Exhibit 4.11
FORM OF SECURITIES PURCHASE AGREEMENT DATED NOVEMBER 6, 1997,
BETWEEN THE REGISTRANT AND HOLDER OF THE DEBENTURES
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance
set forth below, is entered into by and between Vyrex Corporation, a Nevada
corporation, with headquarters located at 0000 Xxxxxxx xx xx Xxxxx, Xx Xxxxx,
Xxxxxxxxxx 00000-0000 ("COMPANY") and the undersigned (the "BUYER").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon certain exemptions from securities registration
afforded, INTER ALIA, by Rule 506 under Regulation D ("REGULATION D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 ACT"), and/or Section
4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 6% Convertible Debentures (the "DEBENTURES"),
of the Company which will be convertible into shares of Common Stock, $.001 par
value per share (the "COMMON STOCK"), of the Company upon the terms and subject
to the conditions of such Debentures (the Common Stock and the Debentures
sometimes referred to herein as the "SECURITIES"), and subject to acceptance of
this Agreement by the Company.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. PURCHASE. The undersigned hereby agrees to purchase from the
Company up to $2,000,000 in principal amount of Debentures, $500,000 principal
amount at the Closing Date as defined below, and the balance as more
specifically set forth in PARA4(j) hereof. The purchase price for each
Debenture shall be 100% of the principal amount of such Debenture (the "PURCHASE
PRICE") and shall be payable in United States Dollars. The Debentures offered
hereby are part of an aggregate offering of up to $4,000,000 in principal amount
of Debentures, including $1,000,000 principal amount at the First Closing. In
the event that any buyer in the offering does not fulfill its obligation to
purchase Additional Debentures (as defined in PARA4(j) hereof), then the Buyer
shall have the right, but not the obligation to purchase such Additional
Debentures.
b. FORM OF PAYMENT. The Buyer shall pay the Purchase Price for each
Debenture by delivering immediately available good funds in United States
Dollars to the escrow agent (the "ESCROW AGENT") identified in the Joint Escrow
Instructions attached hereto as ANNEX II (the "JOINT ESCROW INSTRUCTIONS") as
set forth below. Promptly following payment by the Buyer to the Escrow Agent of
the Purchase Price of the Debenture, the Company shall deliver the Debenture
duly executed on behalf of the Company to the Escrow Agent. By
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signing this Agreement, the Buyer and the Company, and subject to acceptance by
the Escrow Agent, each agrees to all of the terms and conditions of, and becomes
a party to, the Joint Escrow Instructions, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
c. METHOD OF PAYMENT. Payment into escrow of the Purchase Price for
each Debenture shall be made by wire transfer of funds to:
Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Account Name: Morse, Zelnick, Rose & Lander, LLP
Attorney Trust Account
The Chase Manhattan Bank
ABA #: 000000000
Account No.: 967086639
F/B/O Vyrex Corporation
Not later than 1:00 p.m., New York time, on the date which is one (1) New
York Stock Exchange trading day after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Escrow
Agent by facsimile (the "Closing Date"), the Buyer shall deposit with the Escrow
Agent the Purchase Price for the initial $500,000 Debenture, in currently
available funds. Time is of the essence with respect to such payment on the
Closing Date and each Additional Closing Date (as defined in PARA4j hereof), and
failure by the Buyer to make such payment, shall allow the Company to cancel
this Agreement.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
a. Without limiting Buyer's right to sell the Common Stock pursuant
to the Registration Statement as defined in the Registration Rights Agreement,
the Buyer is purchasing the Debentures and will be acquiring the shares of
Common Stock issuable upon conversion of the Debentures for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof;
b. The Buyer is (i) an "ACCREDITED INVESTOR" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), and (ii) experienced in making investments of the kind described
in this Agreement and the related documents, (iii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection
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with the transactions described in this Agreement, and the related documents,
and (iv) able to afford the entire loss of its investment in the Securities;
c. All subsequent offers and sales of the Debentures and the shares
of Common Stock issuable upon conversion of, or issued as interest on, the
Debentures (the "SHARES" or "COMMON STOCK" and, together with the Debentures,
the "SECURITIES") by the Buyer shall be made pursuant to registration of the
Shares under the 1933 Act or pursuant to an exemption from registration;
d. The Buyer understands that the Debentures are being offered and
sold, and the Shares are being offered, to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Debentures and to receive an offer of the Shares, and Buyer shall
indemnify and hold harmless the Company from and against any liability incurred
by the Company proximately caused by any breach thereof by Buyer;
e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Debentures and the offer of the
Shares which have been requested by the Buyer, including ANNEX VI hereto. The
Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. Without limiting the generality of the foregoing, the Buyer
has also had the opportunity to obtain and to review the Company's (1) Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1996, as amended,
(2) Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31, 1997
and June 30, 1997, (3) Proxy Statement for Annual Meeting of Stockholders held
June 27, 1997, and (4) Registration Statement on Form SB-2 (file # 33-99880)
(the "COMPANY'S SEC DOCUMENTS");
f. The Buyer understands that its investment in the Securities
involves a high degree of risk;
g. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities;
h. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally;
i. Neither Buyer, nor any affiliate of Buyer, shall enter into, any
put option, short position, or other similar position with respect to the
Debentures or the Shares;
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provided, however, that the foregoing shall not in any manner restrict the Buyer
from selling any Shares simultaneous with, or following the delivery of a
Conversion Notice.
j. Notwithstanding the provisions hereof or of the Debentures, in no
event, other than the automatic conversion of the outstanding amount of a
Debenture at maturity, shall the holder be entitled to convert any Debenture to
the extent after such conversion, the sum of (1) the number of shares of Common
Stock beneficially owned by the Buyer and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Debenture), and (2) the number of shares of Common
Stock issuable upon the conversion of the Debenture with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Buyer and its affiliates of more than 4.9% of the outstanding
shares of Common Stock. For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13 D-G thereunder, except as otherwise provided in clause (1) of such proviso.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
a. CONCERNING THE SHARES. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Common Shares;
b. REPORTING COMPANY STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. The Company has registered its Common Stock pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
Common Stock is listed and traded on the NASDAQ/Small Cap. The Company has
received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such listing;
c. AUTHORIZED SHARES. The Company has sufficient authorized and
unissued Shares as may be reasonably necessary to effect the conversion of the
Debentures. The Shares have been duly authorized and, when issued upon
conversion of, or as interest on, the Debentures, will be duly and validly
issued, fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder;
d. SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS AGREEMENT AND
STOCK. This Agreement and the Registration Rights Agreement, the form of which
is attached hereto as ANNEX IV (the "REGISTRATION RIGHTS AGREEMENT"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Registration Rights Agreement, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally; and the Debenture will be duly and validly authorized and,
when executed and delivered on behalf of the
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Company in accordance with this Agreement, will be a valid and binding
obligation of the Company in accordance with its terms, subject to general
principles of equity and to bankruptcy, insolvency, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally;
e. NON-CONTRAVENTION. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Registration Rights Agreement, and the
Debentures do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, (ii) any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
including any listing agreement for the Common Stock except as herein set forth,
(iii) any existing applicable law, rule, or regulation or any applicable decree,
judgment, or (iv) order of any court, United States federal or state regulatory
body, administrative agency, or other governmental body having jurisdiction over
the Company or any of its properties or assets, except such conflict, breach or
default which would not have a material adverse effect on the transactions
contemplated herein;
f. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the Stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained;
g. SEC FILINGS. None of the SEC Filings with the Securities and
Exchange Commission since January 1, 1996 contained, at the time they were
filed, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements made
therein in light of the circumstances under which they were made, not
misleading. The Company has since January 1, 1996 timely filed all requisite
forms, reports and exhibits thereto with the Securities and Exchange Commission;
h. ABSENCE OF CERTAIN CHANGES. Since January 1, 1997, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, or results of operations
of the Company, except as disclosed in ANNEX VI or in the documents referred to
in Section 2(e) hereof;
i. FULL DISCLOSURE. There is no fact known to the Company (other
than general economic conditions known to the public generally) or as disclosed
in the documents referred to in Section 2(e), that has not been disclosed in
writing to the Buyer that (i) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) or in the earnings,
business affairs, properties or assets of the Company or (ii) could reasonably
be expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement;
j. ABSENCE OF LITIGATION. Except as set forth in ANNEX VI hereto,
and in the documents referred to in Section 2(e), which the Buyer has reviewed,
there is no action,
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suit, proceeding, inquiry or investigation before or by any court, public board
or body pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company or any of its subsidiaries, wherein
an unfavorable decision, ruling or finding would have a material adverse effect
on the properties, business, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries taken as a whole or
the transactions contemplated by this Agreement or any of the documents
contemplated hereby or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents;
k. ABSENCE OF EVENTS OF DEFAULT. Except as set forth in ANNEX VI
hereto, no Event of Default, as defined in the respective agreement to which the
Company is a party, and no event which, with the giving of notice or the passage
of time or both, would become an Event of Default (as so defined), has occurred
and is continuing, which would have a material adverse effect on the Company's
financial condition or results of operations;
l. NO DEFAULT. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound, and
neither the execution, nor the delivery by the Company, nor the performance by
the Company of its obligations under this Agreement or the Debentures, other
than the conversion provision thereof, will conflict with or result in the
breach or violation of any of the terms or provisions of, or constitute a
default or result in the creation or imposition of any lien or charge on any
assets or properties of the Company under, any material indenture, mortgage,
deed of trust or other material agreement applicable to the Company or
instrument to which the Company is a party or by which it is bound or any
statute or the Articles of Incorporation or By-Laws of the Company, or any
decree, judgment, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or its properties, or the Company's
listing agreement for its Common Stock;
m. PRIOR ISSUES. During the twelve (12) months preceding the date
hereof, the Company has not issued any securities except as set forth in the
documents listed in PARA2e hereof. Except as set forth in ANNEX VI hereto, no
person holds any unfulfilled registration rights with respect to any securities
of the Company.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the
Debentures have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company and its transfer agent,
to the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; (2) any sale of the
Securities made in reliance on Rule 144 promulgated under the 1933 Act may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
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underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.
b. RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that the
Debentures, and, until such time as the Common Stock has been registered under
the 1933 Act as contemplated by the Registration Rights Agreement and sold in
accordance with such Registration Statement, the shares of Common Stock issued
to the Holder upon conversion of the Debentures shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of the Debenture and such shares of Common Stock):
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR
CANADIAN PROVINCE, OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE
OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
c. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter
into the Registration Rights Agreement, in substantially the form attached
hereto as ANNEX IV, on or before the Initial Closing Date.
d. FILINGS. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Debentures to the Buyer under any
United States laws and regulations, or by any domestic securities exchange or
trading market, and to provide a copy thereof to the Buyer promptly after such
filing.
e. REPORTING STATUS. So long as the Buyer beneficially owns any of
the Debentures, the Company shall file all reports required to be filed with the
SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 ACT"), and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
f. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Debentures (excluding amounts paid by the Company for legal fees and
finder's fees in connection with the sale of the Debentures) for internal
working capital purposes , and shall not, directly or indirectly, use such
proceeds for any loan to or investment in any other
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corporation, partnership enterprise or other person, except for wholly owned
subsidiaries or for the purpose of making acquisitions of businesses.
g. CERTAIN AGREEMENTS. For a period of eighteen (18) months
following the First Closing, the Purchaser shall have a five (5) day right of
first refusal (together with any other purchasers in this offering) to purchase
any debt or equity securities of the Company which the Company intends to offer
in a private placement transaction. However, this provision shall not apply to
(x) the issuance of securities (other than for cash) in connection with a
merger, consolidation, sale of assets, disposition of a business, product or
license by the Company, strategic alliance, bank loan or agreement, compensation
to employees or consultants, or the exercise of outstanding options, or (y) the
exchange of the capital stock for assets, stock, partnership, limited liability
company, or other joint venture interests.
h. AVAILABLE SHARES. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield the number of Common Stock issuable at conversion as may be
required to satisfy the conversion rights of the Buyer pursuant to the terms and
conditions of the Debentures.
i. WARRANTS. The Company agrees to issue to Buyer at the Closing,
transferable divisible warrants (the "Warrants") for 8,500 shares of Common
Stock. Such Warrants shall bear an exercise price per share of Common Stock as
follows: 125% of the Market Price, as defined in the Debenture, on the Closing
Date, and shall be exercisable two (2) business days following issuance, and
for a period of three (3) years thereafter, in the form annexed hereto as ANNEX
V, together with demand registration rights. At each Additional Closing Date,
the Company shall issue to the Buyer at each such closing, additional Warrants
at the rate of one Warrant for the purchase of 17,000 shares of Common Stock for
each $1 million of Additional Debentures purchased, or pro rated for any
portion thereof.
j. The Buyer irrevocably agrees to purchase up to an additional
$1,350,000 of Debentures (the "ADDITIONAL DEBENTURES") in a series of tranches,
commencing ninety (90) days after the effective date of the registration
statement contemplated by the Registration Rights Agreement attached hereto as
ANNEX IV (the "EFFECTIVE DATE") and ending 21 months following the Effective
Date, upon the same terms and conditions and substantially in the form as those
applicable to the initial Debentures issued pursuant to the Agreement except as
set forth in 4(j)(d) and the maturity date of such Additional Debenture shall be
eighteen (18) months from the Additional Closing Date on which such Additional
Debenture was issued (each an "ADDITIONAL CLOSING DATE"). Buyer's obligation to
purchase the Additional Debentures, on each Additional Closing Date (which shall
occur not less than thirty (30) days apart), shall be contingent upon the
satisfaction of the following conditions:
(a) The Company shall give the Buyer ten (10) days prior written
notice and at least thirty (30) days shall have lapsed since the prior tranche;
(b) The Debentures issued in each tranche shall be not less than
$100,000 nor in excess of $225,000 principal amount;
(c) On each Additional Closing Date:
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(i) the Registration Statement required to be filed under
the Registration Rights Agreement, is effective;
(ii) The representations and warranties contained in
Section 3 shall be true and correct in all material respects;
(iii) The dollar value of the average daily trading volume
of the Company's Common Stock for the previous three months must exceed $40,000
per day;
(iv) The number of shares issuable upon conversion of the
Debentures, together with the Shares of Common Stock issued prior thereto
pursuant to this Agreement, will not exceed 20% of the outstanding Common Shares
of the Company.
(d) The conversion price for shares to be issued upon conversion
of the Additional Debentures shall be 86% of the Market Price on the Additional
Closing Date.
(e) In the event that the Company does not exercise its option
to require the Buyer to purchase at least $1,325,000 of Debentures (including
the $500,000 at the First Closing), the Company will, not later than eighteen
(18) months after the date hereof, issue to the Buyer an additional 10,000
Warrants upon the terms and conditions of PARA4i hereof. In any event, the
Company's obligations under the Registration Rights Agreement, shall be to
register the necessary Common Stock underlying $4,000,000 in Debentures, and the
shares underlying 68,000 Warrants to purchase Common Stock.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the Purchase
Price for each Debenture in accordance with Section 1(c) hereof, the Company
will irrevocably instruct its transfer agent to issue Common Stock from time to
time upon conversion of the Debenture in such amounts as specified from time to
time by the Company to the transfer agent, bearing the restrictive legend
specified in Section 4(b) of this Agreement prior to registration of the Shares
under the 1933 Act, registered in the name of the Buyer or its nominee and in
such denominations to be specified by the Buyer in connection with each
conversion of the Debenture. The Company warrants that no instruction other
than such instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 4(a) hereof prior to registration and
sale of the Shares under the 1933 Act will be given by the Company to the
transfer agent and that the Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement, the Registration Rights Agreement, and applicable law. Nothing in
this Section shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Securities. If
the Buyer provides the Company with an opinion of counsel reasonably
satisfactory to the Company and its transfer agent that registration of a resale
by the Buyer of any of the Securities in accordance with clause (1)(B) of
Section 4(a) of this Agreement is not required under the 1933 Act, the Company
shall (except as provided in clause (2) of Section 4(a) of this Agreement)
permit the transfer of the Securities and, in the case of the Shares,
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promptly instruct the Company's transfer agent to issue one or more certificates
for Common Stock without legend in such name and in such denominations as
specified by the Buyer.
b. The Company will permit the Buyer to exercise its right to
convert the Debenture and/or exercise the Warrant, as the case may be,by
telecopying an executed and completed Notice of Conversion or Exercice Notice,
as the case may be, in the respective forms attached to the Form of Debenture
attached hereto as ANNEX I and Form of Warrant attached hereto as Annex V, to
the Company and delivering within three business days thereafter, the original
Notice of Conversion and the Debenture representing the Shares, or the original
Exercise Notice and Warrant, to the Company by express courier to the Transfer
Agent. Each date on which a Notice of Conversion or Exercise Notice is
telecopied to and received by the Company in accordance with the provisions
hereof shall be deemed a Conversion Date or exercise date.. The Company will
transmit, or cause to be transmitted, the certificates representing the Shares
of Common Stock issuable upon conversion of any Debenture (together with a
replacement Debenture representing any principal amount not so converted) or
exercise of the Warrant (together with a replacement Warrant representing any
portion not exercised) to the Buyer via express courier, by electronic transfer
or otherwise, within three (3) business days after receipt by the Company or its
transfer agent of the original Notice of Conversion and the Debenture
representing the Shares to be converted or the original Exercise Notice and
Warrant (the "DELIVERY DATE").
d. In lieu of delivering physical certificate representing the
Common Stock issuable upon conversion of a Debenture or exercise of a Warrant,
provided the company's transfer agent is participating in the Depository Trust
Company ("DTC") Fast Aautomated Securities Transfer program, upon request of the
Buyer and its compliance with the provisions contained in this paragraph, so
long as the certificates do not bear a legend and the Buyer thereof is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Common stock issuable upon conversion or exercise to the Buyer by
crediting the account of Buyer's Prime Broker with DTC through its Deposit
Withdrawal Agent Commission system.
e. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date could result in economic loss to
the Buyer. As compensation to the Buyer for such loss, the Company agrees to
pay late payments to the Buyer for late issuance of Shares upon Conversion in
accordance with the following schedule (where "NO. BUSINESS DAYS LATE" is
defined as the number of business days beyond three (3) business days from
Delivery Date):
Late Payment For Each
$10,000 of Debenture
No. Business Days Late Principal Amount Being Converted
---------------------- --------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
10
6 $600
7 $700
8 $800
9 $900
10 $1,000
GREATER THAN 10 $1,000 +$200 for each Business Day
Late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit Buyer's right to pursue
actual damages for the Company's failure to issue and deliver Common Stock to
the Buyer. Furthermore, in addition to any other remedies which may be
available to the Buyer, in the event that the Company fails for any reason to
effect delivery of such shares of Common Stock within five business days after
the Delivery Date, the Buyer will be entitled to revoke the relevant Notice of
Conversion by delivering a notice to such effect to the Company whereupon the
Company and the Buyer shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion.
6. DELIVERY INSTRUCTIONS.
Each Debenture shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof, or a delivery against payment basis at each
closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the initial $1,000,000
Debenture (the "CLOSING DATE" ) shall occur no later than 12:00 Noon, New York
time on the second NYSE trading day after the fulfillment or waiver of all
Closing conditions pursuant to Sections 8 and 9, or such other mutually agreed
to time. The Closing shall occur on such date at the offices of the Escrow
Agent. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the funds representing the Purchase Price
for the Debenture, and the Debenture only upon satisfaction of the conditions
set forth in Section 8 hereof. The Additional Debentures shall be issued and
sold on the Additional Closing Dates in accordance with this section and the
Joint Escrow Instructions.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the
Debentures on the Closing Date and Additional Closing Dates to the Buyer
pursuant to this Agreement is conditioned upon:
a. The receipt and acceptance by the Buyer of this Agreement as
evidenced by execution of this Agreement by the Buyer for at least One Million
Three Hundred Thousand ($1,000,000.00) Dollars in Debenture (or such lesser
amount as the Company, in its sole discretion, shall determine);
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b. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the Debenture in
accordance with Section 1(c) hereof;
c. The accuracy on the Closing Date and each Additional Closing Date
of the representations and warranties of the Buyer contained in this Agreement
as if made on the Closing Date and the performance by the Buyer on or before the
Closing Date and each Additional Closing Date of all covenants and agreements of
the Buyer required to be performed on or before the Closing Date and each
Additional Closing Date;
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Debentures on the Closing Date and each Additional Closing Date is conditioned
upon:
a. Acceptance by the Company of this Agreement for the sale of
Debentures, as indicated by execution of this Agreement;
b. Delivery by the Company to the Escrow Agent of the appropriate
Debenture in accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date and
each Additional Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on the Closing Date and such
Additional Closing Date and the performance by the Company on or before the
Closing Date and each Additional Closing Date of all covenants and agreements of
the Company required to be performed on or before the Closing Date and such
Additional Closing Date, and as to Additional Debentures, the conditions set
forth in PARA4j; and
d. On the Closing Date and each Additional Closing Date, the Buyer
having received an opinion of counsel for the Company, dated the Closing Date
and each Additional Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer, to the effect set forth in ANNEX III attached hereto,
and on the First Closing Date only, the Registration Rights Agreement annexed
hereto as ANNEX IV and the 68,000 Warrant shares.
10. GOVERNING LAW; COST OF COLLECTION; MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any
12
objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. Any costs (including attorneys fees and disbursements) incurred by
Buyer with respect to any default by the Company under this Agreement, the
Registration Rights Agreement, or the Debenture, shall be the obligation of the
Company.
11. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon, (a) by personal delivery or fax (with written
confirmation copy by recognized overnight delivery service), or (b) one business
day after deposit with a nationally recognized overnight delivery service such
as Federal Express, with postage and fees prepaid, addressed to each of the
other parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days advance written notice to each of
the other parties hereto.
COMPANY: VYREX CORPORATION
0000 Xxxxxxx xx xx Xxxxx
Xx Xxxxx, XX 00000-0000
Attn.: Xxxxxx X. Xxxxxx
Telecopier No. (000) 000-0000
with a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxx Xxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx Xxxxx, XX 00000-0000
Telecopier No. (000) 000-0000
PURCHASER: At the address set forth on the signature page of the Agreement.
with a copy to:
Xxxxxxx & Prager, Esqs.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
13
ESCROW AGENT: Morse, Zelnick, Rose & Lander LLP
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Telecopier No. (000) 000-0000
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Company's
representations and warranties shall survive the execution and delivery hereof
of this Agreement and the delivery of the Debenture.
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
or one of its officers thereunto duly authorized as of the date set forth below.
AGGREGATE INITIAL PURCHASE PRICE OF SUCH DEBENTURE: $ 500,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 6th day of November, 1997.
Endeavour Capital Fund, S.A.
By
--------------------------------------
Telecopier No.: 011-972 2 582 4443 (Signature of Authorized Person)
Address:
14/14 Dirvei Xxxxx Xxxxxx
Xxxxxxxxx, 00000 Xxxxxx
--------------------------------------
Print Name and Title
-----------------------------------
Jurisdiction of Incorporation
or Organization
This Agreement has been accepted as of the date set forth below.
VYREX CORPORATION
By:
------------------------------
Title:
Date:
14
ANNEX I FORM OF DEBENTURE
ANNEX II JOINT ESCROW INSTRUCTIONS
ANNEX III OPINION OF COUNSEL
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V FORM OF WARRANT
ANNEX VI COMPANY DISCLOSURE MATERIALS
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ANNEX VI
COMPANY DISCLOSURE
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