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SECURITIES PURCHASE AND EXCHANGE AGREEMENT
dated as of March 19, 1999
by and between
SUGEN, INC.
and
[BUYER]
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12% SENIOR CONVERTIBLE NOTES DUE 2002
and
WARRANTS TO PURCHASE ADDITIONAL
12% SENIOR CONVERTIBLE NOTES
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Placement Agent:
▇▇▇▇ & ▇▇▇▇▇▇▇▇ CAPITAL, LLC
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SUGEN, INC.
SECURITIES PURCHASE AND EXCHANGE AGREEMENT
12% SENIOR CONVERTIBLE NOTES DUE 2002
and
WARRANTS TO PURCHASE ADDITIONAL
12% SENIOR CONVERTIBLE NOTES
TABLE OF CONTENTS
Page
----
1. DEFINITIONS................................................................1
2. PURCHASE AND SALE..........................................................6
(a) Purchase..........................................................6
(b) Form of Payment...................................................6
(c) Exchange of Notes.................................................6
(d) Closing...........................................................7
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF
THE BUYER..................................................................7
(a) Acquisition for Investment........................................7
(b) Accredited Investor...............................................7
(c) Reoffers and Resales..............................................7
(d) Company Reliance..................................................8
(e) Information Provided..............................................8
(f) Absence of Approvals..............................................8
(g) Securities Purchase and Exchange Agreement........................8
(h) Buyer Status......................................................9
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF
THE COMPANY................................................................9
(a) Organization and Authority........................................9
(b) Qualifications....................................................9
(c) Capitalization....................................................9
(d) Material Losses..................................................10
(e) Concerning the Shares and the Common Stock.......................10
(f) Corporate Authorization..........................................10
(g) Non-contravention................................................11
(h) Approvals, Filings, Etc..........................................11
(i) Information Provided.............................................11
(j) Conduct of Business..............................................11
(k) SEC Filings......................................................12
(l) Absence of Certain Proceedings...................................12
(m) Liabilities......................................................12
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(n) Absence of Certain Changes.......................................12
(o) Intellectual Property............................................12
(p) Internal Accounting Controls.....................................13
(q) Compliance with Law..............................................13
(r) Properties.......................................................13
(s) Labor Relations..................................................13
(t) Insurance........................................................13
(u) Tax Matters......................................................13
(v) Investment Company...............................................14
(w) Absence of Brokers, Finders, Etc.................................14
(x) No Solicitation..................................................14
(y) Rights Agreement.................................................14
(z) Certain Securities Law Matters...................................14
5. CERTAIN COVENANTS AND WAIVER..............................................14
(a) Transfer Restrictions............................................14
(b) Restrictive Legends..............................................15
(c) Nasdaq Listing...................................................16
(d) Form D...........................................................16
(e) State Securities Laws............................................16
(f) Limitation on Certain Actions....................................16
(g) Use of Proceeds..................................................16
(h) Best Efforts.....................................................17
(i) Debt Obligation..................................................17
(j) Buyer's Waiver...................................................17
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
AND EXCHANGE..............................................................17
7. CONDITIONS TO THE BUYER'S OBLIGATIONS TO
PURCHASE AND EXCHANGE.....................................................18
(a) Closing Date.....................................................18
(b) Exchange Date....................................................19
8. REGISTRATION RIGHTS.......................................................19
(a) Mandatory Registration...........................................19
(b) Obligations of the Company.......................................20
(c) Obligations of the Buyer and other Investors.....................23
(d) Rule 144.........................................................24
9. INDEMNIFICATION AND CONTRIBUTION..........................................24
(a) Indemnification..................................................24
(b) Contribution.....................................................26
(c) Other Rights.....................................................26
10. MISCELLANEOUS....................................................26
(a) Governing Law....................................................26
(b) Headings.........................................................26
(c) Severability.....................................................26
(d) Notices..........................................................26
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(e) Counterparts.....................................................26
(f) Entire Agreement.................................................27
(g) Waiver...........................................................27
(h) Amendment........................................................27
(i) Further Assurances...............................................27
(j) Assignment of Certain Rights and Obligations.....................27
(k) Expenses.........................................................28
(l) Termination......................................................28
(m) Survival.........................................................28
(n) Public Statements, Press Releases, Etc...........................28
(o) Construction.....................................................29
ANNEXES
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ANNEX I - Form of 12% Senior Convertible Note due 2002
ANNEX II - Form of 12% Senior Convertible Note Purchase Warrant
ANNEX III - Form of Issuing Agent Instruction to Be Delivered on the Closing
Date
ANNEX IV - Form of Opinion of ▇▇▇▇▇▇ Godward LLP to Be Delivered on the
Closing Date
ANNEX V - Form of Opinion of Lyon & Lyon LLP to Be Delivered on the Closing
Date
ANNEX VI - Form of Instruction to Transfer Agent to Be Delivered in
Connection with Effectiveness of the Registration Statement
ANNEX VII - Form of Opinion of ▇▇▇▇▇▇ Godward LLP to Be Delivered in
Connection with Effectiveness of the Registration Statement
ANNEX VIII - Form of Opinion of Lyon & Lyon LLP to Be Delivered in Connection
with Effectiveness of the Registration Statement
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SECURITIES PURCHASE AND EXCHANGE AGREEMENT
THIS SECURITIES PURCHASE AND EXCHANGE AGREEMENT, dated as of March 19,
1999 (this "Agreement"), by and between SUGEN, INC., a Delaware corporation,
with headquarters located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and [_________________] (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer wishes to purchase from the Company and the Company
wishes to sell to the Buyer, upon the terms and subject to the conditions of
this Agreement, the Purchase Note (such capitalized term and all other
capitalized terms used in this Agreement having the meanings provided in Section
1) having the aggregate principal amount, if any, set forth on the signature
page of this Agreement and which will be convertible into shares of Common
Stock;
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company wishes to issue the Exchange Note, if any, to the Buyer
in exchange for the Outstanding Note, if any, and the Buyer wishes to exchange
the Outstanding Note, if any, for the Exchange Note; and
WHEREAS, in connection with the issuance of the Notes, the Company is
issuing to the Buyer Warrants on the terms provided herein;
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. DEFINITIONS.
(a) As used in this Agreement, the terms "Agreement", "Buyer" and
"Company" shall have the respective meanings assigned to such terms in the
introductory paragraph of this Agreement.
(b) All the agreements or instruments herein defined shall mean such
agreements or instruments as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of this Agreement.
(c) The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Blackout Period" means the period of up to 20 consecutive Trading Days
commencing on the day immediately after the date the Company notifies the
Investors that they are required, pursuant to Section 8(c)(4), to suspend offers
and sales of Registrable Securities as a result of an event or circumstance
described in Section 8(b)(5)(A) during which period, by
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reason of Section 8(b)(5)(B), the Company is not required to amend the
Registration Statement or to supplement the Prospectus.
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banks in The City of New York are authorized or required by law
or executive order to remain closed.
"Claims" means any losses, claims, damages, liabilities or expenses
(joint or several), incurred by a Person.
"Closing Date" means 12:00 noon, New York City time, on March 24, 1999
or such other mutually agreed to time.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Common Stock Warrants" means the Common Stock Purchase Warrants
issuable or issued by the Company upon redemption of the Notes, the Warrant
Notes and the Warrants.
"Common Stock Warrant Expiration Date" means the "Expiration Date" as
defined in the Common Stock Warrants.
"Conversion Price" shall have the meaning to be provided or provided in
the Notes.
"Conversion Shares" means the shares of Common Stock and the related
Preferred Share Purchase Rights issuable upon conversion of any Note or Warrant
Note.
"Disclosure Schedule" means the Disclosure Schedule prepared by the
Company and furnished to the Buyer prior to the date of execution and delivery
of this Agreement by the Buyer.
"Event of Default" shall have the meaning to be provided or provided in
the Notes or the Warrant Notes.
"Exchange Date" means the date that is 135 days after the Closing Date
or such earlier date specified by the Buyer in accordance with Section 2(c)(2).
"Exchange Note" means the 12% Senior Convertible Note due 2002 in the
form of Annex I to this Agreement to be issued to the Buyer in exchange for the
Outstanding Note, if any, pursuant to Section 2(c).
"Indemnified Party" means the Company, each of its directors, each of
its officers, each Person, if any, who controls the Company within the meaning
of the 1933 Act or the 1934 Act, any underwriter and any other stockholder
offering or selling securities pursuant to the Registration Statement or any of
its directors or officers or any Person who controls such stockholder or
underwriter within the meaning of the 1933 Act or the 1934 Act.
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"Indemnified Person" means the Buyer and each other Investor who
beneficially owns or holds Registrable Securities included in the Registration
Statement and each other Investor who offers or sells Registrable Securities
included in the Registration Statement in the manner permitted under this
Agreement, the directors, if any, of the Buyer or such Investor, the officers,
if any, of the Buyer and any such Investor, each Person, if any, who controls
the Buyer or any such Investor within the meaning of the 1933 Act or the 1934
Act, any underwriter (as defined in the ▇▇▇▇ ▇▇▇) acting on behalf of an
Investor who participates in the offering of Registrable Securities of such
Investor in accordance with the plan of distribution contained in the
Prospectus, the directors, if any, of such underwriter and the officers, if any,
of such underwriter, and each Person, if any, who controls any such underwriter
within the meaning of the 1933 Act or the 1934 Act.
"Inspector" means any attorney, accountant or other agent reasonably
acceptable to the Company retained by an Investor for the purposes provided in
Section 8(b)(9).
"Interest Shares" means the shares of Common Stock and the related
Preferred Share Purchase Rights issuable in payment of interest on the Notes or
the Warrant Notes.
"Investor" means the Buyer and any permitted transferee or assignee who
agrees to become bound by the provisions of Sections 5(a), 5(b), 8, 9, and 10 of
this Agreement.
"Issuing Agent Instruction" means the letter from the Company to the
Transfer Agent in the form of Annex III to this Agreement.
"Margin Stock" shall have the meaning provided in Regulation U of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 221).
"Market Price" shall have the meaning to be provided or provided in the
Notes.
"Maturity Date" shall have the meaning to be provided or provided in
the Notes.
"Nasdaq" means the Nasdaq National Market.
"NASD" means the National Association of Securities Dealers, Inc.
"1997 10-K" means the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 (including any information or documents
incorporated therein by reference).
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Non-Responsive Investor" means an Investor who does not provide the
Required Information to the Company at least one Business Day prior to the
filing of the Registration Statement.
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"Note" means the Purchase Note or the Exchange Note and "Notes" means,
collectively, the Purchase Note and the Exchange Note.
"Other Notes" means the "Other Notes" and the "Warrant Notes" as
defined in the Notes.
"Other Securities Purchase Agreements" means the several Securities
Purchase and Exchange Agreements, dated as of the date hereof, by and between
the Company and the buyers named therein relating to the Other Notes.
"Outstanding Note" means all of the Company's 5% Senior Custom
Convertible Notes due 2000 registered in the name of the Buyer or its nominee.
"Person" means any natural person, corporation, partnership, limited
liability company, trust, incorporated organization, unincorporated association,
or similar entity or any government, governmental agency or political
subdivision.
"Placement Agent" means ▇▇▇▇ & ▇▇▇▇▇▇▇▇ Capital, LLC.
"Preferred Share Purchase Rights" means the Preferred Share Purchase
Rights issued or issuable pursuant to the Rights Agreement (or any similar
rights hereafter issued by the Company with respect to the Common Stock).
"Prospectus" means the prospectus forming part of the Registration
Statement at the time the Registration Statement is declared effective and any
amendment or supplement thereto and including any documents or information
incorporated therein by reference.
"Purchase Note" means the 12% Senior Convertible Note due 2002 of the
Company in the form of Annex I to this Agreement to be purchased by the Buyer
pursuant to Section 2(a).
"Purchase Price" means the purchase price for the Purchase Note set
forth on the signature page of this Agreement.
"Questionnaire" means the Prospective Purchaser Questionnaire completed
by the Buyer in connection with this Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Record" means all pertinent financial and other records, pertinent
corporate documents and properties of the Company subject to inspection for the
purposes provided in Section 8(b)(9).
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing the Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415, and the declaration or
ordering of effectiveness of such Registration Statement by the SEC.
"Registrable Securities" means the Shares (other than the Conversion
Shares issuable upon conversion of, and the Interest Shares issuable in payment
of interest on, the
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Exchange Notes) and any stock or other securities into which or for which the
Common Stock may hereafter be changed, converted or exchanged by the Company or
its successor, as the case may be, and any other securities issued to holders of
such Common Stock (or such stock or other securities into which or for which the
shares are so changed, converted or exchanged) upon any reclassification, share
combination, share subdivision, share dividend, merger, consolidation or similar
transaction or event.
"Registration Period" means the period from the SEC Effective Date to
the earlier of
(i) the date which is two years after the later of (A) the end of the
Warrant Exercise Period and (B) the Common Stock Warrant Expiration Date (or, if
(x) the Notes and the Warrant Notes shall have been fully converted into shares
of Common Stock and the Warrants and the Common Stock Warrants shall have been
fully exercised, (y) the Maturity Date of the Notes and the Warrant Notes shall
have occurred, the Common Stock Warrant Expiration Date shall have occurred and
the Warrant Exercise Period shall have expired or (z) the Notes, the Warrant
Notes, the Warrants and the Common Stock Warrants shall no longer remain
outstanding, such date after which each Investor may sell all of its Registrable
Securities without registration under the 1933 Act pursuant to Rule 144, free of
any limitation on the volume of such securities which may be sold in any
period), and
(ii) the date on which the Investors no longer beneficially own any
Registrable Securities.
"Registration Statement" means a registration statement on Form S-3 (or
the comparable form at the time of filing with the SEC) of the Company under the
1933 Act relating to the resale of the Registrable Securities and which names
the Investors as selling stockholders.
"Regulation D" means Regulation D under the 1933 Act.
"Repurchase Event" shall have the meaning to be provided or provided in
the Notes or the Warrant Notes.
"Required Information" means, with respect to any Investor, all
information regarding such Investor, the Registrable Securities held by such
Investor or which such Investor has the right to acquire and the intended method
of disposition of the Registrable Securities held by such Investor or which such
Investor has the right to acquire as shall be required by the 1933 Act to effect
the registration of the resale by such Investor of such Registrable Securities.
"Rights Agreement" means the Rights Agreement, dated as of August 1,
1995, by and between the Company and Boston EquiServe, as Rights Agent.
"Rule 415" means Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a delayed or continuous basis.
"Rule 144" means Rule 144 under the 1933 Act or any other similar rule
or regulation of the SEC that may at any time provide a "safe harbor" exemption
from registration under the 1933 Act so as to permit a holder of any securities
to sell securities of the Company to the public without registration under the
1933 Act.
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"Rule 144A" means Rule 144A under the 1933 Act or any successor rule
thereto.
"SEC" means the Securities and Exchange Commission.
"SEC Effective Date" means the date the Registration Statement is
declared effective by the SEC.
"SEC Filing Date" means the date the Registration Statement is first
filed with the SEC pursuant to Section 8.
"SEC Reports" means (1) the 1997 10-K, (2) the Company's definitive
Proxy Statement for its 1998 Annual Meeting of Stockholders, and (3) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30, and September 30, 1998, in each case as filed with the SEC and including the
information and documents (other than exhibits) incorporated therein by
reference.
"Securities" means, collectively, the Notes, the Warrant Notes, the
Warrants, the Common Stock Warrants, and the Shares.
"September 1998 10-Q" means the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998, as filed with the SEC.
"Shares" means the Conversion Shares, the Interest Shares and the
Warrant Shares.
"Subsidiary" means any corporation or other entity of which a majority
of the capital stock or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the Company.
"Trading Day" shall have the meaning to be provided or provided in the
Notes.
"Transaction Documents" means, collectively, this Agreement, the
Securities and the other agreements, instruments and documents contemplated
hereby and thereby.
"Transfer Agent" means BankBoston, N.A., or any successor thereof,
serving as transfer agent and registrar for the Common Stock.
"Violation" means
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereof
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading,
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(iii) any violation or alleged violation by the Company of the 1933
Act, the 1934 Act, any state securities law or any rule or regulation under the
1933 Act, the 1934 Act or any state securities law, or
(iv) any breach or alleged breach by any Person other than the Buyer of
any representation, warranty, covenant, agreement or other term of any of the
Transaction Documents.
"Warrant Exercise Period" means the "Exercise Period" as defined in the
Warrants.
"Warrants" means the 12% Senior Convertible Note Purchase Warrants in
the form of Annex II to this Agreement.
"Warrant Note" means any 12% Senior Convertible Note in the form of
Exhibit 3 to the Warrants in the aggregate principal amount set forth on the
signature page of this Agreement that is issuable or issued to the Buyer
pursuant to the Warrant.
"Warrant Shares" means the shares of Common Stock and the related
Preferred Share Purchase Rights issuable upon exercise of the Common Stock
Warrants.
2. PURCHASE AND SALE; PURCHASE PRICE; EXCHANGE.
(a) Purchase. Upon the terms and subject to the conditions of this
Agreement, the Buyer hereby agrees to purchase from the Company, and the Company
hereby agrees to sell to the Buyer, on the Closing Date, the Purchase Note in
the principal amount set forth on the signature page of this Agreement and
having the terms and conditions as set forth in the form of the Note attached
hereto as Annex I for the Purchase Price. In connection with the purchase and
sale of the Purchase Note, the Company will issue to the Buyer a Warrant to
purchase Warrants Notes having an aggregate principal amount equal to 75 percent
of the original principal amount the Purchase Note.
(b) Form of Payment. Payment by the Buyer of the Purchase Price, if
any, to the Company on the Closing Date shall be made by wire transfer of funds
to:
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
ABA No. ▇▇▇▇▇▇▇▇▇
For credit to the account of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co.
Account No. 3889-0774
For further credit to the account of SUGEN, Inc.
Account No. 14-78177
Reference: NP
(c) Exchange of Notes. (1) Upon the terms and subject to the conditions
of this Agreement, the Buyer hereby agrees to deliver to the Company on the
Exchange Date the Outstanding Note, if any, and the Company agrees (x) to
deliver to the Buyer or its designee on the Exchange Date in exchange for the
Outstanding Note, if any, an Exchange Note in the
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principal amount determined as stated opposite the heading Exchange Ratio on the
signature page of this Agreement and a Warrant to purchase Warrant Notes having
an aggregate principal amount equal to 75 percent of the original principal
amount of the Exchange Note and (y) to pay the Buyer on the Exchange Date by
wire transfer of immediately available funds to the account specified by the
Buyer an amount in cash equal to the accrued and unpaid interest on the
Outstanding Note, if any, to the Exchange Date. The Company agrees to cancel the
Outstanding Note in full immediately after such exchange. Nothing in this
Agreement shall limit the right of the Buyer to convert the Outstanding Note in
accordance with the terms thereof at any time prior to the Exchange Date.
(2) At any time on or after the Closing Date and prior to the date that
is 135 days after the Closing Date, the Buyer shall have the right, exercisable
by notice given to the Company, to specify an Exchange Date which is prior to
the date that is 135 days after the Closing Date, but not earlier than three
Trading Days after the Buyer gives such notice. If the Buyer shall have given
such notice and stated in such notice that the Buyer is waiving the condition
precedent in Section 7(b)(4), then the Buyer may specify that the Exchange Date
shall be on the date that the Buyer gives such notice, in which case the Buyer
shall be deemed to have become the holder of the Exchange Note on the date the
Buyer gives such notice; provided, however, that the Buyer shall not be entitled
to exercise any of the rights of a holder of the Exchange Note until the Buyer
surrenders the Outstanding Note to the Company.
(3) If the conditions precedent in Section 7(b) are not satisfied or
waived by the Buyer on an Exchange Date that is on or prior to the date which is
135 days after the Closing Date, then neither the Buyer nor the Company shall
have any further obligation to exchange the Outstanding Note for the Exchange
Note but each of the Buyer and the Company shall remain liable for any breach of
its obligations under the Transaction Documents with respect thereto.
(d) Closing. The issuance and sale of the Purchase Note and the
issuance of the Warrant referred to in Section 2(a) shall occur on the Closing
Date at the Law Offices of ▇▇▇▇▇ ▇ ▇▇▇▇▇, Penthouse Suite, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇. At the closing, upon the terms and subject to the conditions
of this Agreement, the Company shall issue and deliver to the Buyer the Purchase
Note and such Warrant against payment by the Buyer to the Company of an amount
equal to the Purchase Price, and the Buyer shall pay to the Company an amount
equal to the Purchase Price against delivery of the Purchase Note and such
Warrant to the Buyer.
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE BUYER.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(a) Acquisition for Investment. The Buyer is acquiring the Notes and
the Warrant and will acquire the Warrant Notes, the Common Stock Warrants and
the Warrant Shares for its own account for investment and not with a view
towards the public sale or distribution thereof within the meaning of the 1933
Act; the Buyer will acquire any Shares issued to the Buyer prior to the SEC
Effective Date of the Registration Statement covering the resale of such Shares
by the Buyer for its own account for investment and not with a view
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towards the public sale or distribution thereof within the meaning of the 1933
Act prior to the SEC Effective Date; and the Buyer has no intention of making
any distribution, within the meaning of the 1933 Act, of the Shares except in
compliance with the registration requirements of the 1933 Act or pursuant to an
exemption therefrom; provided, however, that by making this representation the
Buyer does not agree to hold the securities for any minimum or specified period
of time (unless any such holding period is required by the terms of any such
exemption being relied on by the Buyer).
(b) Accredited Investor. The Buyer is an "accredited investor" as that
term is defined in Rule 501 of Regulation D under the 1933 Act by reason of Rule
501(a)(3) thereof;
(c) Reoffers and Resales. The Buyer will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Securities
unless registered under the 1933 Act, pursuant to an exemption from registration
under the 1933 Act or in a transaction not requiring registration under the 1933
Act;
(d) Company Reliance. The Buyer understands that (1) the Notes are
being offered and sold and the Warrants are being issued to the Buyer, (2) the
Shares, the Warrant Notes and the Common Stock Warrants are being offered to the
Buyer, (3) upon conversion of the Notes, the Conversion Shares will be issued to
the Buyer, (4) upon exercise of the Warrants, the Warrant Notes will be issued
to the Buyer, (5) upon any redemption of the Notes and the Warrants, the Common
Stock Warrants will be issued to the Buyer, (6) upon exercise of the Common
Stock Warrants, the Warrant Shares will be issued to the Buyer, and (7) the
Interest Shares will be issued to the Buyer, in each such case in reliance on
one or more exemptions from the registration requirements of the 1933 Act,
including, without limitation, Regulation D, and exemptions from 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 and in the
Questionnaire, a true and accurate copy of which has been delivered by the Buyer
to the Company, in order to determine the availability of such exemptions and
the eligibility of the Buyer to acquire or receive an offer to acquire the
Securities; and the information with respect to the Buyer set forth in the
Questionnaire is accurate and complete in all material respects;
(e) Information Provided. The Buyer and its advisors, if any, have
requested, received and considered all information relating to the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company and information relating to the offer and sale of the
Notes and issuance of the Warrants, and the offer of the Warrant Notes, the
Conversion Shares, the Common Stock Warrants, and the Warrant Shares deemed
relevant by them (assuming the accuracy and completeness of the SEC Reports and
of the Company's responses to the Buyer's requests); the Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company
concerning the terms of the offering of the Securities and the business,
properties, operations, condition (financial or other), results of operations
and prospects of the Company and have received satisfactory answers to any such
inquiries (assuming the accuracy and completeness of the SEC Reports and the
Company's responses to the Buyer's requests); without limiting the generality of
the foregoing, the Buyer has had the opportunity to obtain and to review the SEC
Reports and the Disclosure Schedule; in connection with its decision to purchase
the Notes and to acquire the Warrants, the Buyer has relied solely upon the SEC
Reports, the Disclosure
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Schedule, the representations, warranties, covenants and agreements of the
Company set forth in this Agreement and to be contained in the other Transaction
Documents, as well as any investigation of the Company completed by the Buyer or
its advisors, if any; the Buyer understands that its investment in the
Securities involves a high degree of risk; and the Buyer understands that the
offering of the Notes and the Warrants is being made to the Buyer as part of an
offering without any minimum or maximum amount of the offering (subject,
however, to the right of the Company at any time prior to execution and delivery
of this Agreement by the Company, in its sole discretion, to accept or reject an
offer by the Buyer to purchase the Notes and to acquire the Warrants);
(f) Absence of Approvals. 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;
(g) Securities Purchase and Exchange Agreement. The Buyer has all
requisite power and authority, corporate or otherwise, to execute, deliver and
perform its obligations under this Agreement and the other agreements executed
by the Buyer in connection herewith and to consummate the transactions
contemplated hereby and thereby; and this Agreement has been duly and validly
authorized, duly executed and delivered by the Buyer and, assuming due execution
and delivery by the Company, is a valid and binding agreement of the Buyer
enforceable in accordance with its terms, except as the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and general principles of equity,
regardless of whether enforcement is considered in a proceeding in equity or at
law; and
(h) Buyer Status. The Buyer is not a "broker" or "dealer" as those
terms are defined in the 1934 Act which is required to be registered with the
SEC pursuant to Section 15 of the 1934 Act.
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE COMPANY.
The Company represents and warrants to the Buyer that the following
matters are true and correct on the date of execution and delivery of this
Agreement, will be true and correct on the Closing Date and, to the extent
stated in Section 7(b) will be true and correct on the Exchange Date, and the
Company covenants and agrees with the Buyer as follows:
(a) Organization and Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority (i) to own, lease
and operate its properties and to carry on its business as described in the SEC
Reports and as currently conducted, and (ii) to execute, deliver and perform its
obligations under this Agreement and the other Transaction Documents being
executed and delivered by the Company in connection herewith, and to consummate
the transactions contemplated hereby and thereby. The Company has no
Subsidiaries except as set forth on Schedule 4(a).
(b) Qualifications. The Company is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions where such
qualification is
-14-
necessary and where failure so to qualify could have a material adverse effect
on the business, properties, operations, condition (financial or other), results
of operations or prospects of the Company.
(c) Capitalization. (1) The authorized capital of the Company consists
of (a) 30,000,000 shares of Common Stock, of which 16,734,113 shares were
outstanding at the close of business on March 10, 1999 and (b) 20,000,000 shares
of Preferred Stock, $.01 par value, of which 300,000 shares have been designated
Series A Junior Participating Preferred Stock, none of which is outstanding;
from March 10, 1999 to the Closing Date there will be (x) no material increase
in the number of shares of Common Stock outstanding (except for shares of Common
Stock issued upon exercise of options and warrants outstanding on the date
hereof or options or similar rights granted subsequent to the date of this
Agreement pursuant to the Company's stock option plans in effect on the date of
this Agreement and except for shares of Common Stock issued upon conversion or
in payment of interest on the Company's 5% Senior Custom Convertible Notes due
2002 that are outstanding on the date of this Agreement) and (y) no issuance of
securities convertible into, exchangeable for, or otherwise entitling the holder
to acquire, shares of Common Stock (except for securities issued pursuant to the
Other Securities Purchase Agreements and except for Preferred Share Purchase
Rights issuable in connection with the issuance of shares of Common Stock issued
in accordance with the immediately preceding clause (x)). The 1997 10-K
discloses as of December 31, 1997 all outstanding options or warrants for the
purchase of, or other rights to purchase or subscribe for, or securities
convertible into or exchangeable for, Common Stock or other capital stock of the
Company, or any contracts or commitments to issue or sell Common Stock or other
capital stock of the Company or any such options, warrants, rights or other
securities; and from December 31, 1997 to the date hereof there has been, and to
the Closing Date there will be, no material change in the amount or terms of any
of the foregoing except for the grant of options to purchase shares of Common
Stock pursuant to the Company's stock option plans in effect on the date of this
Agreement and except as disclosed in the SEC Reports.
(2) The Company has duly reserved from its authorized and unissued
shares of Common Stock the full number of shares required for (A) all options,
warrants, convertible securities and other rights to acquire shares of Common
Stock which are outstanding and (B) all shares of Common Stock and options and
other rights to acquire shares of Common Stock which may be issued or granted
under the stock option and similar plans which have been adopted by the Company
or any Subsidiary; and, immediately following the Closing Date, after giving
effect to any antidilution or similar adjustment arising by reason of issuance
of the Notes and the Other Notes and the other transactions contemplated by this
Agreement, the total number of shares of Common Stock reserved and required to
be reserved from the authorized and unissued shares of Common Stock for purposes
of all such options, warrants, convertible securities, other rights and stock
option and similar plans (excluding the Notes and the Other Notes and the other
transactions contemplated by this Agreement) will be 5,729,664. No antidilution
adjustment will occur with respect to any outstanding class or series of
securities of the Company by reason of issuance, conversion or exercise of the
Securities or the other transactions contemplated by this Agreement except as
set forth on Schedule 4(c) of the Disclosure Schedule. The outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable and all of such options, warrants and other
rights have been duly authorized by the Company. None of the holders of such
outstanding shares of capital stock is subject to personal liability solely by
reason of being such a holder. None of the outstanding shares of capital stock
and options, warrants and other
-15-
rights to acquire Common Stock has been issued in violation of the preemptive
rights of any security holder of the Company. The offers and sales of the
outstanding shares of capital stock of the Company and options, warrants and
other rights to acquire Common Stock were at all relevant times either
registered under the 1933 Act and applicable state securities laws or exempt
from such requirements. No holder of any of the Company's securities has any
rights, "demand," "piggy-back" or otherwise, to have such securities registered
by reason of the intention to file, filing or effectiveness of the Registration
Statement.
(d) Material Losses. Since the date as of which information is given in
the 1997 10-K or the September 1998 10-Q, neither the Company nor any Subsidiary
has sustained any loss or interference with its business or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, which loss or interference would be material to the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company and the Subsidiaries, taken as a whole.
(e) Concerning the Shares and the Common Stock. The Shares have been
duly authorized and the Conversion Shares, when issued upon conversion of the
Notes and the Warrant Notes, the Interest Shares, when issued in payment of
interest on the Notes and the Warrant Notes, and the Warrant Shares, when issued
upon exercise of the Common Stock Warrants, in each such case 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. The holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities. The Company has duly
reserved 4,750,000 shares of Common Stock for issuance upon conversion of the
Notes, the Warrant Notes and the Other Notes and exercise of the Common Stock
Warrants, and such shares shall remain so reserved, and the Company shall from
time to time reserve such additional shares of Common Stock as shall be required
to be reserved pursuant to the Notes, the Warrants, the Warrant Notes, and the
Common Stock Warrants as long as the Notes and the Warrant Notes may be
converted or the Warrants and the Common Stock Warrants may be exercised. The
Common Stock is listed for trading on Nasdaq and (1) the Company and the Common
Stock meet the criteria for continued listing and trading on Nasdaq; (2) the
Company has not been notified since January 1, 1996 by the NASD or the Nasdaq
Stock Market of any failure or potential failure to meet the criteria for
continued listing and trading on Nasdaq and (3) no suspension of trading in the
Common Stock is in effect. The Company knows of no reason that the Shares will
not be eligible for listing on Nasdaq.
(f) Corporate Authorization. This Agreement and the other Transaction
Documents have been duly and validly authorized by the Company; this Agreement
has been duly executed and delivered by the Company and, assuming due execution
and delivery by the Buyer, this Agreement is, and the Notes, the Warrants, each
Warrant Note and the Common Stock Warrants will be, when executed and delivered
by the Company, valid and binding obligations of the Company enforceable in
accordance with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and general principles of equity,
regardless of whether enforcement is considered in a proceeding in equity or at
law.
-16-
(g) Non-contravention. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated by the Transaction Documents do not and will not, with or without
the giving of notice or the lapse of time, or both, (i) result in any violation
of any provision of the certificate of incorporation or by-laws or similar
instruments of the Company or any Subsidiary, (ii) conflict with or result in a
breach by the Company or any Subsidiary of any of the terms or provisions of, or
constitute a default under, or result in the modification of, or result in the
creation or imposition of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company pursuant to, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary or any of
their respective properties or assets are bound or affected which would have a
material adverse effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company and the
Subsidiaries, taken as a whole, (iii) violate or contravene any applicable law,
rule or regulation or any applicable decree, judgment or order of any court,
United States federal or state regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any Subsidiary or any
of their respective properties or assets which would have a material adverse
effect on the business, properties, operations, condition (financial or other),
results of operations or prospects of the Company and the Subsidiaries, taken as
a whole, or (iv) have any material adverse effect on any permit, certification,
registration, approval, consent, license or franchise necessary for the Company
or any Subsidiary to own or lease and operate any of its properties and to
conduct any of its business or the ability of the Company or any Subsidiary to
make use thereof.
(h) Approvals, Filings, Etc. No authorization, approval or consent of,
or filing with, 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 or made by the Company or any Subsidiary in connection
with the execution, delivery and performance of the Transaction Documents and
the issuance and sale of the Securities as contemplated by the Transaction
Documents, other than (1) listing of the Shares on Nasdaq, (2) registration of
the resale of the Shares under the 1933 Act as contemplated by Section 8, (3) as
may be required under applicable state securities or "blue sky" laws, and (4)
filing of one or more Forms D with respect to the Securities as required under
Regulation D.
(i) Information Provided. The written information provided by or on
behalf of the Company to the Buyer and referred to in Section 3(e) of this
Agreement does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading, it
being understood that for purposes of this Section 4(i), any statement contained
in such information shall be deemed to be modified or superseded for purposes of
this Section 4(i) to the extent that a statement in any document included in
such information which was prepared or filed with the SEC on a later date
modifies or replaces such statement, whether or not such later prepared or filed
statement so states.
(j) Conduct of Business. Except as set forth in the SEC Reports, since
December 31, 1997, neither the Company nor any Subsidiary has (i) incurred any
material obligation or liability (absolute or contingent) other than in the
ordinary course of business; (ii) canceled, without payment in full, any
material notes, loans or other obligations receivable or other debts or claims
held by it other than in the ordinary course of business; (iii) sold,
-17-
assigned, transferred, abandoned, mortgaged, pledged or subjected to lien any of
its material properties, tangible or intangible, or rights under any material
contract, permit, license, franchise or other agreement; (iv) conducted its
business in a manner materially different from its business as conducted on such
date; (v) declared, made or paid or set aside for payment any cash or non-cash
distribution on any shares of its capital stock; or (vi) consummated, or entered
into any agreement with respect to, any transaction or event which would
constitute a Repurchase Event. Except as disclosed in the SEC Reports, the
Company and each Subsidiary owns, possesses or has obtained all governmental,
administrative and third party licenses, permits, certificates, registrations,
approvals, consents and other authorizations necessary to own or lease (as the
case may be) and operate its properties, whether tangible or intangible, and to
conduct its business or operations as currently conducted, except such licenses,
permits, certificates, registrations, approvals, consents and authorizations the
failure of which to obtain would not have a material adverse effect on the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and the Subsidiaries, taken as a whole.
(k) SEC Filings. The Company has timely filed all reports required to
be filed under the 1934 Act and any other material reports or documents required
to be filed with the SEC since January 1, 1997. All of such reports and
documents complied, when filed, in all material respects, with all applicable
requirements of the 1933 Act and the 1934 Act. The Company meets the
requirements for the use of Form S-3 for the registration of the resale of the
Registrable Securities by the Buyer and any other Investor. The Company has not
filed any reports with the SEC under the 1934 Act since December 31, 1997 other
than the SEC Reports.
(l) Absence of Certain Proceedings. Except as disclosed in the SEC
Reports, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body, or governmental agency pending or, to the
knowledge of the Company and the Subsidiaries, threatened against or affecting
the Company or any Subsidiary wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the business, properties, operations,
condition (financial or other), results of operations or prospects of the
Company and the Subsidiaries, taken as a whole, or the transactions contemplated
by the Transaction Documents or which could adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, the Transaction Documents; the Company does not have pending
before the SEC any request for confidential treatment of information and, to the
best of the Company's knowledge, no such request will be made by the Company
prior to the SEC Effective Date except as set forth in Schedule 4(l) of the
Disclosure Schedule; and to the best of the Company's knowledge there is not
pending or contemplated any, and there has been no, investigation by the SEC
involving the Company or any current director or officer of the Company.
(m) Liabilities. Except as and to the extent disclosed, reflected or
reserved against in the financial statements of the Company and the notes
thereto included in the SEC Reports, neither the Company nor any Subsidiary has
any material (individually or in the aggregate) liability, debt or obligation,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due. Subsequent to December 31, 1997, neither the Company nor any Subsidiary has
incurred any liabilities, debts or obligations of any nature whatsoever which
are individually or in the aggregate material to the Company and the
Subsidiaries, taken as a
-18-
whole, other than those incurred in the ordinary course of its business and as
set forth in the SEC Reports.
(n) Absence of Certain Changes. Since December 31, 1997, there has been
no material adverse change in the business, properties, operations, condition
(financial or other), results of operations or, to the best knowledge of the
Company and the Subsidiaries, prospects of the Company and the Subsidiaries,
taken as a whole, except as disclosed in the SEC Reports.
(o) Intellectual Property. Except as disclosed in the SEC Reports, each
of the Company and each Subsidiary (1) to the knowledge of the Company and the
Subsidiaries after reasonable investigation for the purposes hereof, owns, or
possesses adequate rights to use, all patents, patent rights, inventions, trade
secrets, know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names and copyrights described or referred to
in the SEC Reports or owned or used by it or which are necessary for the conduct
of its business, except for failure to own or possess any such rights as would
not individually or in the aggregate have a material adverse effect on the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and the Subsidiaries, taken as a whole,
and (2) has no reason to believe, and is not aware of any claim, that the
conduct of its business will conflict with any such rights of others which
conflict or claim is material to the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company and the
Subsidiaries, taken as a whole.
(p) Internal Accounting Controls. The Company maintains a system of
internal accounting controls meeting the requirements of Section 13(b)(2) of the
1934 Act in all material respects.
(q) Compliance with Law. To the best knowledge of the Company and the
Subsidiaries, neither the Company nor any Subsidiary is in violation of or has
any liability under any statute, law, rule, regulation, ordinance, decision or
order of any governmental agency or body or any court, domestic or foreign,
including, without limitation, those relating to the use, operation, handling,
transportation, disposal or release of hazardous or toxic substances or wastes
or relating to the protection or restoration of the environment or human
exposure to hazardous or toxic substances or wastes, except where such violation
or liability would not individually or in the aggregate have a material adverse
effect on the business, properties, operations, condition (financial or other),
results of operations or prospects of the Company and the Subsidiaries, taken as
a whole; and the Company and the Subsidiaries are not aware of any pending
investigation which would reasonably be expected to lead to such a claim.
(r) Properties. Except as disclosed in Schedule 4(r) of the Disclosure
Schedule, the Company and each Subsidiary has good title to all property real
and personal (tangible and intangible) and other assets owned by it which are
individually or in the aggregate material to the Company and the Subsidiaries,
taken as a whole, free and clear of all security interests, charges, mortgages,
liens or other encumbrances, except such as are described in the SEC Reports or
such as do not materially interfere with the use of such property made, or
proposed to be made, by the Company and the Subsidiaries. To the best knowledge
of the Company and the Subsidiaries, the leases, licenses or other contracts or
instruments under which the Company and each Subsidiary leases, holds or is
entitled to use any property, real or personal, which individually or in the
aggregate are material to the Company and the
-19-
Subsidiaries, taken as a whole, are valid, subsisting and enforceable with only
such exceptions as do not materially interfere with the use of such property
made, or proposed to be made by the Company and the Subsidiaries. Neither the
Company nor any Subsidiary has received notice of any material violation of any
applicable law, ordinance, regulation, order or requirement relating to its
owned or leased properties.
(s) Labor Relations. No material labor problem exists or, to the
knowledge of the Company and the Subsidiaries, is imminent with respect to any
of the employees of the Company or any Subsidiary.
(t) Insurance. The Company and each Subsidiary maintains insurance
against loss or damage by fire or other casualty and such other insurance,
including but not limited to, product liability insurance, in such amounts and
covering such risks as is reasonably adequate for the conduct of its business
and the value of its properties.
(u) Tax Matters. The Company and each Subsidiary has filed all federal,
state and local income and franchise tax returns required to be filed and has
paid all taxes shown by such returns to be due, and no tax deficiency has been
determined adversely to the Company or any Subsidiary which has had (nor does
the Company or any Subsidiary have any knowledge of any tax deficiency which, if
determined adversely to the Company or any Subsidiary, might have) a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations, or prospects of the Company and the Subsidiaries,
taken as a whole.
(v) Investment Company. Neither the Company nor any Subsidiary is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the SEC
thereunder.
(w) Absence of Brokers, Finders, Etc. No broker, finder, or similar
Person is entitled to any commission, fee, or other compensation by reason of
the transactions contemplated by this Agreement other than the Placement Agent,
and the Company shall pay, and indemnify and hold harmless the Buyer from, any
claim made against the Buyer by such entity or any other Person for any such
commission, fee or other compensation.
(x) No Solicitation. No form of general solicitation or general
advertising was used by the Company or, to the best of its knowledge, any other
Person acting on behalf of the Company, in respect of the Securities or in
connection with the offer and sale of the Securities. Neither the Company nor,
to its knowledge, any Person acting on behalf of the Company has, either
directly or indirectly, sold or offered for sale to any Person any of the
Securities (other than the Placement Agent) or, within the six months prior to
the date hereof, any other similar security of the Company except as
contemplated by this Agreement, and the Company represents that neither the
Company nor any Person authorized to act on its behalf will sell or offer for
sale any such security to, or solicit any offers to buy any such security from,
or otherwise approach or negotiate in respect thereof with, any Person so as
thereby to cause the issuance or sale of any of the Securities to be in
violation of any of the provisions of Section 5 of the 1933 Act.
(y) Rights Agreement. Assuming that the Buyer does not hold any shares
of Common Stock other than as acquired pursuant to this Agreement or upon
conversion of the
-20-
Notes and the Warrant Notes or upon exercise of the Common Stock Warrants, and
subject to the limitations on the number of shares of Common Stock that may be
held by the Buyer contained therein, the execution and delivery of this
Agreement by the Company, the issuance of the Securities as contemplated by the
Transaction Documents and the other transactions contemplated by the Transaction
Documents will not result in the Buyer becoming an "Acquiring Person," as
defined in the Rights Agreement; and the holders of the Notes, the Warrant Notes
and the Common Stock Warrants will be entitled, with respect to the Shares, and
the holders of the Shares will be entitled, in each case to the benefits
available to the holders of Common Stock under the Rights Agreement.
(z) Certain Securities Law Matters. For purposes of Rule 144, the Buyer
will be entitled to tack the holding period of the Outstanding Note to the
holding period of the Exchange Note issued to the Buyer in exchange for the
Outstanding Note and, based on the law in effect on the date of this Agreement,
the Company will not take a contrary position on such matter.
5. CERTAIN COVENANTS AND WAIVER.
(a) Transfer Restrictions. The Buyer acknowledges and agrees that (1)
the Notes and the Warrants to be issued and any Warrant Notes and Common Stock
Warrants which may be issued to it hereunder are not being registered under the
provisions of the 1933 Act or any state securities laws and, except as provided
in Section 8, the Shares have not been and are not being registered under the
1933 Act or any state securities laws, and that the Notes, the Warrants, the
Warrant Notes, and Common Stock Warrants may not be transferred unless the Buyer
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Note, the Warrant, the Warrant Note, or the Common Stock Warrant or the portion
thereof to be transferred may be transferred without such registration or unless
transferred in accordance with Rule 144A to a QIB; (2) no sale, assignment or
other transfer of any Note, Warrant, Warrant Note, or Common Stock Warrant or
any interest therein may be made except in accordance with the terms thereof;
(3) the Shares are not transferable in the absence of registration under the
1933 Act and applicable state securities laws, or applicable exemptions
therefrom; (4) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if the
exemption provided by Rule 144 is not available, any resale of the Securities
under circumstances in which the seller, or the Person through whom the sale is
made, may be deemed to be an 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 (5) the Company is under no
obligation to register the Securities (other than registration of the resale of
Registrable Securities in accordance with Section 8) under the 1933 Act or,
except as provided in Sections 5(d) and 8, Section 3.12 of the Notes and the
Warrant Notes, Section 18 of the Warrants, and Section 17 of the Common Stock
Warrants, to comply with the terms and conditions of any exemption thereunder.
Prior to the time particular Shares are eligible for resale under Rule 144(k),
the Buyer may not transfer such Shares in a transaction which does not
constitute a transfer thereof pursuant to the Registration Statement relating to
such Shares in accordance with the plan of distribution set forth therein or in
any supplement to the Prospectus unless the Buyer shall have delivered to the
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, that such Shares may be transferred without
registration
-21-
under the 1933 Act. Nothing in any of the Transaction Documents shall limit the
right of a holder of the Securities to make a bona fide pledge thereof to an
institutional lender.
(b) Restrictive Legends. (1) The Buyer acknowledges and agrees that the
Notes and the Warrant Notes shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
Notes and the Warrant Notes):
This Note has not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or any state securities laws. The issuance to the
holder of this Note of the shares of Common Stock issuable upon conversion
of this Note, in payment of interest on this Note and upon exercise of
Common Stock Warrants issuable upon redemption of this Note are not covered
by a registration statement under the 1933 Act or registration under state
securities laws. This Note has been acquired for investment only and may
not be sold, transferred or assigned unless (1) the resale hereof is
registered under the 1933 Act, (2) the Company has received an opinion of
counsel reasonably satisfactory in form, scope and substance to the Company
that such registration is not required or (3) sold, transferred or assigned
to a QIB pursuant to Rule 144A.
(2) The Buyer further acknowledges and agrees that each Warrant shall
bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against each Warrant);
This Warrant has not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or applicable state securities laws and may not
be sold, transferred or assigned unless (1) the resale hereof is registered
under the 1933 Act, (2) the Company has received an opinion of counsel
reasonably satisfactory in form, scope and substance to the Company that
such registration is not required or (3) sold, transferred or assigned to a
QIB pursuant to Rule 144A.
This Warrant is issued pursuant to a Securities Purchase and Exchange
Agreement, dated as of March 19, 1999, by and between the Company and the
original holder of this Warrant, as amended from time to time, and the
holder of this Warrant and this Warrant are subject to certain of the terms
of the Securities Purchase and Exchange Agreement.
(3) The Buyer further acknowledges and agrees that until such time as
the Shares have been registered for resale under the 1933 Act as contemplated by
Section 8 or are eligible for resale under Rule 144(k) under the 1933 Act, the
certificates for the Shares, may bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
certificates for the Shares):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned in
the absence of an effective registration statement for the securities under
the Securities Act of 1933, as amended, or an opinion of counsel reasonably
satisfactory in form, scope and substance to the Company that registration
is not required under said Act.
-22-
(4) Once the Registration Statement has been declared effective, or
particular Shares are eligible for resale pursuant to Rule 144(k) under the 1933
Act, thereafter (A) upon request of the Buyer the Company will substitute
certificates without restrictive legend for certificates for any such Shares
issued prior to the SEC Effective Date or the time of such eligibility, as the
case may be, which bear such restrictive legend and remove any stop-transfer
restriction relating thereto promptly, but in no event later than three days
after surrender of such certificates by the Buyer and (B) the Company shall not
place any restrictive legend on certificates for such Shares subsequently issued
or impose any stop-transfer restriction thereon.
(c) Nasdaq Listing; Reporting Status. Not later than the Business Day
following the Closing Date, the Company will file with Nasdaq an application or
other document required by Nasdaq for the listing of the Shares with Nasdaq and
shall provide evidence of such filing to the Buyer. So long as the Buyer
beneficially owns any portion of any of the Securities, the Company will use its
best efforts to maintain the listing of the Common Stock on Nasdaq or another
national securities exchange. During the Registration Period, the Company shall
timely file all reports required to be filed with the SEC pursuant to Section 13
or 15(d) of 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. So long as the
Buyer beneficially owns any of the Securities, the Company shall furnish to the
Buyer copies of all reports and other information filed by the Company with the
SEC pursuant to Sections 13, 14(a), 14(c) and 15(d) of the 1934 Act promptly,
but in no event later than ten days, after the same are filed with the SEC.
(d) Form D. The Company agrees to file one or more Forms D with respect
to the Securities as required under Regulation D to claim the exemption provided
by Rule 506 of Regulation D and to provide a copy thereof to the Buyer promptly
after such filing.
(e) State Securities Laws. On or before the Closing Date, the Company
shall take such action as shall be necessary to qualify, or to obtain an
exemption for, the offer and sale of the Securities to the Buyer as contemplated
by the Transaction Documents under such of the securities laws of jurisdictions
in the United States as shall be applicable thereto. In connection with the
foregoing obligations of the Company in this Section 5(e), the Company shall not
be required (1) to qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 5(e), (2) to subject
itself to general taxation in any such jurisdiction, (3) to file a general
consent to service of process in any such jurisdiction, (4) to provide any
undertakings that cause more than nominal expense or burden to the Company or
(5) to make any change in its charter or by-laws which the Board of Directors of
the Company determines to be contrary to the best interests of the Company and
its stockholders. The Company shall furnish the Buyer with copies of all
filings, applications, orders and grants or confirmations of exemptions relating
to such securities laws on or before the Closing Date.
(f) Limitation on Certain Actions. From the date of execution and
delivery of this Agreement by the parties hereto to the date of issuance of the
Notes, the Company (1) shall comply with Article III of the Notes as if the
Notes were outstanding, (2) shall not take any action which, if the Notes were
outstanding, (A) would constitute an Event of Default or, with the giving of
notice or the passage of time, or both, would constitute an Event of Default or
(B)
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would constitute a Repurchase Event or, with the giving of notice or the passage
of time, or both, would constitute a Repurchase Event.
(g) Use of Proceeds. The Company represents and agrees that: (1) it
does not own or have any present intention of acquiring any Margin Stock; (2)
the proceeds of sale of the Notes, the Warrant Notes and the Warrant Shares will
be used for general working capital purposes and in the operation of the
Company's business; (3) none of such proceeds will be used, directly or
indirectly (A) to make any loan to or investment in any other Person or (B) for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock or for the purpose of maintaining, reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
stock that is currently a Margin Stock or for any other purpose which might
constitute the transactions contemplated by this Agreement a "purpose credit"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System; and (4) neither the Company nor any agent acting on its behalf
has taken or will take any action which might cause this Agreement or the
transactions contemplated hereby to violate Regulation T, Regulation U or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the 1934 Act, in each case as in effect now or as the same may hereafter
be in effect.
(h) Best Efforts. Each of the parties shall use its best efforts timely
to satisfy each of the conditions to the other party's obligations to sell and
purchase the Notes and issue and acquire the Warrants set forth in Section 6 or
7, as the case may be, of this Agreement on or before the Closing Date. If the
Buyer or the Company shall exercise any of its rights under the Warrants, each
of the parties shall use its best efforts timely to satisfy each of the
applicable conditions to the other party's obligations thereunder on or before
the applicable date for closing the particular transaction.
(i) Debt Obligation. So long as any portion of any Note or Warrant Note
is outstanding, the Company shall cause its books, records and financial
statements to reflect the Notes and the Warrant Note as debts of the Company in
the unpaid principal amount thereof and, whenever appropriate, as valid senior
debt obligations of the Company for money borrowed.
(j) Buyer's Waiver. The Buyer, on behalf of itself and any subsequent
holder of the Outstanding Note, hereby waives any requirements or restrictions
contained in the Outstanding Note which would restrict or prohibit the
transactions contemplated by this Agreement and the Other Securities Purchase
Agreements and any "Event of Default" under and as defined in the Outstanding
Note (and the consequences thereof) which would otherwise arise from the
execution and delivery of this Agreement and the Other Securities Purchase
Agreements and completion of the transactions contemplated hereby and thereby.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND EXCHANGE.
The Buyer understands that the Company's obligations to sell to the
Buyer the Purchase Note and to issue to the Buyer the Warrant to be issued to
the Buyer pursuant to Section 2(a) on the Closing Date and to issue to the Buyer
the Exchange Note, if any, and to issue to the Buyer the Warrant to be issued to
the Buyer pursuant to Section 2(c) in exchange for the Outstanding Note, if any,
on the Exchange Date are conditioned upon satisfaction of the
-24-
following conditions precedent on or before the Closing Date (any or all of
which may be waived by the Company in its sole discretion):
(a) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
(b) The representations and warranties of the Buyer contained in this
Agreement and in the Questionnaire shall have been true and correct on the date
of this Agreement and on the Closing Date as if made on the Closing Date and on
or before the Closing Date the Buyer shall have performed all covenants and
agreements of the Buyer required to be performed by the Buyer on or before the
Closing Date; and
(c) No event which, if the Notes were outstanding (1) would constitute
an Event of Default under and as defined in the Notes or, with the giving of
notice or the passage of time, or both, would constitute an Event of Default
under and as defined in the Notes shall have occurred and be continuing or (2)
would constitute a Repurchase Event under and as defined in the Notes or, with
the giving of notice or the passage of time, or both, would constitute a
Repurchase Event under and as defined in the Notes shall have occurred and be
continuing unless the Buyer shall have waived in writing such (and only such)
Event of Default or Repurchase Event, as the case may be, and the rights of the
Buyer under the Notes with respect to such (and only such) Event of Default or
Repurchase Event, as the case may be.
7. CONDITIONS TO THE BUYER'S OBLIGATIONS TO PURCHASE AND EXCHANGE.
(a) Closing Date. The Company understands that the Buyer's obligation to
purchase from the Company the Purchase Note and to acquire from the Company the
Warrant to be acquired from the Company pursuant to Section 2(a) on the Closing
Date and to exchange the Outstanding Note, if any, for the Exchange Note, if
any, on the Exchange Date are conditioned upon satisfaction of the following
conditions precedent on or before the Closing Date (any or all of which may be
waived by the Buyer in its sole discretion):
(1) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
(2) The representations and warranties of the Company contained in this
Agreement shall have been true and correct on the date of this Agreement and
shall be true and correct on the Closing Date as if given on and as of the
Closing Date (except for representations given as of a specific date, which
representations shall be true and correct as of such date and except for the
approvals referred to in clause (3) of Section 4(h), which shall have been
obtained on or before the Closing Date), and on or before the Closing Date the
Company shall have performed all covenants and agreements of the Company
contained herein required to be performed by the Company on or before the
Closing Date;
(3) No event which, if the Notes were outstanding (1) would constitute
an Event of Default under and as defined in the Notes or, with the giving of
notice or the passage of time, or both, would constitute an Event of Default
under and as defined in the Notes shall
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have occurred and be continuing or (2) would constitute a Repurchase Event or,
with the giving of notice or the passage of time, or both, would constitute a
Repurchase Event under and as defined in the Notes shall have occurred and be
continuing;
(4) The Company shall have delivered to the Buyer a certificate, dated
the Closing Date, duly executed by its Chief Executive Officer or Chief
Financial Officer to the effect set forth in subparagraphs (1), (2), and (3) of
this Section 7(a);
(5) The Company shall have delivered to the Buyer a certificate, dated
the Closing Date, of the Secretary of the Company certifying (A) the Certificate
of Incorporation and By-Laws of the Company as in effect on the Closing Date,
(B) all resolutions of the Board of Directors (and committees thereof) of the
Company relating to the Transaction Documents and the transactions contemplated
hereby and (C) such other matters as reasonably requested by the Buyer;
(6) The Transfer Agent shall have acknowledged receipt of the Issuing
Agent Instruction;
(7) On the Closing Date, the Buyer shall have received an opinion of
▇▇▇▇▇▇ Godward LLP, counsel for the Company, dated the Closing Date, addressed
to the Buyer, in form, scope and substance reasonably satisfactory to the Buyer,
substantially in the form of Annex IV to this Agreement;
(8) On the Closing Date, the Buyer shall have received an opinion of
Lyon & Lyon LLP, special counsel for the Company, dated the Closing Date,
addressed to the Buyer, in form, scope and substance reasonably satisfactory to
the Buyer, substantially in the form of Annex V to this Agreement; and
(9) On the Closing Date (i) trading in securities on the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. or Nasdaq shall not have been
suspended or materially limited and (ii) a general moratorium on commercial
banking activities in the State of California or the State of New York shall not
have been declared by either federal or state authorities.
(b) Exchange Date. The Company understands that, in addition to the
conditions precedent in Section 7(a), the Buyer's obligation to exchange the
Outstanding Note, if any, for the Exchange Note, if any, on the Exchange Date is
conditioned upon satisfaction of the following conditions precedent on the
Exchange Date (any or all of which may be waived by the Buyer in its sole
discretion):
(1) On the Exchange Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
(2) The representations and warranties of the Company contained in this
Agreement insofar as they relate to the Exchange Note and the Warrants issuable
pursuant to Section 2(c) shall have been true and correct on the date of this
Agreement and shall be true and correct on the Exchange Date as if given on and
as of the Exchange Date (except for representations given as of a specific date,
which representations shall be true and correct as
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of such date and except for the approvals referred to in clauses (1) through (4)
of Section 4(h), which shall have been obtained on or before the Exchange Date),
and on or before the Exchange Date the Company shall have performed all
covenants and agreements of the Company contained herein required to be
performed by the Company on or before the Exchange Date;
(3) No Event of Default under and as defined in the Notes and no event
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default under and as defined in the Notes shall have
occurred and be continuing and (2) no Repurchase Event and no event which, with
the giving of notice or the passage of time, or both, would constitute a
Repurchase Event under and as defined in the Notes shall have occurred and be
continuing;
(4) The Company shall have delivered to the Buyer a certificate, dated
the Exchange Date, duly executed by its Chief Executive Officer or Chief
Financial Officer to the effect set forth in subparagraphs (1), (2), and (3) of
this Section 7(b);
(5) The SEC Effective Date shall have occurred and the Registration
Statement shall be effective and available for use under the 1933 Act by the
Buyer for resale of the Registrable Securities required to be included therein;
and
(6) On the Exchange Date (i) trading in securities on the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. or Nasdaq shall not have
been suspended or materially limited and (ii) a general moratorium on commercial
banking activities in the State of California or the State of New York shall not
have been declared by either federal or state authorities.
8. REGISTRATION RIGHTS.
(a) Mandatory Registration. (1) The Company shall prepare and, on or
prior to the date which is 30 days after the Closing Date, file with the SEC a
Registration Statement on Form S-3 which covers the resale by the Buyer of (A) a
number of shares of Common Stock equal to at least the number of Conversion
Shares issuable to the Buyer under the Purchase Note and the Warrant Notes,
determined as if the Purchase Note and the Warrant Notes, together with three
months' accrued and unpaid interest thereon, were converted in full at the
Conversion Price in effect on the SEC Filing Date, and (B) such additional
number of shares of Common Stock as the Company shall in its discretion
determine to register in connection with the issuance of the Interest Shares and
Warrant Shares, as Registrable Securities, and which Registration Statement
shall state that, in accordance with Rule 416 under the 1933 Act, the
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Notes and
the Warrant Notes or exercise of the Common Stock Warrants to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
(2) Prior to the SEC Effective Date the Company will not, without the
prior written consent of the Majority Holders, request the acceleration of any
other registration statement filed with the SEC, and during any time subsequent
to the SEC Effective Date when the Registration Statement for any reason is not
available for use by any Investor for the resale of any Registrable Securities,
the Company shall not file any other registration statement or any
-27-
amendment thereto with the SEC under the 1933 Act or request the acceleration of
the effectiveness of any other registration statement previously filed with the
SEC, other than (A) any registration statement on Form S-8 and (B) any
registration statement or amendment which the Company is required to file or as
to which the Company is required to request acceleration pursuant to any
obligation in effect on the date of execution and delivery of this Agreement.
(3) The Company shall use its best efforts to maintain its eligibility
to use Form S-3 for registration of the resale of shares of its Common Stock
under the 1933 Act so long as Form S-3 is generally available for use by
registrants for registration of the resale of common stock, and if Form S-3 is
rescinded by the SEC or, despite such efforts, the Company is ineligible to use
Form S-3 then the Company will use commercially reasonable efforts to become
eligible and maintain its eligibility to use "short form" for registration of
the resale of shares of its Common Stock; provided, however, that nothing in
this Section 8(a)(3) shall require the Company to issue shares of its Common
Stock in order to meet any public "float" requirement for eligibility to use any
such registration form or to meet any asset, net worth or tangible asset
requirement for eligibility to use any such registration form.
(b) Obligations of the Company. In connection with the registration of
the Registrable Securities, the Company shall:
(1) use its best efforts to cause the Registration Statement to become
effective as promptly as possible after the Closing and to keep the Registration
Statement effective pursuant to Rule 415 at all times during the Registration
Period. The Company shall submit to the SEC, within three Business Days after
the Company learns that no review of the Registration Statement will be made by
the staff of the SEC or that the staff of the SEC has no further comments on the
Registration Statement, as the case may be, a request for acceleration of
effectiveness of the Registration Statement to a time and date not later than 48
hours after the submission of such request. The Company represents and warrants
to the Investors that (a) the Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein), at the time it is
first filed with the SEC, at the time it is ordered effective by the SEC and at
all times during which it is required to be effective hereunder (and each such
amendment and supplement at the time it is filed with the SEC and at all times
during which it is available for use in connection with the offer and sale of
the Registrable Securities) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (b) the Prospectus, at the
time the Registration Statement is declared effective by the SEC and at all
times that the Prospectus is required by this Agreement to be available for use
by any Investor and, in accordance with Section 8(c)(4), any Investor is
entitled to sell Registrable Securities pursuant to the Prospectus, shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
(2) subject to Section 8(b)(5), prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective, and the Prospectus current, at all times
during the Registration Period, and, during the Registration Period, comply with
the provisions of the 1933 Act applicable to the Company in order to permit the
disposition by the Investors of all Registrable Securities covered by the
Registration Statement;
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(3) furnish to each Investor whose Registrable Securities are included
in the Registration Statement and its legal counsel (1) promptly after the same
is prepared and publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment thereto and
the Prospectus and each amendment or supplement thereto, (2) one copy of each
letter written by or on behalf of the Company to the SEC or the staff of the SEC
and each item of correspondence from the SEC or the staff of the SEC relating to
the Registration Statement (other than any portion of any thereof which contains
information for which the Company has sought confidential treatment), each of
which the Company hereby determines to be confidential information and which the
Buyer hereby agrees to keep confidential as a confidential Record in accordance
with Section 8(b)(9) and (3) such number of copies of the Prospectus and all
amendments and supplements thereto and such other documents, as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor;
(4) subject to Section 8(b)(5), use its best efforts (i) to register
and qualify the Registrable Securities covered by the Registration Statement
under the securities or blue sky laws of such jurisdictions as the Investors who
hold a majority in interest of the Registrable Securities reasonably request,
(ii) to prepare and to file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period and (iii) to take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
by the Investors in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto (I) to
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 8(b)(4), (II) to subject itself to
general taxation in any such jurisdiction, (III) to file a general consent to
service of process in any such jurisdiction, (IV) to provide any undertakings
that cause more than nominal expense or burden to the Company or (V) to make any
change in its charter or by-laws which the Board of Directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders;
(5) (A) as promptly as practicable after becoming aware of such event
or circumstance, notify each Investor of the occurrence of an event or
circumstance of which the Company has knowledge (x) as a result of which the
Prospectus, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (y) which requires the Company to amend or supplement
the Registration Statement due to the receipt from an Investor of new or
additional information about such Investor or its intended plan of distribution
of its Registrable Securities, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement and Prospectus to correct
such untrue statement or omission or to add any new or additional information,
and deliver a number of copies of such supplement or amendment to each Investor
as such Investor may reasonably request;
(B) notwithstanding Section 8(b)(5)(A) above, if at any time the
Company notifies the Investors as contemplated by Section 8(b)(5)(A) that the
event giving rise to such notice relates to a development involving the Company
which occurred subsequent to the later of (x) the SEC Effective Date and (y) the
latest date prior to such notice on which the Company has amended or
supplemented the Registration Statement, then the Company shall not be required
to use best efforts to make such amendment during a Blackout Period; provided,
-29-
however, that the aggregate number of Trading Days on which any Blackout Period
is in effect may not exceed 20 Trading Days (whether or not consecutive) in any
period of 12 consecutive months; and provided further, however, that no Blackout
Period may commence within 40 Trading Days after the end of an earlier Blackout
Period;
(6) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being offered or sold
pursuant to the Registration Statement of the issuance by the SEC of any stop
order or other suspension of effectiveness of the Registration Statement at the
earliest possible time;
(7) permit the Investors who hold Registrable Securities being included
in the Registration Statement, at such Investors' sole cost and expense (except
as otherwise specifically provided in Section 10(k)) to review and have a
reasonable opportunity to comment on the Registration Statement and all
amendments and supplements thereto at least five Business Days prior to their
filing with the SEC and shall not file any such document to which any Investor
reasonably objects; provided, however, that all comments by such Investors shall
be given to the Law Offices of ▇▇▇▇▇ ▇ ▇▇▇▇▇ (or such other counsel as
designated by Investors who hold a majority in interest of the Registrable
Securities proposed to be offered by the Registration Statement) to convey to
the Company;
(8) make generally available to its security holders as soon as
practical, but not later than 90 days after the close of the period covered
thereby, an earning statement (in form complying with the provisions of Rule 158
under the ▇▇▇▇ ▇▇▇) covering a 12-month period beginning not later than the
first day of the Company's fiscal quarter next following the SEC Effective Date
of the Registration Statement;
(9) make available for inspection by any Investor and any Inspector
retained by such Investor at such Investor's sole expense, all Records as shall
be reasonably necessary to enable such Investor to exercise its due diligence
responsibility with respect to Section 11 of the 1933 Act as it relates to the
Registration Statement or any amendment thereof, and cause the Company's
officers to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that such Investor shall
hold in confidence and shall not make any disclosure of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination such Investor is so notified, unless (i)the disclosure of
such Record is necessary to avoid or correct a misstatement or omission in the
Registration Statement, (ii) the release of such Record is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction or (iii) the information in such Record has been made generally
available to the public other than by disclosure in violation of this or any
other agreement; provided further, however, that each Investor understands that
in the course of exercising the rights provided in this Section 8(b)(9) such
Investor may come into possession of material non-public information about the
Company and that by reason of the requirements of the 1934 Act any such Investor
who possesses such material non-public information may be restricted in making
purchases and sales of the Common Stock unless such information has been
publicly disclosed. The Company shall not be required to disclose any
confidential information in such Records to any Inspector until and unless such
Inspector shall have entered into a confidentiality agreement with the Company
with respect thereto, substantially in the form of this Section 8(b)(9), which
agreement shall permit such Inspector to disclose Records to the Investor who
has retained such Inspector. Each Investor agrees that it shall, upon learning
that disclosure of such
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Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. The Company shall hold in confidence and shall not make any
disclosure of information concerning an Investor provided to the Company
pursuant to this Agreement unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) disclosure of
such information is necessary to avoid or correct a misstatement or omission in
the Registration Statement, (iii) release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to such Investor and allow such Investor, at such Investor's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information;
(10) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement as of the SEC Effective Date to be listed
on Nasdaq or such other principal securities market on which securities of the
same class or series issued by the Company are then listed or traded;
(11) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;
(12) cooperate with the Investors who hold Registrable Securities being
offered pursuant to the Registration Statement to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be offered pursuant to the Registration
Statement and enable such certificates to be in such denominations or amounts as
the Investors may reasonably request and registered in such names as the
Investors may request; and, not later than the SEC Effective Date, the Company
shall deliver (i) to the Transfer Agent (with copies to the Investors whose
Registrable Securities are included in the Registration Statement) an
instruction substantially in the form of Annex VI to this Agreement and (ii)
shall cause legal counsel selected by the Company to deliver to the Investors
whose Registrable Securities are included in the Registration Statement and, if
required by the Transfer Agent, to the Transfer Agent opinions of counsel, in
the forms of Annex VII and Annex VIII to this Agreement; and
(13) during the Registration Period, the Company shall not bid for or
purchase any Common Stock or any right to purchase Common Stock or attempt to
induce any Person to purchase any such security or right if such bid, purchase
or attempt would in any way limit the right of the Investors to sell Registrable
Securities by reason of the limitations set forth in Regulation M under the 1934
Act.
(c) Obligations of the Buyer and other Investors. In connection with
the registration of the Registrable Securities, the Investors shall have the
following obligations:
(1) It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities
-31-
of a particular Investor that such Investor shall furnish to the Company the
Required Information and shall execute such documents in connection with such
registration as the Company may reasonably request. At least four Business Days
prior to the first anticipated filing date of the Registration Statement, the
Company shall notify each Investor of the Required Information if any of such
Investor's Registrable Securities are eligible for inclusion in the Registration
Statement. If at least one Business Day prior to the SEC Filing Date the Company
has not received the Required Information from an Investor, then the Company may
file the Registration Statement without including Registrable Securities of such
Non-Responsive Investor; provided, however, that nothing herein shall relieve
the Company of its obligation to register the resale of such Investor's
Registrable Securities promptly after such Investor provides the Required
Information to the Company.
(2) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company of such
Investor's election to exclude all of such Investor's Registrable Securities
from the Registration Statement;
(3) Each Investor agrees that it will not effect any disposition of the
Registrable Securities except as contemplated in the Registration Statement or
as otherwise in compliance with applicable securities laws and that it will
promptly notify the Company of any material changes in the information set forth
in the Registration Statement regarding such Investor or its plan of
distribution; each Investor agrees (a) to notify the Company in the event that
such Investor enters into any material agreement with a broker or a dealer for
the sale of the Registrable Securities through a block trade, special offering,
exchange distribution or a purchase by a broker or dealer and (b) in connection
with such agreement, to provide to the Company in writing the information
necessary to prepare any supplemental prospectus pursuant to Rule 424(c) under
the 1933 Act which is required with respect to such transaction;
(4) Each Investor acknowledges that during the times specified in
Section 8(b)(5) or 8(b)(6) the Company must suspend the use of the Prospectus
until such time as an amendment to the Registration Statement has been filed by
the Company and declared effective by the SEC, the Company has prepared a
supplement to the Prospectus or the Company has filed an appropriate report with
the SEC pursuant to the 1934 Act. Each Investor hereby covenants that it will
not sell any Registrable Securities pursuant to the Prospectus in accordance
with Section 8(b)(5) or 8(b)(6) during the period commencing at the time at
which the Company gives such Investor notice of the suspension of the use of the
Prospectus and ending at the time the Company gives such Investor notice that
such Investor may thereafter effect sales pursuant to the Prospectus, or until
the Company delivers to such Investor an amended or supplemented Prospectus;
(5) In connection with any sale of Registrable Securities which is made
by an Investor pursuant to the Registration Statement (A) if such sale is made
through a broker, such Investor shall instruct its broker or brokers to deliver
the Prospectus to the purchaser or purchasers in connection with such sale,
shall supply copies of the Prospectus to such broker or brokers and shall
instruct such broker or brokers to deliver such Prospectus to the purchaser in
such sale or such purchaser's broker, (B) if such sale is made in a transaction
directly with a purchaser and not through the facilities of any securities
exchange or market, such Investor shall deliver, or cause to be delivered, the
Prospectus to such purchaser; and (C) if such sale is
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made by any means other than those described in the immediately preceding
clauses (A) and (B), such Investor shall otherwise use its reasonable best
efforts to comply with the prospectus delivery requirements of the 1933 Act
applicable to such sale; and
(6) Each Investor agrees to notify the Company promptly after the event
of the completion of the sale by such Investor of all Registrable Securities to
be sold by such Investor pursuant to the Registration Statement.
(d) Rule 144. With a view to making available to each Investor the
benefits of Rule 144, the Company agrees:
(1) to promptly furnish to each Investor so long as such Investor owns
Registrable Securities, such information as may be necessary to permit each
Investor to sell Registrable Securities pursuant to Rule 144 without
registration; and
(2) if at any time the Company is not required to file such reports
with the SEC under Sections 13 or 15(d) of the 1934 Act, to use its best efforts
to, upon the request of an Investor, make publicly available other information
so long as is necessary to permit publication by brokers and dealers of
quotations for the Common Stock and sales of the Registrable Securities in
accordance with Rule 15c2-11 under the 1934 Act.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification. (1) To the extent not prohibited by applicable
law, the Company will indemnify and hold harmless each Indemnified Person
against any Claims to which any of them may become subject under the 1933 Act,
the 1934 Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any Violation or any of the transactions contemplated by the Transaction
Documents. Subject to the restrictions set forth in Section 9(a)(3) with respect
to the number of legal counsel, the Company shall reimburse the Investors and
each such controlling Person, promptly as such expenses are incurred and are due
and payable, for any documented reasonable legal fees or other documented and
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 9(a)(1) shall
not apply to: (I) a Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information relating to an Indemnified
Person furnished in writing to the Company by such Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if the Prospectus was timely made available by the Company
pursuant to Section 8(b)(3) hereof; (II) amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld; (III) an Indemnified Person
with respect to a Claim which arises solely from the failure of such Indemnified
Person to comply in any material respect with Section 8(c)(4) or 8(c)(5); and
(IV) any Investor with respect to a Claim by the Company against such Investor
to the extent and solely to the extent such Investor shall have been determined
by final judgment of a court of competent jurisdiction, not subject to further
appeal (x) to have breached the obligation of such Investor under Section 1(b)
of the Warrants to purchase Warrant Notes in accordance with the terms of such
Warrants and (y) to have breached such obligation principally by reason of
conduct of such Investor involving gross negligence or willful
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misconduct. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors.
(2) In connection with the Registration Statement, each Investor whose
Registrable Securities are included in the Registration Statement agrees to
indemnify and hold harmless, to the same extent and in the same manner set forth
in Section 9(a)(1), each Indemnified Party against any Claim to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with the Registration Statement; and such
Investor will reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 9(a)(2) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Section 9(a)(2) for only that amount of all Claims in the
aggregate as does not exceed the amount by which the proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to the Registration
Statement exceeds the amount paid by such Investor for such Registrable
Securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 9(a)(2) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the Prospectus, as then amended or
supplemented.
(3) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 9(a) of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 9(a), deliver to the indemnifying party a
notice of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume control
of the defense thereof with counsel reasonably satisfactory to the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding; provided further,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel for all Indemnified Persons or
Indemnified Parties, as the case may be, hereunder and one separate counsel in
each jurisdiction in which a Claim is pending or threatened. The failure to
deliver notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section
9(a), except to the extent that the indemnifying party is prejudiced in its
ability to defend such action.
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The indemnification required by this Section 9(a) shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
(b) Contribution. To the extent any indemnification by an indemnifying
party as set forth in Section 9(a) above is applicable by its terms but is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 9(a) to the fullest extent permitted by law. In determining the
amount of contribution to which the respective parties are entitled, there shall
be considered the relative fault of each party, the parties' relative knowledge
of and access to information concerning the matter with respect to which the
Claim was asserted, the opportunity to correct and prevent any statement or
omission and any other equitable considerations appropriate under the
circumstances; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 9(a), (b) no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any other Person who was not guilty
of such fraudulent misrepresentation and (c) the contribution by any seller of
Registrable Securities in respect of all Claims in the aggregate shall be
limited to the amount by which the proceeds received by such seller from the
sale of such Registrable Securities exceeds the amount paid by such Investor for
such Registrable Securities.
(c) Other Rights. The indemnification and contribution provided in this
Section shall be in addition to any other rights and remedies available at law
or in equity.
10. MISCELLANEOUS.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
(b) Headings. The headings, captions and footers of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(c) Severability. 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.
(d) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be in writing and shall be sent by mail, personal
delivery, by telephone line facsimile transmission or courier and shall be
effective five days after being placed in the mail, if mailed, or upon receipt,
if delivered personally, by telephone line facsimile transmission or by courier,
in each case addressed to a party at such party's address (or telephone line
facsimile transmission number) shown in the introductory paragraph or on the
signature page of this Agreement or such other address (or telephone line
facsimile transmission number) as a party shall have provided by notice to the
other party in accordance with this provision. In the case of any notice to the
Company, such notice shall be addressed to the Company at its address shown in
the introductory paragraph of this Agreement, Attention: Senior Vice
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President and Chief Financial Officer (telephone line facsimile number (650)
553-8310), and a copy shall also be given to: ▇▇▇▇▇▇ Godward LLP, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇, Five ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Esq., and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq. (telephone line facsimile
transmission number (▇▇▇) ▇▇▇-▇▇▇▇), and in the case of any notice to the Buyer,
a copy shall be given to: [__________________________] (telephone line facsimile
transmission number [____________]), in each case with a copy to: ▇▇▇▇ &
Altschul Capital, LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(telephone line facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇).
(e) Counterparts. This Agreement may be executed in counterparts and by
the parties hereto on separate counterparts, each of which shall be deemed to be
an original but all of which together shall constitute one and the same
instrument. A telephone line facsimile transmission of this Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.
Although this Agreement is dated as of the date first set forth above, the
actual date of execution and delivery of this Agreement by each party is the
date set forth below such party's signature on the signature page hereof. Any
reference in this Agreement or in any of the documents executed and delivered by
the parties hereto in connection herewith to (1) the date of execution and
delivery of this Agreement by the Buyer shall be deemed a reference to the date
set forth below the Buyer's signature on the signature page hereof, (2) the date
of execution and delivery of this Agreement by the Company shall be deemed a
reference to the date set forth below the Company's signature on the signature
page hereof and (3) the date of execution and delivery of this Agreement, or the
date of execution and delivery of this Agreement by the Buyer and the Company,
shall be deemed a reference to the later of the dates set forth below the
signatures of the parties on the signature page hereof.
(f) Entire Agreement; Benefit. This Agreement, including the Annexes,
Schedules and Disclosure Schedule, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties, or undertakings, other than those set forth
or referred to herein and therein. This Agreement, including the Annexes,
Schedules and Disclosure Schedule, supersedes all prior agreements and
understandings, whether written or oral, between the parties hereto with respect
to the subject matter hereof. This Agreement and the terms and provisions hereof
are for the sole benefit of only the Company, the Buyer and their respective
successors and permitted assigns and in no event shall the Buyer have any
liability to any stockholder or creditor of the Company or any other Person
(other than the Company) in any way relating to or arising from this Agreement
or the transactions contemplated hereby.
(g) Waiver. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, or course of dealing between the parties, shall not operate as a waiver
thereof or an amendment hereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
(h) Amendment. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Buyer or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the
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specific instance and for the purpose for which given. No course of dealing
between the parties hereto shall operate as an amendment of this Agreement.
(i) Further Assurances. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
(j) Assignment of Certain Rights and Obligations. The rights of an
Investor under Sections 5(a), 5(b), 8, 9, and 10 of this Agreement shall be
automatically assigned by such Investor to any transferee of all or any portion
of such Investor's Registrable Securities (or all or any portion of any Note,
Warrant, Warrant Note, or Common Stock Warrant) who is an "accredited investor"
as that term is defined in Regulation D under the 1933 Act, only if: (1) such
Investor agrees in writing with such transferee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment, (2) the Company is, within a reasonable time after such
assignment, furnished with notice of (A) the name and address of such transferee
and (B) the Securities with respect to which such rights and obligations are
being transferred, (3) immediately following such transfer or assignment the
further disposition of Registrable Securities by such transferee is restricted
under the 1933 Act and applicable state securities laws, (4) at or before the
time the Company received the notice contemplated by clause (2) of this sentence
the transferee agrees in writing with the Company to be bound by all of the
provisions contained in Sections 5(a), 5(b), 8, 9, and 10 hereof and (5)
immediately after such transfer such transferee holds at least 25,000 shares of
Common Stock or a portion (which, if applicable, may be all) of any Note,
Warrant, Warrant Note, or Common Stock Warrant which at the time of such
transfer is convertible into or exercisable for 25,000 shares of Common Stock
(or any combination thereof) or such lesser amount of Common Stock that any
Note, Warrant, Warrant Note, or Common Stock Warrant is convertible into or
exercisable for at the time of such assignment. Upon any such assignment, the
Company shall be obligated to such transferee to perform all of its covenants
under Sections 5, 8, 9, and 10 of this Agreement as if such transferee were the
Buyer. In connection with any such transfer the Company shall, at its sole cost
and expense, promptly after such assignment take such actions as shall be
reasonably acceptable to the transferring Investor and such transferee to assure
that the Registration Statement relating to the Registrable Securities involved
in such transfer and the Prospectus are available for use by such transferee for
sales of the Registrable Securities in respect of which such rights and
obligations have been so transferred.
(k) Expenses. All reasonable expenses incurred in connection with
registrations, filings or qualifications pursuant to this Agreement shall be
paid by the Company, including, without limitation, all registration, listing
and qualifications fees, printers fees, accounting fees, and the fees and
disbursements of counsel for the Company but excluding (a) fees and expenses of
investment bankers retained by any Investor, (b) brokerage commissions incurred
by any Investor and (c) fees and disbursements of counsel for the Investors. The
Company shall pay on demand all expenses incurred by the Buyer, including
reasonable fees and disbursements of counsel, as a consequence of, or in
connection with (1) any default or breach of any of the Company's obligations
set forth in the Transaction Documents and (2) the enforcement or restructuring
of any right of, including the collection of any payments due, the Buyer under
the Transaction Documents, including any action or proceeding relating to such
enforcement or any order, injunction or other process seeking to restrain the
Company from
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paying any amount due the Buyer. Except as otherwise provided in this Section
10(k), each of the Company and the Buyer shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby. Nothing
herein shall limit the rights of the Placement Agent under its Engagement
Agreement with the Company.
(l) Termination. The Buyer shall have the right to terminate this
Agreement by giving notice to the Company at any time at or prior to the Closing
Date if:
(1) the Company shall have failed, refused, or been unable at or prior
to the date of such termination of this Agreement to perform any of its
obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is not
fulfilled; or
(3) the closing shall not have occurred on a Closing Date on or before
March 31, 1999, other than solely by reason of a breach of this Agreement by the
Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.
(m) Survival. The respective representations, warranties, covenants and
agreements of the Company and the Buyer contained in this Agreement and the
documents delivered in connection with this Agreement shall survive the
execution and delivery of this Agreement and the closing hereunder and delivery
of and payment for the Notes and issuance of the Warrants, and shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Buyer or any Person controlling or acting on behalf of the
Buyer or by the Company or any Person controlling or acting on behalf of the
Company.
(n) Public Statements, Press Releases, Etc. The Company and the Buyer
shall have the right to approve before issuance any press releases or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations,
including the 1933 Act and the rules and regulations promulgated thereunder
(although the Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release and shall be
provided with a copy thereof).
(o) Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the date first set forth above and on the dates set forth below their respective
signatures.
Principal Amount of Purchase Note: $
Purchase Price of Purchase Note: $
Exchange Ratio: Exchange Note having a principal amount equal to ________% of
the principal amount of the Outstanding Note that is
outstanding on the Exchange Date
SUGEN, INC.
By:___________________________________________
Name:
Title:
Date: March 19, 1999
[BUYER]
By:___________________________________________
Name:
Title:
Address:
Attention:
Facsimile No:
Date: March 19, 1999
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