
or bound by any instrument, agreement or other arrangement providing
for it to issue any capital stock, rights, warrants, options or other
securities of the Company, except for this Agreement and as described
in or contemplated by the Offering Circular, the Indenture and the
Warrant Agreement;
viii) Based in so far as factual matters are concerned solely up
on a certificate of the Company, no consent, approval, authorization
or order of, and no filing with, any court, regulatory body,
government agency or other body (other than such as have been or may
be made or obtained under the Securities Act (including the filing of
registration statements) and such as may be required under state
securities or Blue Sky laws and such as may be required in order to
list the Notes on Portal or the Conversion Shares on the Nasdaq
National Market, as to which no opinion need be rendered) is required
in connection with the issuance of the Securities as contemplated by
the Offering Circular or in connection with the performance of this
Agreement, the Indenture, the Warrant Agreement and the Registration
Rights Agreement, and the transactions contemplated hereby and
thereby;
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ix) the statements in the Offering Circular under the captions
"Description of Capital Stock" and "Certain United States Federal
Income Tax Considerations" have been reviewed by such counsel, and
insofar as they refer to statements of law, or descriptions of
statutes, licenses, rules or regulations or legal conclusions, are
correct in all material respects;
x) assuming the (A) accuracy of the representations, warranties
and agreements of the Company contained in Sections 1(x) and (y) of
this Agreement and of the Initial Purchaser in Section 2 of this
Agreement and those contained in any Purchase Letter, (B) the due
performance by the Company of the agreements set forth in Section 4 of
this Agreement and of the Initial Purchaser in Section 3 this
Agreement, (C) compliance by the Initial Purchaser with the offering
and transfer procedures and restrictions described in the Offering
Circular, (D) the accuracy of the representations and warranties made
in accordance with this Agreement and the Offering Circular by
purchasers to whom the Initial Purchaser initially resells Notes and
(E) that purchasers to whom the Initial Purchaser initially resells
Notes receive a copy of the Offering Circular prior to such sale, the
offer and sale of the Notes to the Initial Purchaser and the initial
resale of the Notes by the Initial Purchaser to Eligible Purchasers in
the manner contemplated by this Agreement and the Offering Circular,
are exempt from the registration requirements of the Securities Act,
it being understood that such counsel need express no opinion as to
any subsequent resale of any of the Securities, and the Indenture need
not be qualified under the Trust Indenture Act with respect to such
offer and sale; and
xi) the Company is not an "investment company," within the
meaning of, is not registered or otherwise required to be registered
under, and is not "controlled" by a company which is required to be
registered under, the Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may: (A) state that its opinion is
limited to matters governed by the federal laws of the United States of America,
the state laws of the Commonwealth of Massachusetts and General Corporation Law
Statute of the State of Delaware and (B) rely as to matters of fact solely on
certificates and written statements of officers of the Company and certificates
or other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided, that copies of any such statements or certificates
shall be delivered to the Initial Purchaser and Xxxxxx Xxxx & Xxxxxx LLP, if
requested.
(d) Xxxx and Xxxx shall state in the opinion letter contemplated
by Section 6(c) that such counsel has participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company and representatives of Initial Purchaser, at
which conferences the contents of the Offering Circular and related matters were
discussed, and, although such counsel is not passing upon, and does not assume
any responsibility for, the accuracy, completeness or fairness of the statements
contained in the Offering Circular, subject to the foregoing and based on such
participation, inquiries and discussions, no facts have come to the attention of
such counsel which has caused them to believe that the Offering Circular, as of
its date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that such counsel need express no opinion or
belief with respect to the financial statements and related notes, the pro forma
financial information, or any other financial, statistical or accounting data,
or any information relating to the Initial Purchaser or the method of
distribution of the Notes by the Initial Purchaser included in the Offering
Circular or excluded therefrom or the matters in the Offering Circular relating
to intellectual property to which McDonnell, Boehman, Xxxxxxx & Xxxxxxxx has
provided to you a separate legal opinion);
(e) On or prior to the Closing Date and each Option Closing Date,
if any, Xxxxxx Xxxx & Xxxxxx LLP shall have been furnished such documents and
certificates as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in subsection (c) of this Section 6
or in
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order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions of the Company herein contained.
(f) On and as of the Closing Date and each Option Closing Date,
if any: (i) there shall have been no material adverse change involving a
prospective change in the condition, financial or otherwise, prospects,
stockholders' equity or the business activities of the Company and the
Subsidiaries taken as a whole, whether or not in the ordinary course of
business, from the latest dates as of which such condition is set forth in the
Offering Circular, other than the continued incurrence of losses by the Company
in the ordinary course of business; (ii) there shall have been no transaction,
not in the ordinary course of business, entered into by the Company or any of
the Subsidiaries, from the latest date as of which the financial condition of
the Company and the Subsidiaries is set forth in the Offering Circular which is
materially adverse to the Company and the Subsidiaries taken as a whole; (iii)
neither the Company nor any of the Subsidiaries shall be in default under any
provision of any instrument relating to any material outstanding indebtedness;
(iv) no material amount of the assets of the Company or any of the Subsidiaries
shall have been pledged or mortgaged, except as set forth in the Offering
Circular; (v) no action, suit or proceeding, at law or in equity, shall have
been pending or, to the knowledge of the Company, threatened or contemplated
against the Company or any of the Subsidiaries, or affecting any of their
respective properties or businesses, before or by any court or federal, state or
foreign commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may have a Material Adverse Effect, except as set
forth in the Offering Circular; and (vi) no order suspending or preventing the
sale of the Securities shall have been issued under the Securities Act and no
proceedings therefor shall have been initiated or threatened or, to the
knowledge of the Company, contemplated by the Commission or any state regulatory
authority.
(g) On the Closing Date and each Option Closing Date, if any, the
Initial Purchaser shall have received a certificate of the Company signed on
behalf of the Company by the principal executive officer and by the chief
financial or chief accounting officer of the Company, in their capacities as
such, dated the Closing Date or such Option Closing Date, as the case may be, to
the effect that each of such persons has carefully examined the Offering
Circular, this Agreement, the Indenture and the Registration Rights Agreement,
and that:
i) the representations and warranties of the Company in this
Agreement, the Indenture, the Warrant Agreement and the Registration
Rights Agreement are true and correct, as if made on and as of the
Closing Date or such Option Closing Date, as the case may be, and the
Company has complied with all agreements and covenants and satisfied
all conditions contained in this Agreement, the Indenture, the Warrant
Agreement and the Registration Rights Agreement on its part to be
performed or satisfied at or prior to the Closing Date or Option
Closing Date, as the case may be;
ii) no stop order suspending the qualification or exemption from
qualification of the Securities shall have been issued and no
proceedings for that purpose shall have been commenced or, to the
knowledge of the Company, be contemplated;
iii since the date of the most recent financial statements
included in the Offering Circular, there has been no material adverse
change in the condition, financial or otherwise, business, prospects
or results of operation of the Company and the Subsidiaries, taken as
a whole, except as set forth in the Offering Circular;
iv) none of the Offering Circular or any amendment or supplement
thereto includes any untrue statement of a material fact or omits 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; and
v) subsequent to the respective dates as of which information is
given in the Offering Circular: (a) neither the Company nor any of the
Subsidiaries has incurred up to and including
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the Closing Date or the Option Closing Date, as the case may be, other
than in the ordinary course of its business, any material liabilities
or obligations, direct or contingent, except as disclosed in the
Offering Circular; (b) neither the Company nor any of the Subsidiaries
has paid or declared any dividends or other distributions on its
capital stock; (c) neither the Company nor any of the Subsidiaries has
entered into any material transactions not in the ordinary course of
business, except as disclosed in the Offering Circular; (d) there has
not been any change in the capital stock (other than pursuant to the
Company's stock option plan or stock purchase plan or the exercise of
warrants outstanding on such respective dates) or the long term debt
of the Company or any of the Subsidiaries; (e) neither the Company nor
any of the Subsidiaries has sustained any material loss or damage to
its property or assets, whether or not insured; (f) there is no
litigation which is pending or, to the Company's knowledge, threatened
or contemplated against the Company, any of the Subsidiaries or any
affiliated party of any of the foregoing which would, if decided
adversely, have a Material Adverse Effect and which is required to be
set forth in an amended or supplemented Offering Circular which has
not been set forth; and (g) there has occurred no event which would be
required to be set forth in an amended or supplemented prospectus if
the Offering Circular were a prospectus included in a registration
statement on Form S-3, which has not been set forth in an amendment or
supplement to the Offering Circular.
(h) On or before the date hereof the Initial Purchaser shall have
received a letter, dated such date, addressed to the Initial Purchaser in form
and substance satisfactory in all respects to the Initial Purchaser and Xxxxxx
Xxxx & Xxxxxx LLP, from Xxxxxx Xxxxxxxx LLP:
i) confirming that they are independent certified public
accountants with respect to the Company within the meaning of the
Securities Act and the Exchange Act and the applicable Rules and
Regulations;
ii) stating that it is their opinion that the consolidated
financial statements and supporting schedules of the Company and the
Subsidiaries included in the Offering Circular or incorporated by
reference therein comply as to form in all material respects with the
applicable accounting requirements of the Securities Act;
iii) stating that, on the basis of procedures which included a
reading of the latest available unaudited interim consolidated
financial statements of the Company and the Subsidiaries (with an
indication of the date of the latest available unaudited interim
consolidated financial statements of the Company and the
Subsidiaries), a reading of the latest available minutes of the
stockholders and board of directors and the various committees of the
board of directors of each of the Company and the Subsidiaries,
consultations with officers and other employees of each of the Company
and the Subsidiaries responsible for financial and accounting matters
and other procedures specified by the American Institute of Certified
Public Accountants for a review of interim financial information as
described in SAS No. 71, Interim Financial Information, nothing has
come to their attention which would lead them to believe that (A) at
February 28, 1997, there has been any change in the stockholder's
equity or long-term debt of the Company, or any decrease in the
stockholders' equity or net current assets or net assets of the
Company, as compared with amounts shown in the December 31, 1996
balance sheet included in the Offering Circular, other than as set
forth in or contemplated by the Offering Circular, or, if there was
any change or decrease, setting forth the amount of such change or
decrease, (B) during the period from January 1, 1997 to February 28,
1997, there was any decrease in net revenues or net earnings, or net
earnings per common share of the Company, in each case as compared
with the corresponding period beginning January 1, 1996, other than as
set forth in or contemplated by the Offering Circular, or, if there
was any such decrease, setting forth the amount of such decrease, (C)
at a specified date not more than five (5) days prior to the later of
the date of this Agreement or the Offering Circular, there has been
any change in the stockholders' equity or long-term debt
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of the Company, or any decrease in the stockholders' equity or net
current assets or net assets of the Company, as compared with amounts
shown in the December 31, 1996 balance sheet included in the Offering
Circular, other than as set forth in or contemplated by the Offering
Circular, or, if there was any change or decrease, setting forth the
amount of such change or decrease, and (D) during the period from
January 1, 1997 to a specified date not more than five (5) days prior
to the later of the date of this Agreement, there was any decrease in
net revenues or net earnings or net earnings per common share of the
Company, in each case as compared with the corresponding period
beginning January 1, 1996, other than as set forth in or contemplated
by the Offering Circular, or, if there was any such decrease, setting
forth the amount of such decrease;
iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements
and/or other financial information pertaining to the Company and the
Subsidiaries set forth in the Offering Circular in each case to the
extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records,
including work sheets, of the Company and/or the Subsidiaries and
excluding any questions requiring an interpretation by legal counsel,
with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures need not
constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter and found them to be in
agreement; and
v) statements as to such other matters incident to the
transaction contemplated hereby as the Initial Purchaser may
reasonably request.
(i) On the Closing Date and each Option Closing Date, if any, the
Initial Purchaser shall have received from Xxxxxx Xxxxxxxx LLP a letter, dated
as of the Closing Date or such Option Closing Date, as the case may be, to the
effect that they reaffirm that statements made in the letter furnished pursuant
to subsection (h) of this Section 6, except that the specified date referred to
shall be a date not more than five (5) days prior to the Closing Date or such
Option Closing Date, as the case may be, to the further effect that they have
carried out procedures as specified in clause (iii) of subsection (h) of this
Section 6 with respect to certain amounts, percentages and financial information
as specified by the Initial Purchaser and deemed to be a part of the Offering
Circular and have found such amounts, percentages and financial information to
be in agreement with the records specified in such clause (iii). If there is
more than one Option Closing, the obligations of the Company pursuant to this
Section 6(i) shall be conditioned upon the payment by the Initial Purchaser of
the fees and expenses of Xxxxxx Xxxxxxxx LLP incurred to provide the foregoing
letter at any Option Closing after the initial Option Closing.
(j) On the Closing Date and each Option Closing Date, if any,
there shall have been duly tendered to the Initial Purchaser the appropriate
principal amount of Notes.
(k) The Notes shall have been approved by the National
Association of Securities Dealers, Inc. for trading in the PORTAL market.
(l) Trading in the Common Stock shall not have been suspended by
the Nasdaq National Market at any time after February 28, 1996 (other than for a
period not in excess of one hour as a result of announcing the transaction
contemplated by this Agreement).
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended, or minimum prices shall have
been established on either of such exchanges or such market by the Commission,
by such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in securities of the Company on any exchange or
in the over-the-counter market shall have been suspended or (ii) any moratorium
on commercial banking activities shall have been declared by Federal or New York
State authorities or (iii) an outbreak or
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escalation of hostilities or a declaration by the United States of a national
emergency or war or such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
judgment of the Initial Purchaser, impracticable or inadvisable to proceed with
the offering or the delivery of the Notes on the terms and in the manner
contemplated in the Offering Circular.
(n) The Company and the Initial Purchaser shall have executed and
delivered the Warrant Agreement and the Registration Rights Agreement on the
date of this Agreement.
(o) The Indenture shall have been duly executed and delivered by
the Company and the Trustee, and the Notes shall have been duly executed and
delivered by the Company and authenticated by the Trustee.
(p) If any event shall have occurred that requires the Company
under Section 4(c) hereof to prepare an amendment or supplement to the Offering
Circular, such amendment or supplement shall have been prepared, the Initial
Purchaser shall have been given a reasonable opportunity to comment thereon, and
copies thereof delivered to the Initial Purchaser.
(q) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed withdrawal
of any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the reasonable and good faith judgment of the Initial Purchaser would
materially impair the ability of the Initial Purchaser to purchase, hold or
effect resales of the Notes as contemplated hereby.
(r) On or prior to the Closing Date and each Option Closing Date,
if any, the Initial Purchaser shall have received a certificate signed on behalf
of the Company by the secretary of the Company, in his capacity as such, dated
the Closing Date or such Option Closing Date, as the case may be, as to:
i) the absence of any contemplated proceeding for the merger,
consolidation, liquidation or dissolution of the Company or any
Subsidiary, as the case may be, or the sale of all or substantially
all of its assets;
ii) the due adoption and full force and effect of the By-laws of
the Company (with a copy of the By-laws attached);
iii) resolutions adopted by the Board of Directors of the Company
and/or a committee thereof authorizing the Offering and the
consummation of the transactions contemplated by this Agreement, the
Indenture, the Warrant Agreement and the Registration Rights Agreement
(with copies of such resolutions attached); and
iv) the incumbency, authorization and signatures of those
officers of the company signing this Agreement, the Indenture, the
Warrant Agreement, the Registration Rights Agreement and/or any
certificate delivered at Closing.
(s) On the Closing Date and each Option Closing Date, if any, the
Initial Purchaser shall have received an opinion of McDonnell, Boehman, Hulbert
& Xxxxxxxx, United States patent counsel for the Company, dated the Closing Date
or such Option Closing Date, as the case may be, addressed to the Initial
Purchaser and in form and substance satisfactory to the Initial Purchaser and
Xxxxxx Xxxx & Xxxxxx LLP to the effect that:
i) Such counsel has reviewed the statements in the Offering
Circular, set forth in the penultimate paragraph under the caption
"Offering Circular Summary--The Company," in the
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eighth paragraph under the caption "Business" and under the captions
"Risk Factors--Patent and Proprietary Rights" and "Business--Patents,
Trade Secrets and Licenses" (other than the statements set forth in
paragraphs 12 and 13 thereof), and insofar as such statements concern
patents, patent applications or other intellectual property, such
counsel does not believe that, the above-referenced paragraphs contain
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. Further,
insofar as such statements constitute summaries of matters of law,
those statements are accurate statements or summaries of the matters
set forth therein in all material respects.
ii) Such counsel has no knowledge of any facts that would form a
basis for the belief that the Company or any of the Subsidiaries lack
any rights or licenses to use all patents and know-how necessary to
conduct the business as proposed to be conducted in the United States
by the Company and the Subsidiaries as described in the Offering
Circular.
iii) No facts have come to the attention of such counsel that
would form a basis for the belief that any of the United States
patents owned by the Company or any of the Subsidiaries is
unenforceable or invalid. Such counsel is not aware of any patents of
others which are or would be infringed by specific, current or
proposed products or processes referred to in the Offering Circular in
such manner as to materially and adversely affect the Company or any
of the Subsidiaries; such counsel has no knowledge of any pending or
threatened action, suit, proceeding or claim by others that the
Company or any of the Subsidiaries is infringing any patent, trade
secret or other intellectual property which could result in a Material
Adverse Effect.
iv) Other than as described in the Offering Circular, such
counsel has no knowledge of any legal or governmental proceedings
pending relating to the United States patent rights of the Company,
other than U.S. Patent and Trademark Office ("PTO") review of pending
applications for patents, including appeal proceedings, and no such
proceedings are threatened or contemplated by United States
governmental authorities or others, except that Hybridon has received
a co- exclusive license from the NIH under NIH's patents related to
certain oligonucleotide phosphorothioates, and pre-existing licensees
have appealed NIH's decision to grant this license.
v) Prior to filing the patent applications referred to in the
Offering Circular, such counsel conducted investigations of the
published prior art relating to the inventions claimed in such
applications. Based on the information obtained in such
investigations, such patent applications disclosed all pertinent prior
art references known to such counsel. To the best of such counsel's
knowledge, all information submitted to the PTO in such patent
applications, and in connection with the prosecution thereof, was
complete and accurate. Each of the patents and patent applications
referred to in the Offering Circular as being owned by the Company has
been assigned to the Company by the inventors named therein; each of
such patent applications has been filed with the PTO in accordance
with the rules and regulations of the PTO, except for such failures as
will not individually or in the aggregate result in a Material Adverse
Effect, and substantially all of such applications have been awarded a
filing date by the PTO.
In rendering such opinion, such counsel shall state the it has no reason to
believe that the Company's pending patent applications will not eventuate in
issued patents or that the patents issued to the Company or any patents to be
issued in respect of the pending patent applications of the Company will not be
valid or will not afford the Company reasonable patent protection relative to
the subject matter thereof.
(t) On the Closing Date, Xxxxxx Xxxxxxxx LLP shall have delivered
to the Initial Purchaser an unqualified Report of Independent Public Accountants
with respect to the Company's December 31, 1996 financial statements, which
shall contain no reference to the Company's ability to continue as a going
concern.
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(u) On the Closing Date and each Option Closing Date, if any, the
Initial Purchaser shall have received an opinion of Xxxxxxx, Phleger & Xxxxxxxx
LLP, counsel to the Company, dated the Closing Date, or such Option Closing
Date, as the case may be, addressed to the Initial Purchaser and in form and
substance satisfactory to the Initial Purchaser and Xxxxxx Xxxx & Xxxxxx LLP, to
the effect that assuming each of this Agreement, the Indenture, the Warrant
Agreement and the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and by each other party thereto, the same
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms; except as enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally or by general equitable
principles and except that such counsel need express no opinion as to the
enforceability of any rights to indemnification, contribution or liquidated
damages, or any provisions relating to consent to jurisdiction or choice of
forum contained in this Agreement, the Indenture, the Warrant Agreement or the
Registration Rights Agreement.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Initial Purchaser.
If any condition to the Initial Purchaser's obligations hereunder
to be fulfilled prior to or at the Closing Date or the relevant Option Closing
Date, as the case may be, is not so fulfilled, the Initial Purchaser may
terminate its obligations pursuant to Section 9 or, if the Initial Purchaser so
elects, it may waive any such conditions which have not been fulfilled or extend
the time for their fulfillment.
7. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless the Initial
Purchaser (for purposes of this Section 7, "Initial Purchaser" shall include the
officers, directors, partners, employees and agents, and each person, if any,
who controls the Initial Purchaser ("controlling person") within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several (and actions, proceedings, suits and litigation in respect thereof),
whatsoever, as the same are incurred, to which the Initial Purchaser or any such
controlling person may become subject, under the Securities Act, the Exchange
Act or any other statute or at common law or otherwise insofar as such losses,
claims, damages, expenses or liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular (as from time to time
amended and supplemented) or arise out of or are based upon the omission or
alleged omission therefrom of 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; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
expense or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Offering Circular or the Offering Circular or any such amendment or supplement
in reliance upon and in conformity with Initial Purchaser's Information and
provided, further, that the Company shall not be liable to the Initial Purchaser
under the indemnity agreement in this subsection (a) (i) with respect to any
Preliminary Offering Circular to the extent that any such loss, liability,
claim, damage or expense of the Initial Purchaser arises out of a sale of the
Notes by the Initial Purchaser to a person to whom there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the Offering
Circular (or of the Offering Circular as then amended or supplemented) if the
Company has previously furnished copies thereof to the Initial Purchaser a
reasonable time in advance and the loss, liability, claim, damage or expense of
the Initial Purchaser results from an untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in the
Preliminary Offering Circular which was corrected in the Offering Circular (or
the Offering Circular as amended or supplemented) or (ii) to the extent that any
such loss, claim, damage, expense or liability arises out of or is based upon
any action or failure to act by the Initial Purchaser that is found in a final
judicial determination (or a settlement tantamount thereto) to constitute
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bad faith, willful misconduct or gross negligence on the part of the Initial
Purchaser. The indemnity agreement in this subsection (a) shall be in addition
to any liability which the Company may have at common law or otherwise.
(b) The Initial Purchaser agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers and each other person,
if any, who controls the Company within the meaning of the Securities Act, to
the same extent as the foregoing indemnity from the Company to the Initial
Purchaser, but only with respect to statements or omissions, if any, made in
conformity with the Initial Purchaser's Information in any Preliminary Offering
Circular or the Offering Circular or any amendment thereof or supplement
thereto.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under Sections 7(a) or (b) unless and to the extent
that it has been prejudiced in a material respect by such failure or from the
forfeiture of substantial rights and defenses). In case any such action, suit or
proceeding is brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party,
which may be the same counsel as counsel to the indemnifying party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to take charge of the defense of such action within a reasonable time
after notice of commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded, after consultation with counsel to such
indemnified party or parties, that a conflict of interest exists which makes
representation by counsel chosen by the indemnifying party not advisable (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying parties. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Securities Act may be required, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in respect
thereof) (A) in such proportion as is appropriate to reflect the relative
benefits received by each of the contributing parties, on the one hand, and the
party to be indemnified on the other hand, from the offering of the Notes or (B)
if the allocation provided by clause (A) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of each of
the contributing parties, on the one hand, and the party to be indemnified, on
the other hand, in connection with the statements or omissions that resulted in
such losses, claims, damages, expenses or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Initial Purchaser, on the other, shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Notes (before deducting expenses) bear to the total discounts
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received by the Initial Purchaser hereunder, in each case as set forth in the
table on the Cover Page of the Offering Circular. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Initial
Purchaser, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, suits, proceedings or
litigation in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing or defending any
such action, claim, suit, proceeding or litigation. Notwithstanding the
provisions of this subsection (d), the Initial Purchaser shall not be required
to contribute any amount in excess of the discount applicable to the Notes
purchased by the Initial Purchaser hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Securities Act, each
executive officer of the Company and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to this
subsection (d). Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit, proceeding or litigation against
such party in respect to which a claim for contribution may be made against
another party or parties under this subsection (d), notify such party or parties
from whom contribution may be sought, but the omission so to notify such party
or parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have hereunder or otherwise than under
this subsection (d), or to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth above
shall be in addition to any liabilities which any indemnifying party may have at
common law or otherwise.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the Closing
Date and each Option Closing Date, as the case may be, and the agreements of the
Company and the provisions with respect to the payment of expenses contained in
Sections 5 and 9 and the respective indemnity agreements contained in Section 7
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Initial Purchaser, the Company, any of
the Subsidiaries or any controlling person, and shall survive termination of
this Agreement or the issuance and delivery of the Notes to the Initial
Purchaser.
9. Termination.
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(a) Subject to subsection (b) of this Section 9, the Initial
Purchaser shall have the right to terminate this Agreement (i) if any domestic
or international event or act or occurrence has disrupted, or in the Initial
Purchaser's reasonable and good faith opinion will in the immediate future
disrupt the United States financial markets; or (ii) if any material adverse
change in the United States financial markets shall have occurred; or (iii) if
trading on the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market shall have been suspended, or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required on the over-the-counter market by the NASD or by order
of the Commission or any other government authority having jurisdiction; or (iv)
if the United States shall have become involved in a war or major hostilities,
or there shall have been an escalation in an existing war or major hostilities,
or a national emergency shall have been declared in the United States; or (v) if
a banking moratorium has been declared by a state or federal authority; or (vi)
if a moratorium in foreign exchange trading has been declared; or (vii) if the
Company shall have sustained a loss material to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Initial Purchaser's reasonable and good faith opinion, make it inadvisable to
proceed with the delivery of the Securities; or (viii) if there shall have been
such a material adverse change in the general market, political or economic
conditions in the United States or elsewhere, as in the Initial Purchaser's
reasonable and good faith judgment would make it inadvisable to proceed with the
offering, sale and/or delivery of the Notes.
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(b) If this Agreement is terminated by the Initial Purchaser in
accordance with the provisions of Section 9(a) or 10 hereof or if this Agreement
shall not be carried out within the time specified herein, or any extension
thereof granted to the Initial Purchaser, by reason of any failure on the part
of the Company to perform any undertaking or satisfy any condition of this
Agreement by it to be performed or satisfied (including, without limitation,
pursuant to Section 6, 9 or 10 hereof), then the Company shall promptly
reimburse and indemnify the Initial Purchaser for all of its out-of-pocket
expenses, including the fees and disbursements of counsel for the Initial
Purchaser (less amounts previously paid pursuant to Section 5), up to $200,000.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement (including, without limitation,
pursuant to Sections 6, 9 and 10 hereof), and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 and Section 7 shall not be in
any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
10. DEFAULT BY THE COMPANY. If the Company shall fail at the
Closing Date or any Option Closing Date, as applicable, to sell and deliver the
number of Securities which it is obligated to sell hereunder on such date, then
the obligations of the Initial Purchaser under this Agreement shall terminate
(or, if such default shall occur with respect to any Option Securities to be
purchased on an Option Closing Date, the Initial Purchaser may, at its option,
by notice from the Initial Purchaser to the Company, terminate the Initial
Purchaser's obligation to purchase Option Notes from the Company on such date)
without any liability on the part of any non-defaulting party other than
pursuant to Sections 5, 7 and 9 hereof. No action taken pursuant to this Section
10 shall relieve the Company from liability, if any, in respect of such default.
11. NOTICES. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be given in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication and shall be effective upon actual receipt. Notices to the
Initial Purchaser shall be directed to it at Forum Capital Markets L.P., 00
Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Mr. C. Xxxxx
Xxxxxxx, with a copy to Xxxxxx Xxxx & Xxxxxx LLP, Two Stamford Plaza, 000
Xxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxx X. Xxxxxxxxxx,
Esq. Notices to the Company shall be directed to the Company at 000 Xxxxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: President, with a copy to Xxxx
and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X.
Xxxxxxx, Esq.
12. PARTIES. This Agreement shall inure solely to the benefit of
and shall be binding upon the Initial Purchaser, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Notes from the Initial Purchaser shall be deemed to
be a successor by reason merely of such purchase.
13. CONSTRUCTION. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to choice of law or conflict of laws principles.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
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15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement of the parties hereto and supersedes all prior written or oral
agreements, understandings and negotiations with respect to the subject matter
hereof, including, without limitation, the Letter of Intent between the parties
dated March 13, 1997. This Agreement may not be amended except in a writing
signed by the Initial Purchaser and the Company.
If the foregoing correctly sets forth the understanding between
the Initial Purchaser and the Company, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among us.
Very truly yours,
HYBRIDON, INC.
By: /s/ X. Xxxxxxx Xxxxxxxxx, III
---------------------------------
Name: X. Xxxxxxx Xxxxxxxxx, III
Title: Chairman, President and Chief
Executive Officer
Confirmed and accepted as of
the date first above written.
FORUM CAPITAL MARKETS L.P.
By: /s/ C. Xxxxx Xxxxxxx
-------------------------------------
Name: C. Xxxxx Xxxxxxx
Title: Senior Managing Director
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ANNEX I
Subsidiaries
------------
Jurisdictions in
Ownership which Qualified to
Name Jurisdiction Of Incorporation Percentage Conduct Business
---------------- ----------------------------- ---------- -------------------
26
