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Exhibit 10.59
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
August 2, 2001 among i-STAT Corporation, a Delaware corporation (the "COMPANY"),
and the purchasers identified on the signature pages hereto (each a "PURCHASER"
and collectively the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and Rule 506 promulgated thereunder, the Company desires
to issue and sell to the Purchasers, and the Purchasers, severally and not
jointly, desire to purchase from the Company, securities of the Company as more
fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in and
construed under Rule 144. With respect to a Purchaser, any investment
fund or managed account that is managed on a discretionary basis by the
same investment manager as such Purchaser will be deemed to be an
Affiliate of such Purchaser.
"AGGREGATE PURCHASE PRICE" means the sum of the Closing Date
Purchase Amount and the total amount that all Purchasers are required to pay
under Section 2.3.
"CERTIFICATE OF DESIGNATIONS" means a certificate of
designations of the Preferred Stock, in the form of in Exhibit A.
"CLOSING" means the closing of the purchase and sale of the
Securities pursuant to Section 2.1.
"CLOSING DATE" means the date of the Closing.
"CLOSING DATE PURCHASE AMOUNT" means the total amount of money
paid by all Purchasers to or as directed by the Company in accordance with
Section 2.2(b)(i).
"CLOSING PRICE" means, for any date, the price determined by
the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on an Eligible Market or any other
national securities exchange, the closing bid price per share
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of the Common Stock for such date (or the nearest preceding date if
there is no price on such date) at 4 P.M. (local time for such Eligible
Market or other national securities exchange) on the primary Eligible
Market or exchange on which the Common Stock is then listed or quoted;
(b) if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the closing bid price per share of the Common Stock for such
date (or the nearest preceding date) so quoted; (c) if prices for the
Common Stock are then reported in the "Pink Sheets" published by the
National Quotation Bureau Incorporated (or a similar organization or
agency succeeding to its functions of reporting prices), the most
recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by a
majority-in-interest of the Purchasers.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON SHARES" means the shares of Common Stock which are
being purchased by and issued to the Purchasers pursuant to this Agreement.
"COMMON STOCK" means the common stock of the Company, par
value $0.15 per share, or such securities into which such stock shall hereafter
be classified.
"COMPANY COUNSEL" means Paul, Hastings, Xxxxxxxx & Xxxxxx LLP,
counsel to the Company.
"EFFECTIVE DATE" means the date that an Underlying Shares
Registration Statement is first declared effective by the Commission.
"ELIGIBLE MARKET" means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"PER SHARE PURCHASE PRICE " means $9.218.
"PERSON" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
"PREFERRED SHARES" means the shares of Preferred Stock which
are being purchased by and issued to the Purchasers pursuant to this Agreement.
"PREFERRED STOCK" means the Series C Convertible Preferred
Stock of the Company, which is convertible into shares of Common Stock which
shall have the terms set forth in the Certificate of Designations.
"PURCHASER COUNSEL" means Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP, counsel to the Purchasers.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and the
Purchasers, in the form of Exhibit B.
"REQUIRED EFFECTIVENESS DATE" means the date on which an
Underlying Shares Registration Statement is required to become effective
pursuant to the Registration Rights Agreement.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SECURITIES" means the Common Shares, Preferred Shares,
Warrants and Underlying Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARY" means any subsidiary of the Company that is
required to be listed in Schedule 3.1(a).
"TRADING DAY" means (a) any day on which the Common Stock is
traded on its primary Trading Market, or (b) if the Common Stock is not then
listed or quoted on any national securities exchange, market or trading or
quotation facility, then a day on which trading occurs on the New York Stock
Exchange (or any successor thereto).
"TRADING MARKET" means Nasdaq National Market or any other
national securities exchange, market or trading or quotation facility on which
the Common Stock is then listed or quoted.
"TRANSACTION DOCUMENTS" means this Agreement, the Securities,
the Registration Rights Agreement, the Certificate of Designations, the Transfer
Agent Instructions and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
"TRANSFER AGENT INSTRUCTIONS" means instructions to the
Company's transfer agent, in the form of Exhibit E.
"UNDERLYING SHARES" means the shares of Common Stock issuable
upon conversion of the Preferred Shares and upon exercise of the Warrants.
"UNDERLYING SHARES REGISTRATION STATEMENT" means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale of the Common Shares and Underlying
Shares by the Purchasers and their assignees.
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"WARRANTS" means the Common Stock purchase warrants, in the
form of Exhibit D, issued to each Purchaser at the Closing and, if applicable,
upon a call of the aforementioned warrants in accordance with their terms.
"WARRANT SHARES" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
the Common Shares, the Preferred Shares and the Warrants set forth next to the
Purchasers' names on the investor allocation table attached hereto as Exhibit F
(the "INVESTOR ALLOCATION TABLE"). The Closing shall take place at the offices
of Purchaser Counsel immediately following the satisfaction or waiver of the
conditions set forth in Article V of this Agreement, or at such other location
or time as the parties may agree.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser, the following:
(i) one or more stock certificates evidencing the
number of Common Shares indicated next to such Purchaser's name in the
Investor Allocation Table, registered in the name of such Purchaser;
(ii) one or more stock certificates evidencing a
number of Preferred Shares indicated next to such Purchaser's name on
the Investor Allocation Table, registered in the name of such
Purchaser;
(iii) a Warrant, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to
acquire the number of Warrant Shares indicated next to such Purchaser's
name on the Investor Allocation Table;
(iv) evidence that the Certificate of Designations
has been filed on or prior to the Closing Date with the Secretary of
State (or other appropriate office) of Delaware, in form and substance
mutually agreed to by the parties;
(v) the legal opinion of Company Counsel, in the form
of Exhibit C, executed by such counsel and delivered to the Purchasers;
(vi) a Registration Rights Agreement duly executed by
the Company;
(vii) one or more standby letters of credit from, PNC
Bank, National Association ("PNC BANK") in form and substance
acceptable to the Purchasers (as the
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same may be amended, modified or supplemented from time to time
(including, but not limited to, pursuant to Section 2.3(B)(I)) in
accordance with their respective terms, the "LETTERS OF CREDIT"); and
(viii) Transfer Agent Instructions executed by the
Company and delivered to and acknowledged by First Union National Bank,
the Company's transfer agent.
(b) At the Closing, each Purchaser shall deliver or cause to
be delivered to the Company, the following:
(i) an amount equal to the sum of (A) the product of
the number of Common Shares indicated next to such Purchaser's name on
the Investor Allocation Table multiplied by the Per Share Purchase
Price and (B) the number of Preferred Shares indicated next to such
Purchaser's name on the Investor Allocation Table multiplied by $1,000,
all in United States dollars and in immediately available funds, by
wire transfer to an account designated in writing by the Company for
such purpose;
(ii) a Registration Rights Agreement duly executed by
such Purchaser.
2.3 Post Closing Adjustment. On the 6th Trading Day following the
Closing Date, if the average of the 5 VWAP's (as defined in the Certificate of
Designations) during the 5 Trading Day period beginning on the Closing Date (the
"ADJUSTED PURCHASE PRICE") exceeds the Per Share Purchase Price, then (A) each
Purchaser shall, against delivery to it by the Company of the documentation set
forth in Section 2.3(B), deliver to or as directed by the Company an amount, in
United States dollars and in immediately available funds, by wire transfer to an
account designated in writing for such purpose, equal to the sum of: (I) the
product of: (x) the lower of: (i) $0.782 and (ii) the difference between the
Adjusted Purchase Price and the Per Share Purchase Price multiplied by (y) the
number of Common Shares issued to such Purchaser on the Closing Date, and (II)
the product of: (x) the lower of: (i) $0.782 and (ii) the difference between the
Adjusted Purchase Price and the Per Share Purchase Price multiplied by (y) a
number equal to the number of Preferred Shares indicated next to such
Purchaser's name on the Investor Allocation Table multiplied by 1,000, and
divided by the Per Share Purchase Price, and (B) the Company shall deliver or
cause to be delivered to each Purchaser: (I) an amendment to the Letter of
Credit, in the form and substance satisfactory to the such Purchaser and (II) a
calculation notice indicating the basis for the revision to the Stated Value (as
defined in the Certificate of Designations) under the Certificate of
Designations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:
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(a) Subsidiaries. The Company has no subsidiaries other than
those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the
Company owns all of the capital stock of each Subsidiary free and clear of any
lien, charge, security interest, encumbrance, right of first refusal or other
restriction (collectively, "LIENS"), and all the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights. If the Company has no
subsidiaries, then references in the Transaction Documents to the Subsidiaries
will be disregarded.
(b) Organization and Qualification. Each of the Company and
the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate: (i)
adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the results of
operations, assets, prospects, business or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair
the Company's ability to perform fully on a timely basis its obligations under
any of the Transaction Documents (any of (i), (ii) or (iii), a "MATERIAL ADVERSE
EFFECT").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further action is required by the Company.
Each of the Transaction Documents has been (or upon delivery will be) duly
executed by the Company and, when delivered in accordance with the terms hereof
and assuming the applicable Transaction Documents constitute the legal, valid
and binding agreement of each party other than the Company, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, by-laws or other organizational or charter documents.
(d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not: (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) subject to obtaining the Required Approvals (as defined below), conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment,
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acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required under Section 4.8 and
the required filing of the Certificate of Designations pursuant to Section 2.2,
(ii) the filing with the Commission of the Underlying Shares Registration
Statement, (iii) the application(s) to each Trading Market for the listing of
the Common Shares and the Underlying Shares for trading thereon in the time and
manner required thereby and (iv) applicable Blue Sky filings (collectively, the
"REQUIRED APPROVALS").
(f) Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has on the date hereof and will, at all
times while the Preferred Shares and the Warrants are outstanding, maintain an
adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the holders of the Preferred Shares and the Warrants, to enable it
to perform its conversion, exercise and other obligations under this Agreement,
the Certificate of Designation and the Warrants. Such number of reserved and
available shares of Common Stock is not less than 4,995,000 (collectively, the
"INITIAL MINIMUM"). All such authorized shares of Common Stock shall be duly
reserved for issuance to the holders of the Preferred Shares and the Warrants.
When issued in accordance with the Certificate of Designation and the Warrants,
the Underlying Shares will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of all Liens.
(g) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company is set forth in
Schedule 3.1(g). No securities of the Company are entitled to preemptive or
similar rights, and no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities and except as disclosed in Schedule 3.1(g), there are
no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or
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exchangeable into shares of Common Stock. The issue and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
(h) SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively referred
to herein as the "SEC REPORTS" and, together with the Schedules to this
Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. All material agreements to which the Company or any
Subsidiary is a party or to which the property or assets of the Company or any
Subsidiary are subject have been filed as exhibits to the SEC Reports as
required under the Exchange Act.
(i) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports: (i) there has been no event, occurrence or
development that has had or that could result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans.
(j) Litigation. Except as set forth in the SEC Reports, there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective
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properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an "ACTION") which: (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision, individually or
in the aggregate, have or result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. The
Company does not have pending before the Commission any request for confidential
treatment of information, and the Company does not expect to make any such
request prior to the Required Effectiveness Date. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No material labor problem exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company.
(l) Compliance. Neither the Company nor any Subsidiary: (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or result in a
Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the
failure to possess such permits could not, individually or in the aggregate,
have or result in a Material Adverse Effect ("MATERIAL PERMITS"), and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.
(n) Title to Assets. Except as set forth in Schedule 3.1(n),
the Company and the Subsidiaries have good and marketable title in fee simple to
all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property
owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries. Any real property and
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facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance.
(o) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could have a Material Adverse Effect (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person.
To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights that could have or result in a Material Adverse
Effect.
(p) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(q) Transactions With Affiliates and Employees. Except as set
forth in SEC Reports filed at least ten days prior to the date hereof, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
(r) Solvency. Based on the financial condition of the Company
as of the Closing Date: (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
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(s) Certain Fees. Except as described in Schedule 3.1(s), no
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Company agrees that the Purchasers shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of any Person for fees of the type contemplated by this Section
3.1(s) with the transactions contemplated by this Agreement.
(t) Private Placement. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
3.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers as
contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on the Company's
behalf has sold or offered to sell or solicited any offer to buy the Securities
by means of any form of general solicitation or advertising. Neither the Company
nor any of its Affiliates nor any person acting on the Company's behalf has,
directly or indirectly, at any time within the past six months, made any offer
or sale of any security or solicitation of any offer to buy any security under
circumstances that would: (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale of the Securities as contemplated hereby or (ii) cause the
offering of the Securities pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or shareholder approval provisions, including without limitation
under the rules and regulations of any Trading Market. The Company is not, and
is not an Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(u) Form S-3 Eligibility. The Company is eligible to register
its Common Stock for resale by the Purchasers under Form S-3 promulgated under
the Securities Act.
(v) Listing and Maintenance Requirements. The Company has not,
in the two years preceding the date hereof, received notice (written or oral)
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.
(w) Registration Rights. No holder of the Company's securities
has any demand or piggyback registration rights with respect to such securities
and the Company has not agreed to grant such rights to any Person.
(x) Application of Takeover Protections. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including
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without limitation the Company's issuance of the Securities and the Purchasers'
ownership of the Securities.
(y) Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or their
agents or counsel with any information that constitutes or might constitute
material information. The Company understands and confirms that the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Schedules to this Agreement, furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:
(a) Organization; Authority. If such Purchaser is an entity,
such Purchaser is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. If such Purchaser is an
entity, the purchase by such Purchaser of the Securities hereunder has been duly
authorized by all necessary action on the part of such Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms. If such
Purchaser is a natural person, such Purchaser is of a legal age and capable to
enter into and execute this Agreement and the Registration Rights Agreement.
(b) Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement, the Registration Rights Agreement and the
Warrants, at all times to sell or otherwise dispose of all or any part of such
Securities pursuant to an effective registration statement under the Securities
Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws. Nothing contained herein shall be
deemed a representation or warranty by such Purchaser to hold Securities for any
amount of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.
(c) Purchaser Status. At the time such Purchaser was offered
the Common Shares, the Preferred Shares and its respective Warrants, it was, and
at the date hereof it is, and at each exercise date under its respective
Warrants, it will be, an "accredited investor" as defined in Rule 501(a) under
the Securities Act. Such Purchaser has not been formed solely for the purpose of
acquiring the Securities.
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(d) Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) Ability of such Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
(g) General Solicitation. To the best of its knowledge, such
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.
(h) Reliance. Such Purchaser understands and acknowledges
that: (i) the Securities are being offered and sold to it without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act and (ii) the availability of such
exemption, depends in part on, and the Company will rely upon the accuracy and
truthfulness of, the foregoing representations and such Purchaser hereby
consents to such reliance.
(i) Beneficial Ownership. Such Purchaser (other than Xxxx
Xxxxxxx Small Cap Value Fund and any Affiliate thereof), does not on the Closing
Date (after giving effect to the consummation of the transactions contemplated
hereunder), beneficially own (as determined in accordance with Section 13(d) of
the Exchange Act) in excess of 14.999% of the shares of Common Stock outstanding
on the Closing Date, assuming enforcement of all exercise and conversion
limitations set forth in the applicable Transaction Documents.
The Company acknowledges and agrees that no Purchaser makes or has made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Securities may only be disposed of pursuant to an
effective registration statement under the Securities Act, to the Company or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable state securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or to the Company,
except as otherwise set forth herein, the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with any transfer agent for the
securities of the Company, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Company that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and that it is acquiring the
Securities solely for investment purposes (subject to the qualifications
hereof). As a condition of transfer, any such transferee shall agree in writing
to be bound by the terms of this Agreement and shall have the rights of a
Purchaser under this Agreement and the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]] HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
BE REASONABLY ACCEPTABLE TO THE COMPANY.
None of the Securities shall contain the legend set forth
above or any other legend (other than as required pursuant to the Stockholder
Protection Plan, dated as of June 26, 1995 between the Company and First
Fidelity Bank, National Association, as rights agent (the "PLAN")): (i) while a
registration statement (including any Underlying Shares and Common Shares) is
effective under the Securities Act to cover the resale of such security, or (ii)
if Rule
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144(k) may be utilized by the seller of such security or (iii) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission). The Company shall cause its counsel to issue the legal opinion
included in the Transfer Agent Instructions to the Company's transfer agent on
the Effective Date. If any Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Warrant Shares
issuable in respect thereto, such Warrant Shares shall be issued without
legends. The Company agrees that following the Effective Date or at such time as
such legend is no longer required under this Section 4.1(b), it will, no later
than three Trading Days following the delivery by a Purchaser to the Company or
the Company's transfer agent of a certificate representing Securities issued
with a restrictive legend, deliver or cause to be delivered to such Purchaser a
certificate representing such Securities that is free from all restrictive and
other legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
4.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance and conversion and exercise (as applicable) of the Securities will
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 to issue the Securities pursuant to the Transaction
Documents is unconditional and absolute, regardless of the effect of any such
dilution.
4.3 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such Person, the Company shall deliver to
such Person a written certification of a duly authorized officer as to whether
it has complied with the preceding sentence. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.
4.4 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers.
4.5 Reservation and Listing of Securities. The Company shall maintain a
reserve from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents which number shall not be
less than the Initial Minimum. The Company shall: (i) in the time and manner
required by each Trading Market, prepare and file with such
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Trading Market an additional shares listing application covering a number of
shares of Common Stock equal to no less than the sum of the Common Shares and
the Initial Minimum, (ii) take all steps necessary to cause such shares to be
approved for listing on each Trading Market as soon as possible thereafter,
(iii) provide to the Purchasers evidence of such listing, and (iv) maintain the
listing of such shares on each such Trading Market or another Eligible Market.
4.6 Conversion and Exercise Procedures. The Transfer Agent Instructions
and Conversion Notice, as defined in the Certificate of Designations, set forth
the totality of the procedures with respect to the conversion of the Preferred
Shares. The Transfer Agent Instructions and Form of Election to Purchase under
the Warrants set forth the totality of the procedures with respect to the
exercise of the Warrants. No additional legal opinion or other information or
instructions shall be necessary to enable the Purchasers to convert their
Preferred Shares or exercise their Warrants. The Company shall honor conversions
of the Preferred Shares and exercises of the Warrants and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.
4.7 Right of First Refusal.
(a) The Company will not, directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition of) any of its or the
Subsidiaries' equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable for Common Stock (any such offer, sale, grant, disposition or
announcement being referred to as a "SUBSEQUENT PLACEMENT"), from the date
hereof until the first year anniversary of the date hereof, unless: (i) the
Company delivers to each of the Purchasers a written notice (the "SUBSEQUENT
PLACEMENT NOTICE") of its intention to effect such Subsequent Placement, which
Subsequent Placement Notice shall describe in reasonable detail the proposed
terms of such Subsequent Placement, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Placement is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (ii) such Purchaser shall not have notified the Company by
5:30 p.m. (New York City time) on the fifth Trading Day after its receipt of the
Subsequent Placement Notice of its willingness to provide (or to cause its
designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on the same terms set forth in the
Subsequent Placement Notice. The Company and the Purchasers shall use their
commercially reasonable efforts to complete such mutually acceptable
documentation by the 30th day following the date of the delivery of the
Subsequent Placement Notice. If the Purchasers shall fail to so notify the
Company of their willingness to participate in the full Subsequent Placement,
the Company may effect such Subsequent Placement on the terms and to the Persons
set forth in the Subsequent Placement Notice; provided that the Company must
provide the Purchasers with a second Subsequent Placement Notice, and the
Purchasers will again have the right of first refusal set forth above in this
paragraph (b), if the Subsequent Placement subject to the initial Subsequent
Placement Notice is not consummated for any reason on the terms set forth in
such Subsequent Placement Notice within 60 Trading Days after the date of the
initial Subsequent Placement Notice with the Person identified in the Subsequent
Placement Notice. If the Purchasers indicate a willingness to provide financing
in
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excess of the amount set forth in the Subsequent Placement Notice, then each
Purchaser will be entitled to provide financing pursuant to such Subsequent
Placement Notice up to an amount equal to such Purchaser's pro rata portion of
the aggregate purchase price paid for the Securities under this Agreement, but
the Company shall not be required to accept financing from the Purchasers in an
amount in excess of the amount set forth in the Subsequent Placement Notice.
(b) Notwithstanding the foregoing, the provisions of Section
4.7(a) shall not apply to a Subsequent Placement in which each of the following
conditions is true: (i) such Subsequent Placement occurs on or after the 120th
day following the Closing Date, (ii) such Subsequent Placement is exclusively an
offer and sale of Common Stock at a purchase price per share which is equal to
or greater than each of the Per Share Purchase Price and the Conversion Price
(as defined in the Certificate of Designations) determined on the 121st day
following the Closing Date, (iii) such Subsequent Placement is not subject to a
collar or pricing reset mechanism of any kind, and (iv) the total warrant
coverage for such Subsequent Placement, at such time or any later time, enables
the holder or holders thereof to purchase a number of shares of Common Stock no
greater than 35% of the quotient obtained by dividing the aggregate purchase
price for such Subsequent Placement by the purchase price per share of Common
Stock issuable pursuant to such Subsequent Placement, provided, that, in case of
any Subsequent Placement meeting such conditions, each Purchaser shall have the
right (the "MAINTENANCE RIGHT") to participate in such Subsequent Placement in
order to maintain its percentage interest in Total Voting Power (as defined
below) of the Company beneficially owned (as determined by Rule 13d-3 of the
Exchange Act) by such Purchaser immediately prior to the delivery of the
Subsequent Placement. In the event the Maintenance Right is triggered, the
Company shall provide the Purchasers with a written notice, containing the same
information as the Subsequent Placement Notice. Each Purchaser shall have five
Trading Days to exercise its Maintenance Right by delivering to the Company a
written notice of its intention to so exercise. For purposes hereof, "Total
Voting Power" means the total number of votes which may be cast in the election
of directors of the Company at any meeting of stockholders of the Company if all
securities entitled to vote in the election of directors of the Company were
present and voted at such meeting.
(c) Except for: (i) Registrable Securities (as defined in the
Registration Rights Agreement), and (ii) Common Stock permitted to be issued
pursuant to Section 4.7(d), the Company shall not, without the prior written
consent of the Purchasers: (A) prior to the Effective Date, file a registration
statement with the Commission with respect to any securities of the Company or
the Subsidiaries or (B) prior to the 130th day following the Closing Date, cause
a registration statement permitted to be filed with the Commission pursuant to
the terms hereof to be declared effective by the Commission.
(d) The restrictions contained in paragraphs (a) and (c) of
this Section 4.7 shall not apply to: (i) the granting of shares of Common Stock,
restricted stock awards or similar equity incentive awards to employees,
officers and directors of the Company pursuant to any stock option plan duly
adopted by the Company or to the issuance of Common Stock upon exercise of such
options, (ii) the issuance of options, warrants, stock appreciation rights or
shares of Common Stock to bona fide consultants of the Company in payment of
consulting fees of up to an aggregate of $500,000 in any twelve month period
based upon the applicable market price
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of the Common Stock, (iii) the issuance of warrants or shares of Common Stock in
connection with bona fide acquisitions by the Company, (iv) the sale of shares
of Common Stock to Xxxxxx Laboratories, (v) the issuance of shares of Common
Stock upon exercise of any warrant or option permitted to be issued pursuant to
this Section 4.7(d), or (vi) securities issued in connection a public offering
for an aggregate purchase price in excess of $50,000,000 without a discount to
the market price of the Common Stock (which shall not include equity lines of
credit or similar transactions).
4.8 Securities Laws Disclosure; Publicity. The Company shall: (i) on
the Closing Date, issue a press release acceptable to the Purchasers disclosing
the transactions contemplated hereby and (ii) make such other filings and
notices relating to the transactions contemplated hereby in the manner and time
required by the Commission. The Company shall, at least two Trading Days prior
to the filing or dissemination of any disclosure required by this paragraph,
provide a copy thereof to the Purchasers for their review. The Company and the
Purchasers shall consult with each other in issuing any press releases or
otherwise making public statements or filings and other communications with the
Commission or any regulatory agency or Trading Market with respect to the
transactions contemplated hereby, and neither party shall issue any such press
release or otherwise make any such public statement, filing or other
communication without the prior consent of the other, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide
the other party with prior notice of such public statement, filing or other
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by law or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure.
4.9 Use of Proceeds. Except in connection with redemptions of Preferred
Shares, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and not for the satisfaction of any
portion of the Company's debt (other than payment of trade payables and accrued
expenses in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle in any
outstanding litigation, except that the Company may utilize up to $5,000,000 of
the net proceeds from the sale of the Securities hereunder to settle such
outstanding litigation. In order to fulfill its redemption obligations pursuant
to the Certificate of Designations, the Company shall be entitled to fund a cash
collateral account in favor of PNC Bank to support the Letters of Credit which
will support the redemption obligations of the Company pursuant to the
Certificate of Designations. The Company shall also be entitled to use the net
proceeds of the aforementioned cash collateral account to satisfy its
obligations under the Letters of Credit.
4.10 Indemnification of the Purchasers. The Company will indemnify and
hold the Purchasers and their directors, officers, shareholders, partners,
employees and agents (each, a "PURCHASER PARTY") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to any misrepresentation,
breach or
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inaccuracy, or any allegation by a third party that, if true, would constitute a
breach or inaccuracy, of any of the representations and warranties made by the
Company in this Agreement or in the other Transaction Documents. The Company
will reimburse such Purchaser Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.
4.11 Indemnification of the Company. Each Purchaser will, severally and
not jointly, indemnify and hold the Company and its directors, officers,
shareholders, partners, employees and agents (each, a "COMPANY PARTY") harmless
from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys' fees and costs of
investigation that any such Company Party may suffer or incur as a result of or
relating to any misrepresentation, breach or inaccuracy, or any allegation by a
third party that, if true, would constitute a breach or inaccuracy of any of the
representations or warranties made by such Purchaser in this Agreement or in the
other Transaction Documents. Such Purchaser will, severally and not jointly,
reimburse such Company Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.
4.12 Shareholders Rights Plan. No claim will be made or enforced by the
Company that any Purchaser is an "Acquiring Person" under the Plan or in any way
could be deemed to trigger the provisions of the Plan by virtue of receiving
Securities under the Transaction Documents. Each Purchaser other than those who
are "Institutional Investors" under the Plan severally agree not to acquire in
excess of 14.99% of the shares of Common Stock on any date while such Purchaser
holds Warrants or Preferred Shares.
4.13 Disclosure. The Company confirms that as long as any Purchaser
owns Securities, neither the Company nor any other Person acting on its behalf
will provide any of such Purchaser or its agents or counsel with any information
that constitutes or might constitute material non-public information, unless
such Purchaser shall have agreed to execute a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that the Purchasers shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
4.14 Certain Trading Restrictions. Each Purchaser agrees that neither
it nor its Affiliates will enter into any Short Sales (as hereinafter defined)
prior to the first year anniversary of the Closing Date. For purposes hereof, a
"Short Sale" by a Purchaser shall mean a sale of Common Stock by such Purchaser
that is marked as a short sale and that is made at a time when there is no
equivalent offsetting long position in the Common Stock held by such Purchaser.
For purposes of determining whether there is an equivalent offsetting long
position in the Common Stock held by a Purchaser, on any date of computation,
notwithstanding anything to the contrary contained in the Transaction Documents,
the sum of: (i) all Warrant Shares issuable upon exercise in full of the
Warrants issued to such Purchaser and (ii) all Underlying Shares issuable upon
conversion in full of all the Preferred Shares issued to such Purchaser at a
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conversion price equal to the Target Price (as defined in the Certificate of
Designation), shall be deemed to be held long by such Purchaser.
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction or waiver by such Purchaser, at or before the Closing, of each
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date (except for representations and warranties that speak of
a specific date, which need only be true and correct as of such date);
(b) Performance. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing;
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
(d) Adverse Changes. Since the date of execution of this
Agreement, no event or series of events shall have occurred that reasonably
would be expected to have or result in a Material Adverse Effect;
(e) No Suspensions of Trading in Common Stock; Listing.
Trading in the Common Stock shall not have been suspended by the Commission or
any Trading Market (except for any suspensions of trading of not more than one
Trading Day solely to permit dissemination of material information regarding the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for trading on
an Eligible Market; and
(f) Standby Letters of Credit. The Company shall have obtained
the Letters of Credit in agreed form.
5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
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(a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date; and
(b) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
5.3 Termination. The Purchasers shall have the right to terminate this
Agreement, by written notice to the Company, at any time after August 10, 2001,
if the Company has not satisfied the conditions set forth in Section 5.1.
ARTICLE VI
MISCELLANEOUS
6.1 Fees and Expenses. At the Closing, the Company shall reimburse Pine
Ridge Financial Inc. ("Pine Ridge") for its legal fees and expenses incurred in
connection with the preparation and negotiation of the Transaction Documents by
paying to Pine Ridge (or, at Pine Ridge's election, directly to Purchaser
Counsel), an aggregate of $30,000. In lieu of the payment required by the
immediately preceding sentence, Pine Ridge shall retain the amount of such
payment instead of delivering such amount to the Company at the Closing. Except
as expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the issuance of the Securities.
6.2 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
6.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:30 p.m. (New York City time) (with
confirmation of transmission) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) (with confirmation of
transmission) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service (next
day service specified), or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows:
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If to the Company: i-STAT Corporation
000 Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx
LLP
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature
pages hereof;
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
6.4 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
6.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
6.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers.
6.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Sections 4.10 and 4.11 and may enforce the provisions of such
Sections.
6.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective
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affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the "New York Courts"). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereto 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 via registered or certified mail or
overnight delivery (with evidence of delivery) 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. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
6.9 Survival. The representations and warranties contained herein shall
survive the Closing and the delivery, exercise and/or conversion of the
Securities, as applicable, until the third year anniversary of the Closing Date.
The agreements and covenants shall survive the Closing and the delivery,
exercise and/or conversion of the Securities, as applicable, in accordance with
their terms.
6.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
6.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
6.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that
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monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
6.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant 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 or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
I-STAT CORPORATION
By:____________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
26
PINE RIDGE FINANCIAL INC.
By:_____________________________________
Name:
Title:
Address for Notice:
Pine Ridge Financial Inc.
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Avi Vigder and Eldad Gal
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
27
MONTROSE INVESTMENTS LTD.
By:_____________________________________
Name:
Title:
Address for Notice:
Montrose Investments Ltd.
c/o HBK Investments L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxx Xxxxx and Xxx Xxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx
28
DEEPHAVEN PRIVATE PLACEMENT TRADING LTD.
By:_____________________________________
Name:
Title:
Address for Notice:
c/o Deephaven Capital Management LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx
29
XXXXXXX FAMILY LIMITED PARTNERSHIP
By:_____________________________________
Name:
Title:
Address for Notice:
c/o Deephaven Capital Management LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx
30
XXXXX XXXXXXX
-------------------------------------
Address for Notice:
c/o Deephaven Capital Management LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx
31
HARE & CO. F/B/O XXXX XXXXXXX SMALL CAP VALUE FUND
By:_____________________________________
Name:
Title:
Address for Notice (both required):
Hare & Co. f/b/o Xxxx Xxxxxxx Small Cap Value Fund
c/o Bank of New York Securities Department
X.X. Xxx 00,000
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Hare & Co. f/b/o Xxxx Xxxxxxx Small Cap Value Fund
c/o Xxxx Xxxxxxx Advisers, Inc.
Attn: Investment Operations, 4th Floor
Private Placement Corporate Actions
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xx 00000-0000
Facsimile No.: 000-000-0000
32
Exhibits:
A Form of Certificate of Designation
B Form of Registration Rights Agreement
C Form of Opinion of Company Counsel
D Form of Warrant
E Form of Transfer Agent Instructions
F Investor purchase price allocation
Schedules:
3.1(a) Subsidiaries
3.1(g) Capitalization
3.1(n) Title to Assets
3.1(s) Commissions
