Page 14 of 50 Pages
EXHIBIT B
PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement"), dated as of December 16, 1997, by and
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among IGEN International, Inc., a Delaware corporation (the "Company"), and the
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entities whose names appear on the signature pages hereof. Such entities are
each referred to herein as a "Purchaser" and, collectively, as the "Purchasers".
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The Company wishes to sell and each Purchaser wishes to buy, subject
to the terms and conditions set forth in this Agreement, shares (the "Preferred
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Shares") of the Company's Series B Convertible Preferred Stock (the "Preferred
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Stock"), in reliance on the exemption from securities registration afforded by
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the provisions of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act").
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The Preferred Shares are convertible pursuant to the terms of a
Certificate of Designation relating to the Preferred Stock, the form of which is
attached hereto as Exhibit A (the "Certificate"), into shares of the Company's
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Common Stock, $.001 par value (the "Common Stock"). The term (i) "Conversion
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Shares" shall mean, at any time, the shares of Common Stock that are issued or
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issuable upon conversion of the Preferred Shares, (ii) "Dividend Payment Shares"
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shall mean the shares of Common Stock issued by the Company in payment of
dividends on the Preferred Shares in accordance with the terms of the
Certificate and (iii) "Securities" shall mean the Preferred Shares, the
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Conversion Shares and the Dividend Payment Shares.
The parties hereto agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
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1.1 Agreement to Purchase and Sell. Upon the terms and subject
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to the conditions set forth herein, the Company agrees to sell at the Closing
(as defined below), and each Purchaser agrees to purchase, the number of
Preferred Shares set forth on the signature page hereof executed by such
Purchaser, at a purchase price equal to one thousand dollars ($1,000) times the
number of Preferred Shares purchased by such Purchaser (the "Purchase Price").
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1.2 Closing. Subject to the satisfaction of the conditions set
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forth herein, the closing of the purchase and sale of the Preferred Shares (the
"Closing") will be deemed to occur when this Agreement, and the other
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Transaction Documents (as defined below), have been executed and delivered by
the Company and each Purchaser, and full payment of the amount of the Purchase
Price payable by each Purchaser has been made by such Purchaser by wire transfer
of same day funds to an account designated by the Company against delivery by
the Company of duly executed certificates representing the Preferred Shares
purchased by such Purchaser hereunder. The date on which the Closing is deemed
to occur is referred to herein as the "Closing Date".
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1.3 Certain Definitions. When used herein, (A) "business day"
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shall mean any day on which the New York Stock Exchange and commercial banks in
the city of New York are open for business and (B) an "affiliate" of a party
shall mean any person or entity controlling, controlled by or under common
control with that party.
Page 15 of 50 Pages
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
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Each Purchaser, solely with respect to it, hereby makes the following
representations and warranties to the Company (which shall be true as of the
date hereof and as of the Closing Date) and agrees with the Company that:
2.1 Authorization; Enforceability. Such Purchaser is duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full power and authority to purchase the
Preferred Shares and to execute and deliver this Agreement. Such Purchaser has
taken all action necessary for the authorization, execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party, and its obligations hereunder and thereunder, and, upon execution and
delivery thereof by the Company, this Agreement and the other Transaction
Documents to which it is a party constitute such Purchaser's valid and legally
binding obligations, enforceable in accordance with their respective terms,
except as such enforcement may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity.
2.2 Accredited Investor; Investment Intent. Such Purchaser is an
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accredited investor, as defined in Rule 501 of Regulation D under the Securities
Act. Such Purchaser is acquiring the Preferred Shares solely for its own account
for investment purposes as a principal and not with a view to the public resale
or distribution of all or any part thereof; provided, however that in making
such representation, such Purchaser does not agree to hold the Securities for
any minimum or specific term and reserves the right to sell, transfer or
otherwise dispose of the Securities at any time in accordance with the
provisions of this Agreement and with Federal and state securities laws
applicable to such sale, transfer or disposition.
2.3 Information. The Company has provided such Purchaser with
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certain written information regarding the Company and has granted to such
Purchaser the opportunity to ask questions of and receive answers from
representatives of the Company, its officers, directors, employees and agents
concerning the terms and conditions of the purchase and sale of the Preferred
Shares hereunder, and the Company and its business and prospects.
2.4 Limitations on Disposition. Such Purchaser acknowledges that
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the Preferred Shares are "restricted securities" under the Securities Act and
that under the Securities Act and applicable rules and regulations neither the
Preferred Shares nor any interest therein may be offered for sale or resold
absent registration under the Securities Act or unless pursuant to an exemption
therefrom.
2.5 Legend. Such Purchaser understands that the Preferred Shares
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shall bear at issuance the following legend:
"The security represented by this certificate has not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
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or the securities laws of any state, and may not be offered or sold
unless a registration statement under the Securities Act and
applicable state securities laws shall have become effective with
regard thereto, or an exemption from registration under the Securities
Act and applicable state securities laws is available in connection
with such offer or sale. Such security is issued subject to the
provisions of (i) a Purchase Agreement, dated December __,1997, by and
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among IGEN International, Inc. (the "Company") and the purchasers
named therein, and (ii) a Registration Rights Agreement, dated
December __, 1997, by and among the Company and such purchasers."
Notwithstanding the foregoing, it is agreed that, as long as (A) the
resale or transfer (including without limitation a pledge) of any Security is
registered pursuant to an effective registration statement, (B) the holder
thereof provides the Company with an opinion of counsel, in form, substance and
scope customary for opinions of counsel in comparable transactions (the cost of
which shall be borne by such holder) to the effect that such Security can be
sold publicly without registration under the Securities Act, (C) such Security
can be sold pursuant to Rule 144 under the Securities Act ("Rule 144") and a
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registered broker dealer provides to the Company a customary broker's Rule 144
letter and such holder delivers to the Company a customary seller's
representation letter, or (D) such Security is eligible for resale under Rule
144(k), such Security shall be issued without any legend or other restrictive
language and, with respect to any Security upon which such legend is stamped,
the Company shall issue new certificates without such legend to the holder
thereof upon request.
2.6 Fees. Such Purchaser is not obligated to pay any
----
compensation or other fee, cost or related expenditure to any underwriter,
broker, agent or other representative in connection with the transactions
contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company hereby makes the following representations and warranties
to each Purchaser (which shall be true as of the date hereof and as of the
Closing Date) and agrees with such Purchaser that:
3.1 Organization, Good Standing and Qualification. Each of the
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Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to carry on its business as now
conducted. Each of the Company and its subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on the consolidated
business or financial condition of the Company and its subsidiaries taken as a
whole. The term "subsidiaries" means corporations in which the Company has an
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equity interest of greater than 50%.
3.2 Authorization; Consents. The Company has the requisite
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corporate power and authority to enter into and perform its obligations under
(i) this Agreement, (ii) the Registration Rights Agreement and (iii) all other
agreements, documents, certificates or other instruments delivered by the
Company at the Closing (the instruments described in (i), (ii) and (iii) being
collectively referred to herein as the "Transaction Documents"), to execute and
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perform its obligations under the Certificate, to issue and sell the Preferred
Shares to such Purchaser in accordance with the terms of the Certificate, to
issue the Conversion Shares upon conversion of the Preferred Shares in
accordance with the terms thereof and to issue the Dividend Payment Shares in
accordance with the terms of the Certificate. All corporate action on the part
of the Company by its officers, directors and stockholders necessary for (A) the
authorization, execution and delivery of, and the performance by the Company of
its obligations under, the Transaction Documents and (B) the authorization,
execution and filing of, and performance by the Company of its obligations under
the Certificate has been taken, and no further consent or authorization of the
Company, its Board of Directors, its stockholders, or any governmental agency or
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organization or any other person or entity is required (pursuant to any rule of
the National Association of Securities Dealers, Inc. or otherwise).
3.3 Enforcement. The Transaction Documents and the Certificate
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constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except as such enforcement may be
limited by (i) applicable bankruptcy, insolvency, reorganization or other laws
of general application relating to or affecting the enforcement of creditors'
rights generally and (ii) general principles of equity.
3.4 Disclosure Documents; Material Agreements; Other
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Information. The Company has filed with the Commission: (i) the Company's Annual
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Report on Form 10-K for the year ended Xxxxx 00, 0000, (xx) Quarterly Reports on
Form 10-Q for the quarters ended June 30, 1997 and September 30, 1997, (iii) all
Current Reports on Form 8-K required to be filed with the Commission since March
31, 1997 and (iv) the Company's definitive Proxy Statement for its 199[7] Annual
Meeting of Stockholders (collectively, the "Disclosure Documents"). The Company
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is not aware of any event that would require the filing of, or with respect to
which the Company intends to file, a Form 8-K after the Closing. Each Disclosure
Document, as of the date of the filing thereof with the Commission, conformed in
all material respects to the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations thereunder,
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and, as of the date of such filing, such Disclosure Document did not contain an
untrue statement of material fact or omit to state a 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. All material
agreements required to be filed as exhibits to the Disclosure Documents have
been filed as required. To the best of the Company's knowledge, neither the
Company nor any of its subsidiaries is in breach of any agreement to which it is
a party or by which it is bound where such breach is reasonably likely to have a
material adverse effect on the consolidated business or financial condition of
the Company and its subsidiaries taken as a whole. To the best of the Company's
knowledge, except as set forth in the Disclosure Documents or any schedule or
exhibit attached hereto, the Company has no liabilities, contingent or
otherwise, other than liabilities incurred in the ordinary course of business
which, under generally accepted accounting principles, which are not required to
be reflected in the Company's financial statements and which, individually or in
the aggregate, are not material to the consolidated business or financial
condition of the Company and its subsidiaries taken as a whole. The financial
statements of the Company included in the Disclosure Documents, as of their
respective dates (A) complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto and (B) have been prepared in accordance
with generally accepted accounting principles consistently applied at the times
and during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments). The written information
provided to the Purchaser as described in paragraph 2.3 above does not contain
an untrue statement of material fact or omit to state a 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 does not include
any material, non-public information.
3.5 Capitalization. The capitalization of the Company as of the
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date hereof, including its authorized capital stock, the number of shares issued
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and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Company's stock option plans, the number of shares issuable and
reserved for issuance pursuant to securities (other than the Preferred Shares)
exercisable for, or convertible into or exchangeable for any shares of Common
Stock and the number of shares initially to be reserved for issuance upon
conversion of the Preferred Shares is set forth on Schedule 3.5 hereto. All of
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such outstanding shares of capital stock have been, or upon issuance will be,
validly issued, fully paid and non-assessable. No shares of the capital stock of
the Company are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances created by or through
the Company. Except as disclosed on Schedule 3.5, or as contemplated herein, as
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of the date of this Agreement and as of the Closing, there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exercisable or exchangeable for, any shares of capital stock of the Company or
any of its subsidiaries, or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries.
3.6 Valid Issuance. The Preferred Shares are duly authorized
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and, when issued, sold and delivered in accordance with the terms hereof, (i)
will be duly and validly issued, fully paid and nonassessable, free and clear of
any taxes, liens, claims, preemptive or similar rights or encumbrances imposed
by or through the Company, (ii) based in part upon the representations of such
Purchaser in this Agreement, will be issued, sold and delivered in compliance
with all applicable Federal and state securities laws and (iii) will be entitled
to all of the rights, preferences and privileges set forth in the Certificate.
The Conversion Shares are duly authorized and reserved for issuance and, when
issued upon conversion of the Preferred Shares in accordance with the terms
thereof, will be duly and validly issued, fully paid and nonassessable, free and
clear of any taxes, liens, claims, preemptive or similar rights or encumbrances
imposed by or through the Company. The Dividend Payment Shares are duly
authorized and, upon the issuance thereof in accordance with the terms of the
Certificate, will be duly and validly issued, fully paid and nonassessable, free
and clear of any taxes, liens, claims, preemptive or similar rights or
encumbrances imposed by or through the Company.
3.7 No Conflict with Other Instruments. Except as set forth on
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Schedule 3.7, neither the Company nor any of its subsidiaries is in violation of
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any provisions of its Certificate of Incorporation, Bylaws or any other
governing document as amended and in effect on and as of the date hereof or, to
the best of the Company's knowledge, in default (and no event has occurred
which, with notice or lapse of time or both, would constitute a default) under
any provision of any instrument or contract to which it is a party or by which
it is bound, or of any provision of any Federal or state judgment, writ, decree,
order, statute, rule or governmental regulation applicable to the Company, which
would have a material adverse effect on the consolidated business or financial
condition of the Company and its subsidiaries taken as a whole. The execution,
delivery and performance of the Transaction Documents, the execution and filing
of the Certificate, and the consummation of the transactions contemplated hereby
and thereby (including without limitation, the issuance of the Preferred Shares
and the reservation for issuance and issuance of the Conversion Shares and the
Dividend Payment Shares) will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any such provision, instrument or contract or an event
which results in the creation of any lien, charge or encumbrance upon any assets
of the Company or of any of its subsidiaries or the triggering of any preemptive
or anti-dilution rights or rights of first refusal or first offer on the part of
holders of the Company's securities.
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3.8 Financial Condition; Taxes; Litigation.
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3.8.1 The Company's financial condition is, in all material
respects, as described in the Disclosure Documents, except for changes in the
ordinary course of business and normal year-end adjustments that are not, in the
aggregate, materially adverse to consolidated business or financial condition of
the Company or its subsidiaries taken as a whole. Except as otherwise described
in the Disclosure Documents, there have been no material adverse changes to the
Company's business, operations, properties, financial condition, prospects or
results of operations since the date of the Company's most recent audited
financial statements contained in the Disclosure Documents.
3.8.2 The Company has filed all tax returns required to be
filed by it or obtained extensions of the due date for such returns and paid all
taxes which are due, except for taxes which it reasonably disputes or which
could not reasonably be expected to have a material adverse effect on the
consolidated business or financial condition of the Company and its subsidiaries
taken as a whole.
3.8.3 Except as set forth in Schedule 3.8.3, each of the
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Company and its subsidiaries is not the subject of any pending or, to the
Company's knowledge, threatened inquiry, investigation or administrative or
legal proceeding by the Internal Revenue Service, the taxing authorities of any
state or local jurisdiction, the Commission or any state securities commission
or other governmental or regulatory entity which could reasonably be expected to
have a material adverse effect on the consolidated business or financial
condition of the Company and its subsidiaries taken as a whole.
3.8.4 Except as set forth in Schedule 3.8.4, there is no
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material claim, litigation or administrative proceeding or inquiry pending, or,
to the best of the Company's knowledge, threatened, against the Company or any
of its subsidiaries, or against any officer, director or employee of the Company
or any such subsidiary in connection with such person's employment therewith.
Neither the Company nor any of its subsidiaries is a party to or subject to the
provisions of, any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality which could reasonably be expected to have
a material adverse effect on the consolidated business or financial condition of
the Company and its subsidiaries.
3.9 Reporting Company; Form S-3. The Company is subject to the
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reporting requirements of the Exchange Act, has a class of securities registered
under Section 12 of the Exchange Act, and has filed all reports required
thereby. The Company is eligible to register the Conversion Shares and the
Dividend Payment Shares for resale on a registration statement on Form S-3 under
the Securities Act.
3.10 Acknowledgement of Dilution. The Company acknowledges that the
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issuance of (i) the Conversion Shares upon conversion of the Preferred Shares in
accordance with the terms of the Certificate and (ii) the Dividend Payment
Shares in accordance with the terms of the Certificate may result in dilution of
the outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its obligation
(x) to issue Conversion Shares upon conversion of the Preferred Shares and (y)
to issue Dividend Payment Shares in accordance with the terms of the Certificate
is unconditional and absolute regardless of the effect of any such dilution. The
Board of Directors of the Company has reviewed the Transaction Documents, and
has determined that the transactions contemplated thereby are in the best
interests of the Company and its stockholders.
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3.11 Intellectual Property. The Company owns or possesses adequate
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rights to inventions, know-how, patents, copyrights, confidential information
and other intellectual property rights necessary to conduct the business now
operated by them, or presently employed by them, and have not received any
notice of infringement of or conflict with asserted rights of others with
respect to any such rights that, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a material
adverse effect on the consolidated business or financial condition of the
Company and its subsidiaries taken as a whole.
3.12 Registration Rights; Rights of Participation. Except as described
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on Schedule 3.12 hereto, (A) the Company has not granted or agreed to grant to
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any person or entity any rights (including "piggy-back" registration rights) to
have any securities of the Company registered with the Commission or any other
governmental authority and (B) no person or entity, including, but not limited
to, current or former stockholders of the Company, underwriters, brokers, agents
or other third parties, has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Certificate, this Agreement or any other Transaction
Document which has not been waived.
3.13 Trading on Nasdaq. The Common Stock is authorized for quotation
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on the Nasdaq National Market system, and trading in the Common Stock on Nasdaq
has not been suspended. The Company is (or will be at the Closing) in full
compliance with the designation criteria of the Nasdaq National Market, and does
not reasonably anticipate that the Common Stock will lose its designation as a
Nasdaq National Market security, whether by reason of the transactions
contemplated by this Agreement or the other Transaction Documents or otherwise.
Stockholder approval for the issuance of the Preferred Shares is not required
under NASD Rule 4460.
3.14 Solicitation. Neither the Company nor any of its subsidiaries or
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affiliates, nor any person acting on its or their behalf, (i) has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Preferred Shares or (ii) has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under any
circumstances that would require registration of the Preferred Shares under the
Securities Act.
3.15 Fees. Except as described on Schedule 3.15 hereto, the Company is
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not obligated to pay any compensation or other fee, cost or related expenditure
to any underwriter, broker, agent or other representative in connection with the
transactions contemplated hereby.
3.16 Foreign Corrupt Practices. To the knowledge of the Company,
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neither the Company, nor any of its subsidiaries nor any director, officer,
agent, employee or other person acting on behalf of the Company or any
subsidiary, has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity,
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee, or (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
3.17 Other Issuances of Securities. The Company has not issued (and
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will not issue) any shares of Common Stock or shares of any series of preferred
stock (other than the Preferred Shares) or other securities or instruments
convertible into, exchangeable for or otherwise entitling the holder thereof to
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acquire shares of Common Stock which would be integrated with the sale of the
Preferred Shares, or the issuance of the Conversion Shares upon conversion
thereof, for purposes of determining whether stockholder approval is required
under the designation criteria of the Nasdaq National Market.
4. COVENANTS OF THE COMPANY.
4.1 Corporate Existence. The Company shall, so long as any
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Purchaser or any affiliate of such Purchaser beneficially owns any Securities,
maintain its corporate existence in good standing and shall pay all taxes when
due except for taxes which the Company reasonably disputes or which could not
reasonably be expected to have a materially adverse change on the consolidated
business or financial condition of the Company and its subsidiaries.
4.2 Provision of Information. The Company shall provide each
-------------------------
Purchaser with copies of its annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and proxy statements and other materials
sent to stockholders, in each such case promptly after filing thereof with the
Commission, until the conversion or redemption of all of the Preferred Shares
held by such Purchaser.
4.3 Form D; Blue-Sky Qualification. The Company agrees to file a
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Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof to each Purchaser promptly upon filing. The Company
shall, on or before the Closing, take such action as is necessary to qualify the
Securities for sale under applicable state or "blue-sky" laws or obtain an
exemption therefrom, and shall provide evidence of any such action to such
Purchaser.
4.4 Reporting Status. As long as such Purchaser or any affiliate
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of such Purchaser beneficially owns any Securities, and until the date on which
any of the foregoing may be sold to the public pursuant to Rule 144(k) (or any
successor rule or regulation), (i) the Company shall timely file with the
Commission all reports required to be so filed pursuant to the Exchange Act and
(ii) the Company shall not terminate its status as an issuer required by the
Exchange Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination.
4.5 Use of Proceeds. The Company shall use the proceeds from the
---------------
sale of the Preferred Shares for general corporate purposes.
4.6 Listing. The Company shall, as soon as practicable following
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the Closing, secure the designation and quotation of the Conversion Shares and
Dividend Payment Shares on the Nasdaq National Market and shall use its best
efforts to maintain the designation of the Common Stock on the Nasdaq National
Market, the New York Stock Exchange or the American Stock Exchange.
4.7 Reservation of Common Stock. The Company shall at all times
---------------------------
have authorized and reserved for issuance, free from any preemptive rights,
solely for the purpose of effecting conversions of the Preferred Shares
hereunder, such number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all of the Preferred Shares then
outstanding (the "Reserved Amount"). As of the Closing Date, the Reserved Amount
---------------
shall be equal to no less than 175% of the number of shares of Common Stock
issuable upon conversion of all of the Preferred Shares purchased by the
Purchasers at the Closing (assuming for such purpose that the Preferred Shares
are convertible in full at such time). If at any time the Reserved Amount is
less than 125% of the number of Conversion Shares issuable upon conversion of
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all of the Preferred Shares then outstanding, the Company shall take immediate
action (including seeking stockholder authorization) to increase the Reserved
Amount to no less than 175% of the number of Conversion Shares into which such
outstanding Preferred Shares are then convertible. No Purchaser shall be issued,
upon conversion of a Preferred Shares of Common Stock in an amount greater than
the product of (A) the Reserved Amount in effect on the date on which notice of
such conversion or exercise is delivered to the Company pursuant to the terms of
the Certificate times (B) a fraction, the numerator of which is the number of
Preferred Shares purchased by such Purchaser hereunder and the denominator of
which is the number of Preferred Shares purchased by the Purchasers hereunder.
The Company shall not reduce the number of shares reserved for issuance
hereunder without the written consent of the holders of at least 66% of the then
outstanding number of Preferred Shares.
4.8 Use of Purchaser Name. The Company shall not use, directly
----------------------
or indirectly, any Purchaser's name in any advertisement, announcement, press
release or other similar communication unless it has received the prior written
consent of such Purchaser for the specific use contemplated; provided, however,
that the Company may respond to inquiries regarding the identity of the
Purchasers from securities analysts or the media.
4.9 Company's Instructions to Transfer Agent. On or prior to the
----------------------------------------
Closing, the Company shall execute and deliver irrevocable instructions to its
transfer agent (the "Transfer Agent") (i) to issue certificates representing
Conversion Shares upon conversion of Preferred Shares in accordance with the
terms thereof and receipt of (x) a valid Conversion Notice (as defined in the
Certificate) from a Purchaser, and (y) instructions from the Company pursuant to
the Certificate regarding the number of Conversion Shares and Dividend Payment
Shares (if any) to be issued in the name of such Purchaser or its nominee, (ii)
to issue certificates representing the Dividend Payment Shares upon the issuance
thereof in accordance with the Certificate and (iii) to deliver such
certificates to such Purchaser no later than the close of business on the third
(3rd) business day following the related Conversion Date or the Dividend Payment
Date (each as defined in the Certificate). The Company represents to and agrees
with each Purchaser that it will not give any instruction to the Transfer Agent
that will conflict with the foregoing instruction or otherwise restrict such
Purchaser's right to convert the Preferred Shares held by such Purchaser or to
receive Conversion Shares or Dividend Payment Shares in accordance with the
terms of the Certificate. In the event that the Company's relationship with the
Transfer Agent should be terminated for any reason, the Transfer Agent shall
continue acting as transfer agent pursuant to the terms hereof until such time
that a successor transfer agent is appointed by the Company and agrees to be
bound by the terms hereof.
5. CONDITIONS TO CLOSING.
---------------------
5.1 Conditions to Purchaser's Obligations at Closing. Each
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Purchaser's obligations at the Closing, including without limitation its
obligation to purchase the Preferred Shares to be purchased by it hereunder, are
conditioned upon the fulfillment of each of the following events:
(a) the representations and warranties of the Company set forth
in this Agreement shall be true and correct in all material
respects as of the Closing Date of as if made on such date;
(b) the Company shall have complied with or performed all of the
agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed
by the Company on or before the Closing;
-9-
Page 23 of 50 Pages
(c) the Company shall have delivered to such Purchaser a
certificate, signed by an officer of the Company, certifying
that the conditions specified in paragraphs (a) and (b)
above have been fulfilled;
(d) the Company shall have delivered to such Purchaser an
opinion of counsel for the Company, dated as of the date of
the Closing, in the form attached as Exhibit 5.1;
------------
(e) The Company shall have filed the Certificate with the
Secretary of State of the State of Delaware and furnished
such Purchaser with a file-stamped copy thereof;
(f) the Company shall have executed and delivered the
Registration Rights Agreement;
(g) there shall have been no material adverse changes in the
Company's consolidated business or financial condition since
the date of the Company's most recent financial statements
contained in the Disclosure Documents;
(h) the Common Stock shall be designated for quotation and
actively traded on the Nasdaq National Market; and
(j) the Company shall have authorized and reserved for issuance
upon conversion of the Preferred Shares 175% of the number
of shares of Common Stock issuable upon conversion all of
the Preferred Shares issuable at the Closing.
5.2 Conditions to Company's Obligations at Closing. The Company's
-------------------------------------------------
obligation at the Closing to issue and sell Preferred Shares to a Purchaser
hereunder is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions. The obligation of the Company to issue and sell
Preferred Shares to any Purchaser hereunder is distinct and separate from its
obligation to issue and sell Preferred Shares to any other Purchaser hereunder
and the failure by one or more Purchasers to fulfill the conditions set forth
herein or to consummate the purchase of Preferred Shares hereunder will not
relieve the Company of its obligations with respect to any other Purchaser.
(a) the representations and warranties of the applicable
Purchaser shall be true and correct in all material respects
as of the Closing Date as if made on such date; and
(b) the applicable Purchaser shall have complied with or
performed all of the agreements, obligations and conditions
set forth in this Agreement that are required to be complied
with or performed by such Purchaser on or before the
Closing.
6. INDEMNIFICATION.
---------------
The Company agrees to indemnify and hold harmless each Purchaser and
its officers, directors, employees and agents, and each person who controls the
Purchaser within the meaning of the Securities Act or the Exchange Act (each, a
"Purchaser Indemnified Party") against any losses, claims, damages, liabilities
---------------------------
or reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) as incurred, joint or several, to which it, they or
any of them, may become subject and not otherwise reimbursed, arising out of or
in connection with the breach by the Company of any of its representations,
warranties or covenants made herein; provided, that the Company shall not have
--------
-11-
Page 24 of 50 Pages
any obligation to any Purchaser Indemnified Party with respect to any liability
to the extent such liability arises from the gross negligence or willful
misconduct on the part of such Purchaser Indemnified Party as determined by a
court of competent jurisdiction.
Each Purchaser agrees to indemnify and hold harmless the Company and
its officers, directors, employees and agents, and each person who controls the
Company within the meaning of the Securities Act or the Exchange Act (each, a
"Company Indemnified Party") (a Purchaser Indemnified Party and a Company
---------------------------
Indemnified Party are each hereinafter referred to as an "Indemnified Party")
------------------
against any losses, claims, damages, liabilities or expenses (including the fees
and disbursements of counsel) as incurred, joint or several, to which it, they
or any of them, may become subject and not otherwise reimbursed, arising out of
or in connection with the breach by such Purchaser of any of its
representations, warranties or covenants made herein; provided, that such
--------
Purchaser shall not have any obligation to any Company Indemnified Party with
respect to any liability to the extent such liability arises from the gross
negligence or willful misconduct on the part of such Company Indemnified Party
as determined by a court of competent jurisdiction.
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action pursuant to which indemnification may be sought
hereunder, such Indemnified Party will, if a claim in respect thereof is to be
made against the other party (the "Indemnifying Party"), deliver to the
Indemnifying Party a written notice of the commencement thereof and the
Indemnifying Party shall have the right to participate in and to assume the
defense thereof with counsel reasonably selected by the Indemnifying Party,
provided, however, that an Indemnified Party shall have the right to retain its
own counsel, with the reasonably incurred fees and expenses of such counsel to
be paid by the Indemnifying Party, if representation of such Indemnified Party
by the counsel retained by the Indemnifying Party would be inappropriate due to
actual or potential conflicts of interest under applicable standards of
professional conduct between such Indemnified Party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the Indemnifying Party within a reasonable time of the commencement of
any such action will not relieve the Indemnifying Party of any of its
obligations hereunder with respect to such action except to the extent such
failure is prejudicial to the Indemnifying Party's ability to defend any such
action.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of pending or threatened action in
respect of which an Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on any claims that are the subject matter of such action. An
Indemnifying Party will not be liable for any settlement of any action or claim
effected without its written consent.
7. MISCELLANEOUS.
-------------
7.1 Survival; Severability. The representations, warranties,
-----------------------
covenants and indemnities made by the parties herein shall survive the Closing
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that in such case the parties shall negotiate
in good faith to replace such provision with a new provision which is not
illegal, unenforceable or void, as long as such new provision does not
materially change the economic benefits of this Agreement to the parties.
-11-
Page 25 of 50 Pages
7.2 Successors and Assigns. The terms and conditions of this
-----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Each Purchaser may assign its rights hereunder, in connection
with any private sale or transfer of Preferred Shares, as long as, as a
condition precedent to such transfer, the transferee executes an acknowledgment
agreeing to be bound by the applicable provisions of this Agreement, in which
case the term "Purchaser" shall be deemed to refer to such transferee as though
such transferee were an original signatory hereto.
7.3 Independent Nature of Purchasers' Obligations and Rights.
-----------------------------------------------------------
The obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at the Closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of the Certificate, this Agreement or
out of the other Transaction Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.
7.4 No Reliance. Each party acknowledges that (i) it has such
-----------
knowledge in business and financial matters as to be fully capable of evaluating
the Certificate, this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby, (ii) it is not relying on any
advice or representation of any other party (other than those contained or
described in this Agreement or the other Transaction Documents) in connection
with entering into this Agreement, the other Transaction Documents or such
transactions, (iii) it has not received from any such party any assurance or
guarantee as to the merits (whether legal, regulatory, tax, financial or
otherwise) of entering into this Agreement or the other Transaction Documents or
the performance of its obligations hereunder and thereunder, and (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement and the other Transaction Documents based on its own
independent judgment and on the advice of its advisors as it has deemed
necessary, and not on any view (whether written or oral) expressed by any such
party.
7.5 Remedies. The remedies provided to a Purchaser in this
--------
Agreement shall be cumulative and in addition to all other remedies available to
such Holder hereunder, at law or in equity (including without limitation a
decree of specific performance and/or other injunctive relief), no remedy
contained herein shall be deemed a waiver of compliance with the provisions
giving rise to such remedy and nothing contained herein shall limit such
Purchaser's right to pursue actual damages for any failure by the Company to
comply with the terms of this Agreement.
7.6 Governing Law. This Agreement shall be governed by and
--------------
construed under the laws of the State of New York without regard to the conflict
of laws provisions thereof. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
-12-
Page 26 of 50 Pages
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
7.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
7.8 Headings. The headings used in this Agreement are used for
--------
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.9 Notices. Any notice, demand or request required or permitted
-------
to be given by the Company or a Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with a hard copy to follow)
on or before 5:00 p.m., eastern time, on a business day or, if such day is not a
business day, on the next succeeding business day, (ii) on the next business day
after timely delivery to an overnight courier and (iii) on the third business
day after deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:
If to the Company:
IGEN International, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Messrs. Xxxxxx X. Xxxxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xx. Xxxxxxx X. Xxxxxx
Fax:
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
and if to any Purchaser, to such address for such Purchaser as shall appear on
the signature page hereof executed by such Purchaser, or as shall be designated
by such Purchaser in writing to the Company.
7.10 Expenses. Except as otherwise provided herein, each of the
--------
Company and the Purchasers shall pay all costs and expenses that it incurs in
connection with the negotiation, execution, delivery and performance of this
Agreement.
-13-
Page 27 of 50 Pages
7.11 Entire Agreement; Amendments. This Agreement and the other
-----------------------------
Transaction Documents (together with the Certificate) constitute the entire
agreement between the parties with regard to the subject matter hereof and
thereof, superseding all prior agreements or understandings, whether written or
oral, between the parties. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended except pursuant to a written
instrument executed by the Company and the holders of at least 2/3 of the
Preferred Shares then outstanding, and no provision hereof may be waived other
than by a written instrument signed by the party against whom enforcement of any
such waiver is sought.
[Remainder of Page Intentionally Left Blank]
-14-
Page 28 of 50 Pages
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
IGEN INTERNATIONAL, INC.
By: __________________________
Name:
Title:
PURCHASER NAME: ______________________________
By: _________________________
Name:
Title:
ADDRESS:
_______________________________
_______________________________
Tel: __________________________
Fax: __________________________
WITH COPIES OF NOTICES SENT TO:
_______________________________
_______________________________
Tel: ___________________________
Fax: ___________________________
NUMBER OF PREFERRED SHARES
TO BE PURCHASED: _________________
[_]Check here if Purchaser does not intend to be bound by the 4.9% limitation
contained in subparagraph II.G.2 of the Certificate.
-15-
Page 29 of 50 Pages
Exhibit A to
Purchase Agreement
SERIES B CONVERTIBLE PREFERRED STOCK
The designation, powers, preferences and rights of the Series B
Convertible Preferred Stock of IGEN International, Inc. (the "Company") are as
follows:
I. DESIGNATION AND AMOUNT.
----------------------
The designation of this series, which consists of twenty-five thousand
(25,000) shares of preferred stock, par value $.001 (the "Preferred Shares"), is
----------------
the Series B Convertible Preferred Stock (the "Series B Preferred Stock") and
-------------------------
the face amount shall be One Thousand Dollars ($1,000) per share (the "Stated
------
Value").
-----
II. CONVERSION.
----------
A. Right to Convert. Subject to the limitations contained in
----------------
paragraph G below, a holder of Preferred Shares (a "Holder") shall have the
------
right to convert such Preferred Shares at any time and from time to time on or
after the Initial Conversion Date (as defined below) into fully paid and
non-assessable shares (the "Conversion Shares") of the Company's Common Stock,
------------------
$.001 par value (the "Common Stock"), in accordance with the terms hereof (a
-------------
"Conversion"). As used herein, "Initial Conversion Date" means the ninetieth
---------- -------------------------
(90th) day following the Issue Date and "Issue Date" means the date on which the
----------
Preferred Shares are issued pursuant to the Purchase Agreement by and among the
Company and the purchasers (the "Purchasers") named therein (the "Purchase
---------- --------
Agreement").
---------
B. Conversion Notice. In order to convert Preferred Shares, the
-----------------
Holder thereof shall send by facsimile transmission, at any time prior to 11:59
p.m., eastern time, on the date on which the Holder wishes to effect such
Conversion (the "Conversion Date"), to the Company and to its designated
----------------
transfer agent for the Common Stock (the "Transfer Agent") (i) a notice of
---------------
conversion stating the number of Preferred Shares to be converted (a "Conversion
----------
Notice") and (ii) a copy of the certificate or certificates representing the
------
Preferred Shares being converted. The Holder shall thereafter send the original
of the Conversion Notice and of such certificate or certificates to the Company.
The Company shall issue a new certificate for Preferred Shares in the event that
less than all of the Preferred Shares represented by a certificate delivered to
the Company in connection with a Conversion are converted. Upon receipt of a
Conversion Notice, the Company shall calculate the amount of dividends which
have accrued on such Preferred Shares as provided herein up to and including the
Conversion Date, the applicable Conversion Price and a calculation of the number
of shares of Common Stock issuable upon such Conversion, and shall promptly
submit such information to the Transfer Agent. In the case of a dispute as to
the calculation of the Conversion Price or the number of Conversion Shares
issuable upon a Conversion, the Company shall promptly issue to the Holder the
number of Conversion Shares that are not disputed and shall submit the disputed
calculations to its independent accountants within two (2) business days of
receipt of such Holder's Conversion Notice. The Company shall cause such
accountant to calculate the Conversion Price as provided herein and to notify
the Company and the Holder of the results in writing no later than two (2)
business days following the day on which it received the disputed calculations.
Such accountant's calculation shall be deemed conclusive absent manifest error.
Page 30 of 50 Pages
The fees of any such accountant shall be borne by the party whose calculations
are most at variance with those of such accountant.
C. Number of Conversion Shares; Conversion Price. The number of
---------------------------------------------
Conversion Shares to be delivered by the Company pursuant to a Conversion shall
be equal to (A) the aggregate Stated Value of the Preferred Shares being
converted divided by (B) the Conversion Price. Subject to adjustment as provided
----------
in Section III below, the "Conversion Price" shall be equal to $13.96.
----------------
D. Delivery of Common Stock Upon Conversion. Upon receipt of a
----------------------------------------
Conversion Notice pursuant to paragraph B above, the Company shall, no later
than the close of business on the third (3rd) business day following the
Conversion Date set forth in such Conversion Notice (the "Delivery Date"), issue
-------------
and deliver or cause to be delivered to the Holder certificates representing the
number of Conversion Shares as shall be determined as provided in paragraph C
above. If any Conversion would create a fractional Conversion Share, such
fractional Conversion Share shall be disregarded and the number of Conversion
Shares issuable upon such Conversion, in the aggregate, shall be rounded up or
down to the nearest whole number of Conversion Shares. Conversion Shares
delivered to the Holder shall not contain any restrictive legend as long as the
sale of such Conversion Shares by the Holder is covered by a registration
statement which has been filed and declared effective pursuant to the terms of
the Registration Rights Agreement by and among the Company and the Purchasers
(the "Registration Rights Agreement") or may be made pursuant to Rule 144(k)
-------------------------------
under the Securities Act or any successor rule or provision.
E. Failure to Deliver Conversion Shares. In the event that the
-------------------------------------
Company fails for any reason to deliver to a Holder the number of Conversion
Shares issuable upon conversion of the Preferred Shares specified in the
applicable Conversion Notice on or before the Delivery Date therefor (a
"Conversion Default"), and such Conversion Default continues for longer than
-------------------
five (5) business days, the Company shall pay to the Holder cash payments
("Conversion Default Payments") in the amount of (i) (N/365) multiplied by (ii)
---------------------------- -------------
the Stated Value of the Preferred Shares represented by the Conversion Shares
which remain the subject of such Conversion Default multiplied by (iii) the
--------------
lower of twenty-four percent (24%) and the maximum rate permitted by applicable
law, where "N" equals the number of days elapsed between the original Delivery
Date of such Conversion Shares and the earlier to occur of (A) the date on which
all of such Conversion Shares are issued and delivered to such Holder and (B)
the date on which such Preferred Shares are redeemed pursuant to the terms
hereof. Cash amounts payable hereunder shall be paid on or before the fifth
(5th) business day of the calendar month following the calendar month in which
such amount has accrued. Nothing herein shall limit a Holder's right to pursue
actual damages for the Company's failure to issue and deliver Conversion Shares
on the applicable Delivery Date (including, without limitation, damages relating
to any purchase of shares of Common Stock by such Holder to make delivery on a
sale effected in anticipation of receiving Conversion Shares upon Conversion),
and such Holder shall have the right to pursue all remedies available to it at
law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief).
F. Mandatory Conversion. On the date which is five (5) years
---------------------
following the Issue Date (the "Maturity Date"), so long as the Common Stock
--------------
shall be designated for quotation on the Nasdaq National Market system or listed
on the New York Stock Exchange or American Stock Exchange, and actively traded
thereon, all Preferred Shares then outstanding shall be automatically converted
into the number of shares of Common Stock equal to the Stated Value of such
shares divided by the Conversion Price then in effect (a "Mandatory
----------- ---------
-2-
Page 31 of 50 Pages
Conversion"), and the Maturity Date shall be deemed the Conversion Date with
----------
respect to such Mandatory Conversion. If a Mandatory Conversion occurs, the
Company and the Holder shall follow the procedures for Conversion set forth in
this Section II; provided, however, that the Holder shall not be required to
send the Conversion Notice contemplated by paragraph B above.
G. Limitations on Right to Convert.
-------------------------------
1. In no event shall a Holder be permitted to convert any
Preferred Shares in excess of that number of such shares upon the Conversion of
which the number of Conversion Shares to be issued pursuant to such Conversion,
when added to the number of shares of Common Stock issued pursuant to all prior
Conversions of Preferred Shares and issuances of Dividend Payment Shares, would
exceed 19.99% of the number of outstanding shares of Common Stock on the Issue
Date (subject to equitable adjustments from time to time for the events
described in Section III below) (the "Cap Amount"), except that such limitation
----------
shall not apply in the event that the Company obtains the approval of its
stockholders as required by NASD Rule 4460 (or any other similar rule or
regulation) for issuances of Common Stock in excess of such amount; provided,
--------
however that it is understood and agreed that any Holder which has converted
-------
Preferred Shares into a number of Conversion Shares that equals or exceeds such
Holder's Allocation Amount (as defined below) shall have the right to require
the Company, upon written notice to such effect, to seek such stockholder
approval as soon as practicable (but in no event later than forty-five (45)
days) following the Company's receipt of such notice. Until such approval is
obtained, no Purchaser (as defined in the Purchase Agreement) shall be issued,
upon Conversion of Preferred Shares, Conversion Shares in an amount greater than
the product of (A) the Cap Amount times (B) a fraction, the numerator of which
-----
is the number of Preferred Shares purchased by such Purchaser pursuant to the
Purchase Agreement and the denominator of which is the aggregate number of
Preferred Shares purchased by all of the Purchasers pursuant to the Purchase
Agreement (the "Allocation Amount"). In the event that any Purchaser shall sell
------------------
or otherwise transfer all or any of its Preferred Shares, the transferee shall
be allocated a pro rata portion of such Purchaser's Allocation Amount and shall
be similarly bound. In the event that any Holder shall convert all of the
Preferred Shares held by it into a number of Conversion Shares which, in the
aggregate, is less than such Holder's Allocation Amount, then the difference
between such Holder's Allocation Amount and the number of Conversion Shares
actually issued to such Holder shall be allocated to the respective Allocation
Amounts of the remaining Holders of Preferred Shares on a pro rata basis in
proportion to the number of Preferred Shares then held by each such Holder
relative to the aggregate number of Preferred Shares then outstanding.
2. Except with respect to a Holder which indicates that it
elects not to be bound by the provisions of this subparagraph 2 on the signature
page of the Purchase Agreement executed by such Holder, in no event shall any
Holder be permitted to convert Preferred Shares in excess of that number of such
shares upon the Conversion of which (x) the number of shares of Common Stock
beneficially owned by such Holder (other than shares of Common Stock which may
be deemed beneficially owned except for being subject to a limitation on
conversion or exercise analogous to the limitation contained in this
subparagraph 2) plus (y) the number of shares of Common Stock issuable upon the
----
Conversion of such Preferred Shares is equal to or exceeds (z) 4.99% of the
--------------------
number of shares of Common Stock then issued and outstanding. Nothing contained
herein shall be deemed to restrict the right of a Holder to convert such excess
number of Preferred Shares at such time as such Conversion will not violate the
provisions of this subparagraph (2). To the extent that the limitation contained
-3-
Page 32 of 50 Pages
in this subparagraph 2 applies, the determination of whether Preferred Shares
are convertible shall be in the sole discretion of the Holder, and the
submission of a Conversion Notice shall be deemed to be such Holder's
determination that the Preferred Shares described therein are convertible
hereunder.
H. "Trading Day" shall mean any day on which the Common
------------
Stock is traded for any period on the Nasdaq National Market or on the principal
securities exchange or market on which the Common Stock is then traded.
III. ADJUSTMENTS TO CONVERSION PRICE.
A. Adjustment to Conversion Price Due to Stock Split, Stock
------------------------------------------------------------
Dividend, Etc. If prior to the Conversion of all of the Preferred Shares, (i)
--------------
the number of outstanding shares of Common Stock is increased by a stock split,
stock dividend, reclassification, the distribution to holders of Common Stock of
rights or warrants entitling them to subscribe for or purchase Common Stock at
less than the then Current Market Price (as defined below) thereof or other
similar event, the Conversion Price shall be proportionately reduced, or (ii)
the number of outstanding shares of Common Stock is decreased by a reverse stock
split, combination or reclassification of shares or other similar event, the
Conversion Price shall be proportionately increased. In such event, the Company
shall notify the Transfer Agent of such change on or before the effective date
thereof. The "Current Market Price" per share of Common Stock on any date shall
--------------------
be the average of the closing sale prices for the Common Stock as reported by
Nasdaq, or by the principal securities market on which the Common Stock is then
traded, on the five (5) consecutive Trading Days selected by the Company not
later than the earlier of the date in question and the Trading Day immediately
prior to the "ex" date, if any, with respect to the issuance or distribution
requiring such computation. The term "'ex' date", when used with respect to any
issuance or distribution, means the first Trading Day on which the Common Stock
trades regular way in the market from which such average closing price is then
to be determined without the right to receive such issuance or distribution. In
the absence of one or more such quotations, the Company shall determine the
current market price on the basis of such quotations as it considers
appropriate.
B. Adjustment Due to Merger, Consolidation, Etc. If, prior to
----------------------------------------------
the Conversion of all of the Preferred Shares, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, redemption
or other similar event, as a result of which shares of Common Stock shall be
changed into the same or a different number of shares of the same or another
class or classes of stock or securities of the Company or another entity or
there is a sale of all or substantially all the Company's assets, then each such
Holder shall thereafter have the right to receive upon Conversion of the
Preferred Shares held by it and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities and/or
other assets (the "Change of Control Consideration"), if any, which such Holder
-------------------------------
would have been entitled to receive in such transaction had such Preferred
Shares been converted immediately prior to such transaction, and in any such
case appropriate provisions shall be made with respect to the rights and
interests of such Holder to the end that the provisions hereof (including,
without limitation, provisions for the adjustment of the Conversion Price and of
the number of shares issuable upon a Conversion) shall thereafter be applicable
as nearly as may be practicable in relation to any securities thereafter
deliverable upon the exercise hereof. The Company shall not effect any
transaction described in this paragraph B unless (i) it first gives to the
Holder no less than twenty (20) days' prior written notice of such merger,
consolidation, exchange of shares, recapitalization, reorganization, redemption
-4-
Page 33 of 50 Pages
or other similar event, and makes a public announcement of such event at the
same time that it gives such notice and (ii) the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligations of the Company under this Certificate, including the terms of this
paragraph B. Notwithstanding the provisions of paragraph II.A. above, in the
event that the Company delivers a notice of a merger, consolidation, exchange of
shares, recapitalization, reorganization, redemption or other similar event to
each Holder which specifies an effective date therefor which is prior to the
Initial Conversion Date, each Holder shall have the right to convert, from time
to time following the delivery of such notice to such Holder, any or all of the
Preferred Shares held by it, so that such Holder shall be entitled to receive
the Change of Control Consideration with respect to any Conversion Shares which
it received pursuant to a Conversion occurring prior to such effective date.
C. Distribution of Assets. If, prior to the Conversion of all
-----------------------
of the Preferred Shares, the Company shall declare or pay any dividends to
holders of Common Stock, or declare or make any distribution of its assets (or
rights to acquire its assets) to holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise, including any
dividend or distribution in cash or shares of capital stock of a subsidiary of
the Company (collectively, a "Distribution"), then, upon a Conversion by the
------------
Holder occurring after the record date for determining shareholders entitled to
such Distribution but prior to the effective date of such Distribution, each
Holder shall be entitled to receive the amount of such assets which would have
been payable to such Holder had such Holder been the holder of such shares of
Common Stock on the record date for the determination of shareholders entitled
to such Distribution. The Company shall deliver written notice of any
Distribution to each Holder no less than twenty (20) business days prior to the
effective date thereof. Notwithstanding the provisions of paragraph II.A. above,
in the event that the Company delivers a notice of a Distribution to the Holders
which specifies an effective date therefor which is prior to the Initial
Conversion Date, each Holder shall have the right to convert, from time to time
following the delivery of such notice to such Holder, any or all of the
Preferred Shares held by it, so that such Holder shall be entitled to receive
such Distribution with respect to any Conversion Shares which it received
pursuant to a Conversion occurring prior to such effective date.
D. No Fractional Shares. If any adjustment under this Section
---------------------
III would create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be disregarded and
the number of shares of Common Stock issuable upon Conversion shall be rounded
up or down to the nearest whole number of shares.
IV. DIVIDENDS.
A. Dividends; Stock Payment Option. Each Holder of Preferred
---------------------------------
Shares shall be entitled to receive, to the extent permitted by applicable law,
subject to the prior, full payment of any accumulated and unpaid dividends on
any class or series of Senior Securities (as defined below) and in preference to
the payment of any dividend on any class or series of Junior Securities (as
defined below), cumulative dividends ("Dividends") on each Preferred Share in an
---------
amount equal to, on an annualized basis, the Stated Value of such Preferred
Share times 7.75%, compounded annually. Dividends shall accrue and be payable,
-----
whether or not earned or declared, on each Preferred Share from the Issue Date
through the earlier to occur of (A) the Maturity Date (as defined below) and (B)
the redemption or conversion thereof in accordance with the terms hereof.
Accrued Dividends on a Preferred Share shall be payable on each Conversion Date
(as defined below), on the Maturity Date (as defined below) and on any Mandatory
-5-
Page 34 of 50 Pages
Redemption Date or Optional Redemption Date (as defined below) (each, a
"Dividend Payment Date"). If, on any date, Dividends on any outstanding
-----------------------
Preferred Shares have not been paid with respect to all Dividend Payment Dates
preceding such date, the aggregate amount of such Dividends shall be fully paid
before any distribution, whether by way of dividend or otherwise, shall be
declared, paid or set apart with respect to any Junior Securities on or after
such date. Dividends shall be paid either in cash or, at the option of the
Company (the "Stock Payment Option"), and subject to the satisfaction of the
---------------------
conditions set forth in paragraph B below (the "Stock Payment Conditions"), in
-------------------------
shares (the "Dividend Payment Shares") of the Common Stock. Cash Dividends shall
-----------------------
be paid to each Holder within five (5) Business Days following the applicable
Dividend Payment Date by delivering immediately available funds to such Holder
in accordance with such Holder's wiring instructions. Any amount of Dividends
payable in cash which is not paid within five (5) Business Days of the
applicable Dividend Payment Date shall bear interest at an annual rate equal to
the lower of (x) the "prime" rate (as published in the Wall Street Journal) on
such fifth Business Day plus three percent (3%) and (y) the highest rate
permitted by applicable law, for the number of days elapsed from such Dividend
Payment Date until such amount is paid in full (the "Default Interest Rate").
---------------------
B. Conditions to Stock Payment Option. If the Company wishes to
----------------------------------
exercise the Stock Payment Option, it may do so only if each of the following
conditions has been satisfied as of the relevant Conversion Date:
1. the number of shares of Common Stock authorized,
unissued and unreserved for all other purposes, or held in the Company's
treasury, is sufficient to pay 125% of the aggregate number of (x) Conversion
Shares issuable upon the conversion in full of the Preferred Shares and (y) the
number of Dividend Payment Shares issuable pursuant to such option;
2. the Dividend Payment Shares are authorized for
quotation on the Nasdaq National Market or for listing or quotation on any other
national securities exchange or market on which the Common Stock may be listed;
3. the Registration Statement (as defined in the
Registration Rights Agreement) is effective and available for the sale of the
Dividend Payment Shares by the Holder or such shares may be sold to the public
pursuant to Rule 144(k);
4. a Mandatory Redemption Event (as defined herein) has
not occurred or be continuing; and
5. the Company has delivered to each Holder a certificate,
signed by an executive officer of the Company, setting forth:
* the amount of the Dividend to which such Holder is
entitled and, if not the same, the amount of such
payment to be made in Dividend Payment Shares;
* the number of Dividend Payment Shares to be
delivered in payment of such Dividends, and the
calculation therefor; and
* a statement to the effect that all of the
conditions set forth in sub-paragraphs 1-4 above
have been satisfied.
-6-
Page 35 of 50 Pages
C. Delivery of Dividend Payment Shares. Upon exercise of the
-------------------------------------
Stock Payment Option, the Company shall deliver to each Holder, on or before the
third (3rd) Business Day following the applicable Dividend Payment Date (the
"Dividend Payment Share Delivery Date"), the aggregate number of whole Dividend
------------------------------------
Payment Shares that is determined by dividing (x) the amount of the Dividend to
which such Holder is entitled as of such Dividend Payment Date with respect to
all of such Holder's Preferred Shares by (y) the applicable Conversion Price on
such Dividend Payment Date. No fractional Dividend Payment Shares shall be
issued; the Company shall, in lieu thereof, either issue a number of Dividend
Payment Shares which reflects a rounding up to the next whole number of shares
or pay such amount in cash. Dividend Payment Shares shall be fully paid and
non-assessable, free and clear of any liens, claims, preemptive rights or
encumbrances imposed by or through the Company.
D. Failure to Deliver Dividend Payment Shares. In the event
---------------------------------------------
that the Company fails for any reason to deliver to a Holder the appropriate
number of Dividend Payment Shares on or before the third (3rd) Business Day
following the applicable Dividend Payment Share Delivery Date, the Company
shall, upon written notice by such Holder, immediately pay the amount of the
Dividend in cash, together with interest at an annual rate equal to the Default
Interest Rate on such unpaid amount accruing daily from the applicable Dividend
Payment Date until the date on which such amount is paid. Each Holder shall have
the right to pursue actual damages for the Company's failure to issue and
deliver Dividend Payment Shares on the Dividend Payment Share Delivery Date for
a Dividend, including, without limitation, damages relating to any purchase of
shares of Common Stock by such Holder to make delivery on a sale effected in
anticipation of receiving Dividend Payment Shares, such damages to be in an
amount equal to (A) the aggregate amount paid by such Holder for the shares of
Common Stock so purchased minus (B) (i) the aggregate amount of net proceeds, if
-----
any, received by such Holder from the sale of the Dividend Payment Shares issued
by the Company with respect to such Dividend and (ii) the amount of any cash
received in lieu of such Dividend Payment Shares pursuant to the immediately
preceding sentence (excluding any interest accrued thereon), and such Holder
shall have the right to pursue all remedies available to it at law or in equity
(including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to deliver Dividend
Payment Shares).
E. Exercise of Stock Payment Option. In order for the Company
---------------------------------
to exercise the Stock Payment Option, it must deliver written notice thereof (a
"Stock Payment Exercise Notice") to each Holder on or before the tenth (10th)
--------------------------------
Business Day prior to the Initial Conversion Date (as defined below) and prior
to the first day of each calendar quarter thereafter specifying whether the
Company intends to pay Dividends during such calendar quarter (or shorter period
in the case of the notice delivered prior to the Initial Conversion Date) in
Dividend Payment Shares or cash. Upon delivering a Stock Payment Exercise Notice
to a Holder, the Company thereafter shall be irrevocably bound by its election
made therein to deliver Dividend Payment Shares or cash, as the case may be,
during the period to which such notice relates.
V. PAYMENT UPON DISSOLUTION.
------------------------
(a) Upon the occurrence of (x) any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, commenced by the Company or by its
creditors, as such, or relating to its assets or (y) the dissolution or other
winding up of the Company whether total or partial, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy proceedings,
-7-
Page 36 of 50 Pages
or (z) any assignment for the benefit of creditors or any marshalling of the
material assets or material liabilities of the Company (each, a "Liquidation
-----------
Event"), no distribution shall be made to the holders of any shares of Junior
-----
Securities (as defined below) unless, following the payment of preferential
amounts on all Senior Securities (as defined below), each Holder shall have
received the Liquidation Preference (as defined below) with respect to each
Preferred Share then held by such Holder. In the event that upon the occurrence
of a Liquidation Event, and following the payment of preferential amounts on all
Senior Securities (as defined below), the assets available for distribution to
the Holders and the holders of Pari Passu Securities (as defined below) are
insufficient to pay the Liquidation Preference with respect to all of the
outstanding Preferred Shares and the preferential amounts payable to such
holders, the entire assets of the Company shall be distributed ratably among the
Preferred Shares and the shares of Pari Passu Securities in proportion to the
ratio that the preferential amount payable on each such share (which shall be
the Liquidation Preference in the case of a Preferred Share) bears to the
aggregate preferential amount payable on all such shares. If, after the payment
of all preferential amounts to the holders of Senior Securities, the Holders and
the holders of Pari Passu Securities, there are assets of the Company remaining,
the holders of Junior Securities shall share in such assets ratably in
accordance with the respective terms of such Junior Securities.
(b) The "Liquidation Preference" with respect to a Preferred
-----------------------
Share shall mean an amount equal to the Stated Value of such Preferred Share
plus any accrued and unpaid Dividends thereon. "Junior Securities" shall mean
------------------
the Common Stock and all other capital stock of the Company that are not Pari
Passu Securities or do not have a preference over the Preferred Stock in respect
of dividends, redemption or distribution upon liquidation. "Senior Securities"
-----------------
shall mean any securities of the Company which by their terms have a preference
over the Preferred Stock in respect of dividends, redemption or distribution
upon liquidation. "Pari Passu Securities" shall mean any securities ranking pari
---------------------
passu with the Preferred Stock in respect of dividends, redemption and
distribution upon liquidation.
VI. OPTIONAL REDEMPTION BY THE COMPANY.
----------------------------------
A. Optional Redemption. The Company shall have the right, at
--------------------
any time commencing on the date which is thirty-six (36) months after the Issue
Date (the "Initial Optional Redemption Date"), to redeem (an "Optional
------------------------------------ --------
Redemption") all of the Preferred Shares then outstanding at the Optional
----------
Redemption Price (as defined herein); provided, however, that in order to effect
an Optional Redemption, the Company shall have provided to each Holder thirty
(30) Trading Days' prior written notice of the effective date of the Optional
Redemption (the "Optional Redemption Date"). Nothing contained herein shall
--------------------------
prevent a Holder from converting any or all of its Preferred Shares at any time
or from time to time prior to the Optional Redemption Date.
B. Optional Redemption Price. The "Optional Redemption Price"
-------------------------- --------------------------
shall mean the Stated Value of the Preferred Shares being redeemed multiplied by
-------------
(A) 103% if the Optional Redemption Date occurs during the twelve (12) month
period beginning on the Initial Optional Redemption Date and (B) 100% if the
Optional Redemption Date occurs after the last day of such twelve (12) month
period.
C. Payment of Optional Redemption Price. The Company shall pay
-------------------------------------
the Optional Redemption Price to each Holder within five (5) business days of
the Optional Redemption Date. If the Company fails to pay the Optional
Redemption Price on or before such fifth business day, interest at an annual
rate equal to the Default Interest Rate (calculated as of such fifth business
-8-
Page 37 of 50 Pages
day) shall accrue on such unpaid amount on a daily basis calculated from the
Optional Redemption Date until the date on which such amount is paid in full.
VII. MANDATORY REDEMPTION BY THE HOLDER.
----------------------------------
A. Mandatory Redemption. Subject to the provisions of paragraph
--------------------
F below, in the event that a Mandatory Redemption Event (as defined herein)
occurs, each Holder shall have the right, upon written notice to the Company, to
have all or any portion of the Preferred Shares then held by such Holder
redeemed by the Company (a "Mandatory Redemption") at the Mandatory Redemption
---------------------
Price (as defined herein) in same day funds. Such notice shall specify the
effective date of such Mandatory Redemption (the "Mandatory Redemption Date")
---------------------------
and the number of Preferred Shares to be redeemed. The Optional Redemption Date
and the Mandatory Redemption Date are sometimes each referred to herein as a
"Redemption Date".
---------------
B. Mandatory Redemption Price. The "Mandatory Redemption Price"
-------------------------- --------------------------
shall be equal to the Stated Value of the Preferred Shares being redeemed
multiplied by (i) during the twelve-month period following the Issue Date (the
-------------
"Initial Redemption Period"), one hundred and nine percent (109%), (ii) during
--------------------------
the twelve-month period following the end of the Initial Redemption Period, one
hundred and six percent (106%), and (iii) thereafter, one hundred and three
percent (103%).
C. Payment of Mandatory Redemption Price.The Company shall pay
--------------------------------------
the Mandatory Redemption Price to each Holder who has requested a Mandatory
Redemption within five (5) business days of the Mandatory Redemption Date. If
the Company fails to pay the Mandatory Redemption Price to a Holder within five
(5) business days of the Mandatory Redemption Date, such Holder shall be
entitled to interest at an annual rate equal to the Default Interest Rate
(calculated as of such 5th business day) from the Mandatory Redemption Date
until the Mandatory Redemption Price has been paid in full.
D. Mandatory Redemption Event. Each of the following events
----------------------------
shall be deemed a "Mandatory Redemption Event":
--------------------------
1. the Company fails for any reason (including without
limitation (x) as a result of not having a sufficient number of shares of Common
Stock authorized and reserved for issuance, or (y) due to the listing
requirements of any quotation system or exchange on which the Common Stock is
quoted or listed with which the Company is unable to comply as a result of
voluntary action undertaken by the Company or a failure by the Company to take
action) to issue shares of Common Stock to a Holder and deliver certificates
representing such shares to such Holder as and when required by the provisions
hereof upon Conversion of any Preferred Shares, and such failure continues for
twenty (20) Business Days;
2. any material representation or warranty made by the Company
in the Purchase Agreement, the Registration Rights Agreement, or any other
agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby or thereby is inaccurate or misleading
in any material respect as of the date such representation or warranty was made;
3. if following the declaration of effectiveness of the
Registration Statement (as defined in the Registration Rights Agreement) and
-9-
Page 38 of 50 Pages
while the effectiveness of the Registration Statement is required to be
maintained pursuant to the terms of the Registration Rights Agreement, the
effectiveness of the Registration Statement lapses for any reason (including
without limitation, the issuance of a stop order) or is unavailable to the
Holder for the sale of Conversion Shares in accordance with the terms of the
Registration Rights Agreement, and such lapse or unavailability continues for a
period of ten (10) Business Days, provided that the cause of such lapse or
unavailability results from voluntary action undertaken by the Company or its
failure to take action; and
4. the Common Stock is not quoted on the Nasdaq National Market
or listed on the New York Stock Exchange or American Stock Exchange due to any
voluntary action or the failure to take action on the part of the Company.
Notwithstanding the foregoing, to the extent that the Company uses its
best efforts to take action to avoid a Mandatory Redemption Event and such
action is unsuccessful, such failed attempt, in and of itself, will not be
deemed to trigger a Mandatory Redemption Event.
E. Failure to Pay Redemption Amounts. If the Company fails to
----------------------------------
pay the Mandatory Redemption Price within ten (10) business days of the payable
date therefor, and has not exercised the Penalty Option (as defined below) in
accordance with paragraph F below, then the Holder shall have the right at any
time, so long as the Company remains in default, to require the Company, upon
written notice, to immediately issue, in lieu of the Mandatory Redemption Price,
the number of shares of Common Stock of the Company equal to the Mandatory
Redemption Price divided by the Conversion Price in effect on such Conversion
----------
Date as is specified by the Holder in writing to the Company.
F. Penalty Option. In the event that a Mandatory Redemption
---------------
Event described in paragraph D.3 or D.4 above occurs and is continuing, the
Company may, in lieu of redeeming Preferred Shares as provided herein, elect (i)
to increase the rate at which Dividends will accrue on the Preferred Shares and
be payable hereunder to fourteen percent (14)%, such increase to be effective as
of the related Mandatory Redemption Date and (ii) to pay such Dividends in cash
within five business days of the end of each calendar month in which such
increased Dividends have accrued (the "Penalty Option"). Upon the termination of
--------------
the applicable Mandatory Redemption Event, such increased Dividend rate and
payment frequency will revert back to the Dividend rate and payment frequency
otherwise provided in this Certificate. The Company shall give written notice to
each Holder of its intention to exercise the Penalty Option within five (5)
business days of receiving notice of a Mandatory Redemption from a Holder.
VIII. MISCELLANEOUS.
A. Notices. Except as otherwise provided herein, any notice,
-------
demand or request required or permitted to be given by the Company or a Holder
pursuant to the terms of this Certificate shall be in writing and shall be
deemed given (i) when delivered personally or by verifiable facsimile
transmission (with a hard copy to follow), (ii) on the next business day after
timely delivery to an overnight courier and (iii) on the third business day
after deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:
-10-
Page 39 of 50 Pages
If to the Company:
IGEN International, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Messrs. Xxxxxx X. Xxxxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xx. Xxxxxxx X. Xxxxxx
Fax:
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
and if to a Holder, at such address as such Holder shall have furnished the
Company in writing.
B. Transfer of Preferred Shares. A Holder may sell or transfer
-----------------------------
all or any portion of the Preferred Shares to any person or entity as long as
such sale or transfer is the subject of an effective registration statement
under the Securities Act or is exempt from registration thereunder and otherwise
is made in accordance with the terms of the Purchase Agreement. From and after
the date of such sale or transfer, the transferee hereof shall be deemed to be a
Holder. Upon any such sale or transfer, the Company shall, promptly following
the return of the certificate or certificates representing the Preferred Shares
that are the subject of such sale or transfer, issue and deliver to such
transferee a new certificate in the name of such transferee.
C. Lost or Stolen Certificate. Upon receipt by the Company of
---------------------------
evidence of the loss, theft, destruction or mutilation of a certificate
representing Preferred Shares, and (in the case of loss, theft or destruction)
of indemnity or security reasonably satisfactory to the Company, and upon
surrender and cancellation of such certificate if mutilated, the Company shall
execute and deliver to the Holder a new certificate identical in all respects to
the original certificate.
D. No Voting Rights. Except as provided by applicable law and
-----------------
paragraph G below, the Holders of the Preferred Shares shall have no voting
rights with respect to the business, management or affairs of the Company;
provided that the Company shall provide each Holder with prior notification of
each meeting of stockholders (and copies of proxy statements and other
information sent to such stockholders).
E. Remedies, Characterization, Other Obligations, Breaches and
------------------------------------------------------------
Injunctive Relief. The remedies provided to a Holder in this Certificate shall
------------------
be cumulative and in addition to all other remedies available to such Holder
under this Certificate, at law or in equity (including without limitation a
decree of specific performance and/or other injunctive relief), no remedy
contained herein shall be deemed a waiver of compliance with the provisions
giving rise to such remedy and nothing contained herein shall limit such
Holder's right to pursue actual damages for any failure by the Company to comply
-11-
Page 40 of 50 Pages
with the terms of this Certificate. The Company agrees with each Holder that
there shall be no characterization concerning this instrument other than as
specifically provided herein. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder hereof and shall not, except as
expressly provided herein, be subject to any other obligation of the Company (or
the performance thereof).
F. Failure or Delay not Waiver. No failure or delay on the part
---------------------------
of a Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
G. Protective Provisions.
-----------------------
So long as Preferred Shares are outstanding, the Company
shall not, without first obtaining the approval of the Holders of at least
two-thirds (2/3) of the then outstanding Preferred Shares:
1. alter or change (x) the rights, preferences or privileges of
the Series B Preferred Stock or (y) any other capital stock of the Company so as
to affect adversely the Series B Preferred Stock;
2. create any new class or series of capital stock having a
preference over or ranking pari passu with the Series B Preferred Stock as to
redemption, the payment of dividends or distribution of assets upon a
Liquidation Event or any other liquidation, dissolution or winding up of the
Company;
3. increase the authorized number of shares of Series B
Preferred Stock; or
4. re-issue any shares of Series B Preferred Stock which have
been converted in accordance with the terms hereof.
In the event that Holders of at least two-thirds (2/3) of the then
outstanding shares of Series B Preferred Stock agree to allow the Company to
alter or change the rights, preferences or privileges of the Series B Preferred
Stock, pursuant to the terms hereof, then the Company will deliver notice of
such approved change, no later than the twentieth (20th) day prior to the
effective date of such approved change, to the holders of the Series B Preferred
Stock that did not agree to such alteration or change (the "Dissenting Holders")
and the Dissenting Holders shall have the right to convert their Preferred
Shares at any time and from time to time following delivery of such notice. No
such change shall be effective to the extent that, by its terms, it applies to
less than all of the Holders of Preferred Shares then outstanding.
-12-
