Exhibit 99.1
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SIPEX CORPORATION
as the Company
and
ALONIM INVESTMENTS INC.,
as the Purchaser
SECURITIES PURCHASE AGREEMENT
Dated as of May 27, 2003
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TABLE OF CONTENTS
PAGE
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SECTION 1. Purchase and Sale of Note................................................................. 1
SECTION 2. Purchaser's Representations and Warranties................................................ 2
SECTION 3. Representations, Warranties and Covenants of the Company.................................. 5
SECTION 4. Covenants................................................................................. 12
SECTION 5. Conditions to the Company's Obligation to Close........................................... 17
SECTION 6. Conditions to Purchaser's Obligation to Purchase.......................................... 17
SECTION 7. Miscellaneous............................................................................. 19
SCHEDULE
Schedule A.......................... Wire Instructions
EXHIBITS
Exhibit A........................... Form of Note
Exhibit B........................... Form of Registration and Standstill Agreement
Exhibit C........................... Form of Voting Agreement
Exhibit D........................... Form of Deed of Trust
Exhibit E........................... Form of Security Agreement
Exhibit F........................... Proforma Policy
Exhibit G........................... Form of Certificate of the Clerk
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of May
27, 2003, by and between Sipex Corporation, a Massachusetts corporation (the
"Company"), and Alonim Investments Inc. (the "Purchaser"), a Canadian
corporation.
THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of
the following facts, intentions and understandings:
A. In accordance with the terms and conditions of this Agreement,
the Company has agreed to issue and sell, and the Purchaser has agreed to
purchase the Company's 1.5% Convertible Secured Note due June 30, 2007 in an
aggregate amount of U.S. $10,560,000 (the "Principal Amount") (such note, in the
form attached hereto as Exhibit A, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof, the "Note")
that shall be convertible into shares of the common stock, $0.01 par value per
share (the "Common Stock"), of the Company on the terms set forth in the Note.
The shares of Common Stock issuable upon conversion of the Note are referred to
herein collectively as the "Conversion Shares." The Note and the Conversion
Shares are referred to herein as the "Securities."
B. The Company has agreed to provide the Purchaser with the
benefit of certain registration rights with respect to the Conversion Shares and
other securities held by Purchaser under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "Securities Act") and
applicable state securities laws, and the Purchaser has agreed to certain
restrictions regarding the purchase and sale of the Company's securities, in
each case on the terms and subject to the conditions set forth in the
Registration and Standstill Agreement in the Form attached hereto as Exhibit B.
The Purchaser has also agreed to certain restrictions regarding the voting of
shares of the Company's Common Stock as set forth in the Voting Agreement in the
form attached hereto as Exhibit C. This Agreement, the Note, the Registration
and Standstill Agreement, the Voting Agreement and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (the "Transaction") are referred to herein
collectively as the "Transaction Documents."
NOW THEREFORE, in consideration of the promises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF NOTE.
(a) Closing of Note.
(1) Upon the satisfaction (or written waiver) of the
conditions set forth in Sections 5 and 6 of this Agreement, the Company shall
issue and sell to Purchaser, and Purchaser agrees to purchase from the Company,
the Note (the "Closing"). The price to be paid by the Purchaser for the Note
shall be $10,560,000 USD.
(2) The date and time of the Closing (the "Closing Date")
shall be 12:00 p.m., California time, on May 27th, 2003 (or such other date as
the parties may specify), subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 of this Agreement. The Closing shall
occur on the Closing Date at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other places as the
parties may agree.
(b) Form of Payment. On the Closing Date, (i) Purchaser shall pay
the Company for the Note to be issued and sold to such Purchaser on such Closing
Date, by wire transfer of immediately available funds in accordance with the
Company's written wire instructions attached hereto on Schedule A, and (ii) the
Company shall deliver to Purchaser a properly authenticated Note representing
the principal amount of the Note, duly executed on behalf of the Company and
registered in the name of the Purchaser, that the Purchaser is purchasing from
the Company pursuant to this Agreement.
SECTION 2. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to the Company that as of the date hereof and the
Closing Date:
(a) Investment Purpose. Purchaser is acquiring the Note and upon
conversion of the Note owned by it, will acquire the Conversion Shares then
issuable upon conversion thereof, for its own account for investment only and
not with a view toward, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales or distributions registered or
exempted under the Securities Act.
(b) Accredited Investor Status. Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D under the
Securities Act as of the date of this Agreement.
(c) Reliance on Exemptions. Purchaser understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Purchaser set forth herein and
in the Note in order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Securities.
(d) Information. Purchaser believes it (i) has been furnished with
or believes it has had full access to all of the information that it considers
necessary or appropriate for deciding whether to purchase the Securities, (ii)
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Securities, (iii) can
bear the economic risk of a total loss of its investment in the Securities and
(iv) has such knowledge and experience in business and financial matters so as
to enable it to understand the risks of and form an investment decision with
respect to its investment in the Securities. Neither such inquiries nor any
other due diligence investigations conducted by Purchaser or its advisors, if
any, or its representatives shall limit, modify, amend or affect the Company's
representations and warranties contained in this Agreement and the Purchaser's
right to rely thereon.
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(e) No Governmental Review. Purchaser 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 or the
fairness or suitability of an investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. Purchaser understands that, except as
provided in Section 5 herein, none of the Securities have been or will be
registered under the Securities Act or any state securities laws, and the
Securities may not be offered for sale, sold, assigned or transferred without
registration under the Securities Act or an exemption therefrom and that, in the
absence of an effective registration statement under the Securities Act, such
Securities may only be sold under certain circumstances as set forth in the
Securities Act, it being understood that nothing in this Agreement shall
restrict any transfer of Securities to (a) the Company or (b) an affiliate of
the holder of such Securities (provided that in the case of (b) above the
transferor furnishes the Company with such certifications, legal opinions or
other information as the Company may reasonably request to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act).
(g) Legends.
(1) Purchaser understands that, until the later of (i)
the end of the holding period under Rule 144(k) of the Securities Act (or any
successor provision) and (ii) such time as Purchaser ceases to be an "affiliate"
of the Company as such term is defined in Rule 144 of the Securities Act, the
Note (and all securities issued in exchange therefor or in substitution thereof,
other than Conversion Shares, which shall bear the legend set forth in Section
2(g)(2) of this Agreement, if applicable) shall bear a legend in substantially
the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.
The legend set forth above shall be removed and the Company shall issue
a new Note of like tenor and aggregate principal amount and which shall not bear
the restrictive legends required by this Section 2(g)(1), (i) if, in connection
with a sale transaction, such holder provides the Company with an opinion of
counsel reasonably acceptable to the Company to the effect that a public sale,
assignment, pledge or transfer of the Note may be made without registration
under the Securities Act, or (ii) upon expiration of the two-year holding period
under Rule 144(k) of the Securities Act (or any successor rule). The Company
shall not require such opinion of counsel for the sale of Securities in
accordance with Rule 144 of the Securities Act in the event that the Seller
provides
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such representations that the Company shall reasonably request confirming
compliance with the requirements of Rule 144.
(2) Such Purchaser understands that, until the later of
(i) the end of the holding period under Rule 144(k) of the Securities Act (or
any successor provision) with respect to the Conversion Shares issued upon any
conversion of the Note, and (ii) such time as Purchaser ceases to be an
"affiliate" of the Company as such term is defined in Rule 144 of the Securities
Act, any stock certificate representing Conversion Shares issued upon such
conversion of the Note shall bear a legend in substantially the following form
unless the Note submitted for conversion, does not bear the legend specified in
Section 2(g)(1):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR AN EXEMPTION THEREFROM.
The legend set forth above shall be removed and the Company shall issue
the Conversion Shares without such legend to the holder of the Conversion Shares
upon which it is stamped, (i) if such Conversion Shares have been resold or
transferred pursuant to the registration statement contemplated by Section 5
herein and the registration statement was effective at the time of such
transfer, (ii) if, in connection with a sale transaction, such holder provides
the Company with an opinion of counsel reasonably acceptable to the Company to
the effect that a public sale, assignment, pledge or transfer of the Conversion
Shares may be made without registration under the Securities Act, or (iii) upon
the later of (a) expiration of the two-year period under Rule 144(k) of the
Securities Act (or any successor rule) and (b) such time as Purchaser ceases to
be an "affiliate" of the Company as such term is defined in Rule 144 of the
Securities Act. The Company shall not require such opinion of counsel for the
sale of Conversion Shares in accordance with Rule 144 of the Securities Act,
provided that the Seller provides such representations that the Company shall
reasonably request confirming compliance with the requirements of Rule 144.
(3) Purchaser understands that, in the event Rule 144(k)
as promulgated under the Securities Act (or any successor rule) is amended to
change the two-year period under Rule 144(k) (or the corresponding period under
any successor rule), (i) each reference in Sections 2(g)(1) and 2(g)(2) of this
Agreement to "two (2) years", the "two-year period" or "two-year holding period"
shall be deemed for all purposes of this Agreement to be references to such
changed period, and (ii) all corresponding references in the Note shall be
deemed for all purposes to be references to the changed period, provided that
such changes shall not become effective if they are otherwise prohibited by, or
would otherwise cause a violation of, the then-applicable federal securities
laws.
(h) Authorization; Enforcement; Validity. The Transaction
Documents have been duly and validly authorized, executed and delivered on
behalf of Purchaser and are valid and binding
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agreements of Purchaser enforceable against Purchaser in accordance with their
terms, subject as to enforceability to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies and except as the
indemnification agreements of Purchaser may be legally unenforceable.
(i) Residency. Purchaser is a resident of that country or state
specified in its address on the signature page hereto and executed by it.
(j) Additional Acknowledgement. Purchaser acknowledges that it has
independently evaluated the merits of the transactions contemplated by this
Agreement and the Note and that it has independently determined to enter into
the transactions contemplated hereby and thereby.
With the exception of Section 2(h), the Purchaser's representations and
warranties made in this Section 2 are made solely for the purpose of permitting
the Company to make a determination that the offer and sale of the Note pursuant
to this Agreement complies with applicable United States federal and state
securities laws and not for any other purpose. Accordingly, other than Section
2(h), the Company should not rely on such representations and warranties for any
other purpose.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the Purchaser
that as of the date hereof subject to such exceptions as set forth in the letter
from the Company to Purchaser dated as of the date hereof (the "Disclosure
Letter"):
(a) Organization. The Company is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its subsidiaries listed on Exhibit 21.1 to
its Annual Report on Form 10-K for the year ended December 31, 2002 (the
"Subsidiaries") has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and as described
in the Company's Annual Report on Form 10-K for the year ended December 31,
2002, including all exhibits, supplements and amendments thereto, and the
Company's Quarterly Report on Form 10-Q for the quarter ended March 29, 2003,
including all exhibits, supplements and amendments thereto (the "SEC Filings"),
and is registered or qualified to do business and in good standing in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect, and to the Company's knowledge, no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification.
As used in this Agreement, "Material Adverse Effect" means any material adverse
effect upon (i) the business, financial condition, results of operations,
assets, properties or operations of the Company and its Subsidiaries, considered
as one enterprise, or (ii) the Company's ability to perform its obligations
under this Agreement. No subsidiary of the Company is a "significant subsidiary"
of the Company as such term is defined in Rule 1-02(w) of Regulation S-X.
(b) Due Authorization and Valid Issuance. Except as set forth in
Section 3(b) of the Disclosure Letter, the Company has all requisite power and
authority to execute, deliver and perform
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its obligations under the Transaction Documents, and the Transaction Documents
and the transactions contemplated thereby have been duly authorized by the
Company and its Board of Directors and no further consent or authorization by
the Company, or its shareholders is required. Each of the Transaction Documents
has been validly executed and delivered by the Company and constitutes the
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Note being purchased by the Purchaser hereunder will, upon issuance pursuant
to the terms hereof, be duly authorized, validly issued, fully paid and
nonassessable, and shall be free from all liens, claims and encumbrances, except
encumbrances or restrictions arising under U.S. federal or state securities
laws, with respect to the issuance thereof, and the Purchaser shall be entitled
to all the rights set forth therein.
(c) Non-Contravention. The execution, delivery and performance of
the Transaction Documents, including without limitation the issuance and sale of
the Note to be sold by the Company under the Transaction Documents, the
fulfillment of the terms of the Transaction Documents and the consummation of
the transactions contemplated thereby, will not constitute a violation of, or
default (with the passage of time or otherwise) under (i) any bond, debenture,
note or other evidence of indebtedness, lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument to
which the Company or any Subsidiary is a party or by which it or any of its
Subsidiaries or their respective properties are bound when such violation,
conflict or default, individually, or in the aggregate, would have a Material
Adverse Effect, (ii) the articles of organization, by-laws or other
organizational documents of the Company or any Subsidiary, or (iii) any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties when such violation, conflict or
default would have a Material Adverse Effect. In addition, the execution,
delivery and performance of the Transaction Documents, including without
limitation the issuance and sale of the Note to be sold by the Company under the
Transaction Documents, the fulfillment of the terms of the Transaction Documents
and the consummation of the transactions contemplated thereby, will not result
in the creation or imposition of any lien, encumbrance, claim, security interest
or restriction whatsoever upon any of the properties or assets of the Company or
any Subsidiary (other than (i) the lien of the Deed of Trust on the property to
be subject to the Deed of Trust, (ii) the Security Agreement on the property to
be subject to the Security Agreement) or (iii) an acceleration of indebtedness
pursuant to any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or any indenture,
mortgage, deed of trust or any other agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them is bound or to
which any of the property or assets of the Company or any Subsidiary is subject
where such lien or other restriction would have a Material Adverse Effect.
Except for such filings and clearances, if any, as may be required by the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no consent, approval, authorization or other order of, or registration,
qualification or
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filing with, any regulatory body, administrative agency, or other governmental
body in the United States or any other person is required for the execution,
delivery and performance of the Transaction Documents, including without
limitation the valid issuance and sale of the Securities to be sold pursuant to
the Transaction Documents, other than such as have been made or obtained, and
except for any post-closing securities filings or notifications required to be
made under federal or state securities laws. Assuming the accuracy of the
representations made by Purchaser in Section 2, the issuance by the Company of
the Note is exempt from registration under the Securities Act and the issuance
of the Conversion Shares upon conversion the Note, will be exempt from
registration under the Securities Act under applicable rules and regulations as
currently in effect.
(d) Capitalization. The Company's authorized capital stock as of
March 20, 2003 consisted of (i) 40,000,000 shares of Common Stock, $0.01 par
value per share, of which 28,030,659 shares are issued and outstanding,
4,927,814 are reserved for issuance under the Company's 1994 Stock Option and
Incentive Plan, 1996 Stock Option and Incentive Plan, 1996 Non-Employee Director
Stock Option Plan, 1997 Incentive Stock Option Plan, Sipex Corporation 1999
Stock Plan, 2000 Non-Qualified Stock Option Plan, 2002 Nonstatutory Stock Option
Plan, and 1996 Employee Stock Purchase Plan (such plans collectively, "Employee
Benefit Plans"), 3,701,000 shares are reserved for issuance pursuant to options
outside the Employee Benefit Plans, 1,600,000 shares are reserved for issuance
upon conversion of the S&F Note (as defined below) and 900,000 shares are
reserved for issuance upon exercise of a warrant originally issued to S&F
Financial Holdings Inc. and (ii) 1,000,000 shares of Preferred Stock, $0.01 par
value per share, of which no shares are issued and outstanding. The Company has
not issued any capital stock since that date other than pursuant to (i) the
Employee Benefit Plans, or (ii) upon exercise of outstanding warrants or options
disclosed in the SEC Filings. The Company has no stock option or stock purchase
plans or other equity incentive plans of any kind other than the Employee
Benefit Plans. The Conversion Shares to be issued by the Company pursuant to the
Transaction Documents have been duly authorized, and when issued in accordance
with the terms of the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable and will be free from all taxes, liens and charges
with respect to the issuance thereof, with the holder thereof entitled to all
rights accorded to holders of Common Stock of the Company, generally. The
outstanding shares of capital stock of the Company have been duly and validly
issued and are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, and were not issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities.
Except as set forth herein or in the SEC Filings, there are no (i) outstanding
rights (including, without limitation, preemptive rights with respect to
issuances by the Company of any securities, including without limitation the
Securities, of the Company), warrants or options to acquire, or instruments
convertible into or exchangeable for, any unissued shares of capital stock or
other equity interest in the Company or any Subsidiary, (ii) contracts,
commitments, agreements, understandings or arrangements of any kind to which the
Company is a party or of which the Company has knowledge and relating to the
issuance or sale of any capital stock of the Company or any Subsidiary, or of
any such convertible or exchangeable securities or any such rights, warrants or
options, (iii) outstanding securities or instruments of the Company or any
Subsidiary that contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to redeem a security of the Company or any
Subsidiary, (iv) securities or
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other instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of any of the Securities under this Agreement, or (v)
stock appreciation rights or "phantom stock" plans or agreements or any similar
plan or arrangement. Without limiting the foregoing, no preemptive right,
co-sale right, right of first refusal, registration right (other than, in each
case, pursuant to that certain Securities Purchase Agreement dated September 22,
2002, by and between the Company and S&F Financial Holdings Inc., or except as
set forth herein) or other similar right exists with respect to any of the
Securities or the issuance and sale thereof. No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale of the Securities. The Company owns
the entire equity interest in each of its Subsidiaries, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest, other
than as described in the SEC Filings. The Company has no outstanding
indebtedness for borrowed money and no agreement regarding borrowings, other
than pursuant to that certain $12,000,000 Convertible Secured Note due 2007,
originally issued to S&F Financial Holdings Inc. as of September 27, 2002 (the
"S&F Note"). Except as disclosed in the SEC Filings, there are no shareholder
rights plans, stockholders agreements, voting agreements or other similar
agreements with respect to the Common Stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the Company's
stockholders.
(e) Legal Proceedings. There is no material action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened to which the Company or any Subsidiary is
or may be a party or of which the business, property, Common Stock, officers or
directors (in their capacities as such) of the Company or any Subsidiary is
subject that is not disclosed in the SEC Filings, except where the same would
not result, either individually or in the aggregate, in a Material Adverse
Effect.
(f) No Violations. Neither the Company nor any Subsidiary (i) is
in violation of its charter, bylaws, or other organizational document, (ii) is
in violation of any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or authority applicable to the
Company or any Subsidiary, which violation, individually or in the aggregate,
would be reasonably likely to have a Material Adverse Effect, or (iii) is in
default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in any respect in the performance of any
bond, debenture, note or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
is bound or by which the properties of the Company or any Subsidiary are bound,
which would be reasonably likely to have a Material Adverse Effect.
(g) Governmental Permits, Etc. Each of the Company and its
Subsidiaries has all necessary franchises, licenses, certificates and other
authorizations from any foreign, federal, state or local government or
governmental agency, department, or body that are currently necessary for the
operation of the business of the Company and its Subsidiaries as currently
conducted and as described in the SEC Filings except where the failure to
currently possess any such franchise, license, certificate or other
authorization would not have a Material Adverse Effect.
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(h) Intellectual Property. Except as specifically disclosed in the
SEC Filings, (i) each of the Company and its Subsidiaries owns or possesses
sufficient rights to use all patents, patent rights, trademarks, copyrights,
licenses, inventions, mask works, trade secrets, trade names, know-how, moral
rights, confidential and proprietary information, compositions of matter,
formulas, designs and proprietary rights (collectively, "Intellectual Property")
described or referred to in the SEC Filings as owned or possessed by it or that
are necessary for the conduct of its business as now conducted or as described
in the SEC Filings, except where the failure to currently own or possess would
not have a Material Adverse Effect, and (ii) to the Company's knowledge, neither
the Company nor any of its Subsidiaries is infringing, or has received any
notice of or has any knowledge of any asserted infringement by the Company or
any of its Subsidiaries of, any rights of a third party with respect to any
Intellectual Property that, individually or in the aggregate, would have a
Material Adverse Effect. To the Company's knowledge, there is no claim, action
or proceeding being overtly threatened against, but which has not been made or
brought against, the Company or any of its Subsidiaries regarding its
Intellectual Property or infringement of other intellectual property rights
which could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. To the Company's knowledge, no third party
has any ownership right, title, interest, claim in or lien on any of the
Intellectual Property and the Company has taken, and in the future the Company
will use its reasonable effort to take, all steps reasonably necessary to
preserve its legal rights in, and the secrecy of, all the Intellectual Property.
To the Company's knowledge, there is no material unauthorized use, infringement
or misappropriation of any Intellectual Property of the Company or any of the
Subsidiaries by any third party.
(i) Environmental Matters.
(1) Except as would not reasonably be likely to result in
a material liability to the Company, no underground storage tanks and no amount
of any substance that has been designated by any governmental agency or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended to date, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended to date, and the regulations promulgated pursuant to
said laws, but excluding routine quantities of office and janitorial supplies (a
"Hazardous Material"), are present as a result of the actions of the Company,
or, to the Company's knowledge, as a result of the actions of a third party, in,
on or under any property, including the land and the improvements, ground water
and surface water thereof, that the Company or any of its subsidiaries currently
owns, operates, occupies or leases, or to the Company's knowledge, were present
on any other real property at the time it ceased to be owned, operated, occupied
or leased by the Company as a result of the actions of the Company, or to the
Company's knowledge as a result of the actions of a third party.
(2) Except as would not reasonably be likely to result in
a material liability to the Company (in any individual case or in the
aggregate), neither the Company nor any Subsidiary has transported, stored,
used, manufactured, disposed of or arranged for the disposal of, released or
-9-
exposed its employees or others to Hazardous Materials in violation of any
federal, state or local law, rule, regulation, treaty or statute in effect
before the Closing Date related to protection of human health, safety, and the
environment, including natural resources (collectively, "Environmental Laws").
(3) Except as would not reasonably be likely to result in
a material liability to the Company, the Company and the Subsidiaries currently
hold and are in compliance with all approvals, permits, licenses, clearances and
consents required under Environmental Laws for the conduct of the Company's and
the Subsidiaries' businesses as currently being conducted.
(4) No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending, or to the Company's
knowledge, threatened, alleging that the Company or any of the Subsidiaries are
in violation of or liable under any Environmental Law.
(j) No General Solicitation; No Integration. Neither the Company
nor any other person or entity authorized by the Company to act on its behalf
has engaged in a general solicitation or general advertising (within the meaning
of Regulation D of the Securities Act) of investors with respect to offers or
sales of any of the Securities. The Company has not, directly or indirectly,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which, to its
knowledge, is or will be integrated with the Conversion Shares and/or the Note
sold pursuant to this Agreement.
(k) Interested Party Transactions. Except as set forth in Section
3(k) of the Disclosure Letter, to the knowledge of the Company, except as set
forth in the SEC Filings, no officer or director of the Company or the
Subsidiaries or any "affiliate" or "associate" (as those terms are defined in
Rule 405 promulgated under the ▇▇▇▇ ▇▇▇) of any such person has had, either
directly or indirectly, a material interest in: (i) any person or entity which
purchases from or sells, licenses or furnishes to the Company any goods,
property, technology, intellectual or other property rights or services; or (ii)
any contract or agreement to which the Company is a party or by which it may be
bound or affected.
(l) Financial Statements. The financial statements of the Company
and the related notes contained in the SEC Filings (all such financial
statements, the "Financial Statements") present fairly, in accordance with
generally accepted accounting principles, the financial position of the Company
and its Subsidiaries as of the dates indicated, and the results of its
operations and cash flows for the periods therein specified, subject, in the
case of unaudited financial statements for interim periods, to normal year-end
audit adjustments. Such Financial Statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein specified, except
as disclosed in the SEC Filings. The other financial information contained in
the SEC Filings has been prepared on a basis consistent with the financial
statements of the Company. Consistent with the Company's disclosure in its SEC
filings, the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain
-10-
assets accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(m) No Material Adverse Change. Since March 29, 2003, the Company
has not experienced or suffered events or conditions which have, in the
aggregate, caused a Material Adverse Effect.
(n) Disclosure. The information contained in the SEC Filings,
excluding exhibits thereto, including without limitation all information
incorporated therein by reference, as of the date hereof and as of the Closing
Date, did not and shall not contain an 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 under which they were
made, not misleading.
(o) NASDAQ Compliance. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on The Nasdaq Stock
Market, Inc. National Market (the "Nasdaq National Market"), and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock from the Nasdaq National Market, nor has the Company received any
notification that the Securities and Exchange Commission (the "SEC") or the NASD
is contemplating terminating such registration or listing.
(p) Reporting Status. The Company has filed in a timely manner (or
pursuant to applicable extension periods) all documents that the Company was
required to file under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), during the twelve (12) months preceding the date of this
Agreement (the "SEC Documents"). The SEC Documents, as amended, and all other
materials filed with the SEC during such period complied in all material
respects with the SEC's requirements as of their respective filing dates or
amendment dates, and the information contained therein did not contain an 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 under which they were made not misleading. As of the date hereof,
the Company meets the requirements for use of Form S-3 for registration of the
resale of the Conversion Shares. The Company is not required to file and will
not be required to file any agreement, note lease, mortgage, deed or other
instrument entered into prior to the date hereof and to which the Company or any
of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound which has not been previously filed as an exhibit to its
reports filed with the SEC under the Exchange Act.
(q) Listing. The Company shall, upon any conversion of the Note,
comply with all requirements of the NASD with respect to the issuance of the
Conversion Shares to be issued in connection with such conversion and the
listing thereof on the Nasdaq National Market.
(r) No Manipulation of Stock. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result
-11-
in stabilization or manipulation of the price of the Common Stock to facilitate
the transactions contemplated hereby or the sale or resale of the Conversion
Shares.
(s) Company not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for the Shares will not be, an "investment company" or
an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.
(t) Brokers or Finders. The Company has not incurred, and shall
not incur, directly or indirectly, any liability for any brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
(u) Deed of Trust. Except for the recording of a Notice of Intent
to Preserve Security Interest pursuant to California Civil Code Sections
880.310-880.370, after the Deed of Trust (as defined in Section 6(a) hereof) has
been recorded in the Official Records of Santa ▇▇▇▇▇ County, California, it will
not be necessary to re-record, re-register or re-file the Deed of Trust in order
to maintain the priority of the liens and security interests created thereby.
There will be no mortgage taxes or filing fees payable upon the recording and
filing of such documents except (i) normal recording and filing fees payable to
the County Recorder of Santa ▇▇▇▇▇ County, California in connection therewith,
(ii) transfer taxes assessed in connection with any transfer of the Property (as
defined in the Deed of Trust) or interest therein, and (iii) any fee or charge
payable to any entity whose services may have been used to assist in such
recordation and filing.
(v) Canadian Representations. The Company further represents and
warrants to the Purchaser that, as at the date of issuance of the Note, the
Company is not a "reporting issuer" (or the equivalent) in any Canadian
provincial or territorial jurisdiction.
(w) Employee Benefits Plans. The Company does not currently have a
guaranteed pension plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066
and 4068 of ERISA, or a multiemployer plan, under Sections 4041A, 4202, 4219,
4242, or 4245 of ERISA.
SECTION 4. COVENANTS.
(a) Reasonable Efforts. The parties shall use all reasonable
efforts to timely satisfy each of the conditions described in Sections 5 and 6
of this Agreement.
(b) Consents. The Company will use all reasonable efforts to
obtain all consents, approvals, authorizations or other orders of, or
registration, qualification or filing with, any regulatory body, administrative
agency or other governmental body in the United States or any other person that
is required for the execution, delivery and performance of the Transaction
Documents, including without limitation the valid issuance and sale of the
Securities to be sold pursuant to the
-12-
Transaction Documents. The Purchase will cooperate in good faith in assisting
the Purchaser to fulfill this covenant.
(c) Form D; Blue Sky Laws. The Company shall file a Form D with
respect to the Securities as required under Regulation D and provide a copy
thereof to the Purchaser promptly after such filing. The Company shall take such
action at its own cost and expense, as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Purchaser pursuant to this
Agreement under applicable securities or "blue sky" laws of the states of the
United States or obtain exemption therefrom, and shall provide evidence of any
such action so taken to each Purchaser.
(d) Reservation of Shares. Subject to subsection (e) below, the
Company shall take all action necessary to at all times have authorized and
reserved for the purpose of issuance, no less than 100% of the number of shares
of Common Stock needed to provide for the issuance of the Conversion Shares.
(e) Increase of Authorized Capital. Notwithstanding subsection (d)
above, the Company covenants to use its best efforts to obtain shareholder
approval at the next annual meeting of shareholders scheduled for May 30, 2003
(the "2003 Meeting") to increase authorized capital stock by an amount
sufficient for Company to have enough shares authorized, un-issued and
un-reserved to reserve sufficient numbers of shares of common stock to
accommodate the conversion of the Note in accordance with its terms and to
fulfill its obligations with respect to all conversion rights hereby and by the
Note. Notwithstanding the foregoing, in the event that the Company does not
obtain approval for the increase in the authorized capital stock at the 2003
Meeting, the Company shall use its best efforts to ensure the reservation of
sufficient shares of Common Stock by decreasing the number of Shares reserved
for future grants of options to purchase the Company's Common Stock. If the
Company has been unable to reserve sufficient shares of Common Stock within six
(6) months from the date of the 2003 Meeting, the Purchaser shall have the right
to require the Company to repay to the Purchaser a pro-rata amount of the
Principal Amount of the Note, based on the number of shares of Common Stock that
have not been reserved for the conversion of the Note as of such date, and the
Company shall repay such portion of the Principal Amount, and accrued interest
calculated as at the date of repayment, within thirty (30) days of a notice to
that effect from the Purchaser, and in the event of such partial repayment, the
number of Conversion Rights that can vest pursuant to the Note shall be reduced
by such amount repaid, provided however, that if certain Conversion Rights are
no longer capable of vesting, the shortfall shall be first allocated against
these Conversion Rights that can no longer vest.
(f) Reporting Status. Until the later of (i) the date as of which
the Purchaser may sell all of the Conversion Shares without restriction pursuant
to Rule 144(k) promulgated under the 1933 Act (or successor thereto) and (ii)
the last date on which the Note remains outstanding (the "Reporting Period"),
the Company shall file all reports required to be filed with the SEC pursuant to
the Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would otherwise permit such termination, other
than as a result of a Change of Control (as such term is
-13-
defined in the Note), provided that the Company is in compliance with the terms
of the Note with respect to such Change of Control.
(g) Listing. The Company shall promptly secure the listing of all
of the Conversion Shares upon each national securities exchange and automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance, as required by each such national
securities exchange and automated quotation system) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all
Conversion Shares from time to time issuable under the terms of the Transaction
Documents. The Company shall use all reasonable efforts to maintain the Common
Stock's authorization for quotation on the Nasdaq National Market (the
"Principal Market"). Neither the Company nor any of its Subsidiaries shall take
any action which would be reasonably expected to result in the delisting or
suspension of the Common Stock from the Principal Market. The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 4(g).
(h) Redemptions and Dividends. For so long as the Note is
outstanding, without the prior written approval of the Purchaser, the Company
shall not repurchase, redeem, or declare or pay any cash dividend or
distribution on, any shares of capital stock of the Company.
(i) Right of First Refusal. As long as the Note is outstanding,
the Purchaser has the right of first refusal to purchase its Pro Rata Share (as
defined below), of all (or any part) of any "New Securities" (as defined below)
that the Company may from time to time issue after the date of this Agreement
until the second anniversary of the Closing Date. Purchaser's "Pro Rata Share"
for purposes of this right of first refusal is the ratio of (a) the number of
Conversion Shares held by Purchaser or subject to any unconverted portion of the
Note at the time of the issuance of such New Securities, to (b) the total number
of shares of Common Stock of the Company then outstanding (assuming full
conversion and exercise of all outstanding convertible or exercisable
securities, options or warrants, other than options issued to officers,
directors, employees, consultants, contractors or advisors under any employee or
director benefit plan or any other purchase plan, stock grant or other
agreement); provided, however, that the Purchaser's right of first refusal shall
be limited pursuant to the requirements of the Marketplace Rules of the Nasdaq
National Market as amended from time to time.
(1) New Securities. "New Securities" shall mean any
capital stock of the Company, whether now authorized or not, and rights, options
or warrants to purchase such capital stock, and securities of any type
whatsoever that are, or may become, convertible or exchangeable into such
capital stock; provided, however, that the term "New Securities" does not
include: (i) capital stock issued or issuable upon the exercise of any warrants,
options or convertible securities issued and outstanding on the date hereof in
accordance with the terms of such securities as of such date; (ii) capital stock
issued or issuable to officers, directors, employees, consultants, contractors
or advisors upon the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee or director benefit plan of
the Company now existing or to be implemented in the future or any other
purchase plan, stock grant or other agreement, approved by a committee of
independent directors of the Company or the Company's Board of Directors;
-14-
(iii) the Conversion Shares; (iv) any securities issued to strategic partners
(A) investing in connection with a commercial relationship with the Company or
(B) providing the Company with equipment leases, real property leases, loans,
credit lines, guaranties of indebtedness, cash price reductions or similar
transaction; or (v) any securities issued in connection with the acquisition of
a business pursuant to an asset purchase, securities purchase, merger or similar
transaction.
(2) Procedures. In the event that the Company proposes to
undertake an issuance of New Securities, it shall give to Purchaser a written
notice of its intention to issue New Securities (the "Pro Rata Rights Notice"),
describing the type of New Securities and the price and the general terms upon
which the Company proposes to issue such New Securities. Purchaser shall have
fifteen (15) Business Days from the date such Pro Rata Rights Notice is
delivered hereunder, to agree in writing to purchase Purchaser's Pro Rata Share
of such New Securities for the price and upon the general terms specified in the
Notice by giving written notice to the Company and stating therein the quantity
of New Securities to be purchased (not to exceed Purchaser's Pro Rata Share). If
Purchaser fails to so agree in writing within such fifteen (15) Business Day
period to purchase its full Pro Rata Share of an offering of New Securities,
then Purchaser shall forfeit the right hereunder to purchase that part of his
Pro Rata Share of such New Securities that he, she or it did not so agree to
purchase. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which the banking institutions in the State of New
York are authorized or obligated by law or executive order to close or be
closed.
(3) Failure to Exercise. In the event that the Purchaser
fails to exercise in full the right of first refusal within such fifteen (15)
Business Day period, then the Company shall have one hundred twenty (120) days
thereafter to sell the New Securities with respect to which the Purchaser's
right of first refusal hereunder was not exercised, at a price and upon general
terms not materially more favorable to the purchasers thereof than specified in
the Pro Rata Rights Notice. In the event that the Company has not issued and
sold the New Securities within such one hundred twenty (120) day period, then
the Company shall not thereafter issue or sell any New Securities without again
first offering such New Securities to the Purchaser pursuant to this Section
4(i).
(j) No Encumbrance of Property. For so long as the Note is
outstanding, without the prior written approval of the Purchaser, the Company
shall not create, incur, assume or suffer to exist any mortgage, pledge, lien,
security interest or other encumbrance of any kind on the Property (as defined
in the Deed of Trust) except for (i) liens for taxes, assessments, fees and
other governmental charges, and for claims the payment of which is not yet
overdue or is being contested in good faith (and for which adequate reserves
have been established by the Company on its books in conformity with GAAP), (ii)
statutory liens of landlords, carriers, warehousemen, processors, mechanics,
materialmen or suppliers incurred in the ordinary course of business and
securing amounts not yet due or declared to be due by the claimant thereunder;
(iii) liens or security interests in favor of Purchaser or its affiliates; (iv)
zoning restrictions and easements, licenses, covenants and other restrictions
affecting the use of real property that do not individually or in the aggregate
have a material adverse effect on the ability of the Company and its
Subsidiaries to use such real property for its intended purpose in connection
with its business; or (v) matters disclosed in the title insurance
-15-
report relating to the Property prepared by First American Title Company in
October 2002 in connection with the issuance of the S&F Note.
(k) Regulatory Filings; Reasonable Efforts.
(i) Regulatory Filings. Each of the Company and Purchaser
shall coordinate and cooperate with one another and shall each use all
reasonable efforts such that as promptly as practicable after the date hereof,
each of the Company and Purchaser shall make all filings reasonably determined
by the parties to be required by any governmental entity in connection with the
issuance of the Note and the Conversion Shares and the transactions contemplated
hereby, including, without limitation, (i) Notification and Report Forms with
the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice ("DOJ") as required by the
HSR Act, (ii) other comparable filings pursuant to the merger notification or
control laws of any applicable jurisdiction, as agreed by the parties hereto and
(iii) any filings required under the Securities Act, the Exchange Act, any
applicable state or securities or "blue sky" laws and the securities laws of any
foreign country, or any other legal requirement relating to the issuance of the
Note and the Conversion Shares. Each of the Company and Purchaser will cause all
documents that it is responsible for filing with any governmental entity under
this Section 4(k) to comply in all material respects with all applicable legal
requirements. Purchaser agrees to pay the expenses associated with each such
Regulatory Filing.
(ii) Exchange of Information. The Company and Purchaser
each shall promptly supply the other with any information that may be required
in order to effectuate any filings or application pursuant to Section 4(k)(i).
Except where prohibited by applicable legal requirements, each of the Company
and Purchaser shall consult with the other prior to taking a position with
respect to any such filing, shall consider in good faith the views of one
another in connection with any analyses, appearances, presentations, memoranda,
briefs, papers, arguments, opinions and proposals before making or submitting
any of the foregoing to any governmental entity by or on behalf of any party
hereto in connection with any investigations or proceedings in connection with
this Agreement or the transactions contemplated hereby (including under any
antitrust or fair trade legal requirement), coordinate with the other in
preparing and exchanging such information and promptly provide the other with
copies of all filings, presentations or submissions (and a summary of any oral
presentations) made by such party with any governmental entity in connection
with this Agreement or the transactions contemplated hereby, provided that with
respect to any such filing, presentation or submission, each of the Company and
Purchaser need not supply the other with copies (or in case of oral
presentations, a summary) to the extent that any law, treaty, rule or regulation
of any governmental entity applicable to such party requires such party or its
subsidiaries to restrict or prohibit access to any such properties or
information.
(iii) Notification. Each of the Company and Purchaser will
notify the other promptly upon the receipt of (i) any comments from any
officials of any governmental entity in connection with any filings made
pursuant hereto and (ii) any request by any officials of any governmental entity
for amendments or supplements to any filings made pursuant to, or information
provided to comply in all material respects with, any legal requirements.
Whenever any event
-16-
occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 4(k)(i), the Company or Purchaser, as the case
may be, will promptly inform the other of such occurrence and cooperate in
filing with the applicable governmental entity such amendment or supplement.
(iv) Limitation on Divestiture. Notwithstanding anything
in this Agreement to the contrary, nothing contained in this Agreement shall be
deemed to require the Company or Purchaser or any subsidiary or affiliate
thereof to agree to any divestiture by itself or any of its affiliates of shares
of capital stock or of any business, assets or property, or the imposition of
any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
SECTION 5. CONDITIONS TO THE COMPANY'S OBLIGATION TO CLOSE The
obligation of the Company to issue and sell the Note to the Purchaser at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion by providing Purchaser with prior written notice thereof:
(a) Transaction Documents. Purchaser shall have executed each of
the Transaction Documents to which it is a party and delivered the same to First
American Title Insurance Company ("Title Company"), ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ (other than this Agreement, which shall have been
delivered to the Company), and the Title Company shall have issued or committed
to issue to Purchaser Title Company's lender's policy of title insurance (ALTA
1970 form) for $10,560,000, insuring the first lien priority of the Deed of
Trust, such policy of title insurance to be in conformity with the Proforma
Policy attached hereto as Exhibit F, provided that Purchaser shall be the
beneficiary.
(b) Payment of Purchase Price. Purchaser shall have delivered to
the Company the purchase price for the Note being purchased by such Purchaser at
the Closing by the Closing Date by wire transfer of immediately available funds
pursuant to the wire instructions attached hereto as Schedule A.
(c) Representations and Warranties; Covenants. The representations
and warranties of the Purchaser shall be true, correct and complete in all
respects as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date (which shall be true, correct and complete as of such date)), and the
Purchaser shall have performed, satisfied and complied with in all material
respects the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Purchaser at or
prior to the Closing Date.
SECTION 6. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE. The
obligation of Purchaser hereunder to purchase the Note from the Company at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for Purchaser's
sole benefit and may be waived by Purchaser at any time in its sole discretion
by providing the Company with prior written notice thereof:
-17-
(a) Transaction Documents. The Company shall have (i) executed
each of the Transaction Documents and delivered the same to the Title Company
(other than this Agreement, which shall have been delivered to the Purchaser),
(ii) executed and delivered the Deed of Trust in the form attached hereto as
Exhibit D to the Title Company, for recordation in the Office of the Recorder of
Santa ▇▇▇▇▇ County, and the Title Company shall have issued or committed to
issue to Purchaser Title Company's lender's policy of title insurance (ALTA 1970
form) for $10,560,000, insuring the second lien priority of the Deed of Trust,
such policy of title insurance to be in conformity with the Proforma Policy
attached hereto as Exhibit F, provided that Purchaser shall be the beneficiary,
and (iii) executed and delivered the Security Agreement in the form attached
hereto as Exhibit E.
(b) No Delisting of Common Stock. The Common Stock (i) shall be
designated for quotation or listed on the Nasdaq National Market (the "Principal
Market") and (ii) shall not have been suspended by the Commission or the
Principal Market from trading on the Principal Market nor shall suspension by
the Commission or the Principal Market have been threatened either (A) in
writing by the Commission or the Principal Market or (B) by the Company falling
below the minimum listing maintenance requirements of the Principal Market; and
the Conversion Shares issuable upon conversion of the Note (without regard to
any limitations on conversions) shall be designated for quotation or listed upon
the Principal Market.
(c) Representations and Warranties; Covenants. The representations
and warranties of the Company shall be true, correct and complete in all
respects as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date (which shall be true, correct and complete as of such date)) and the
Company shall have performed, satisfied and complied with in all respects the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. The Purchaser shall have received a certificate, executed by the principal
financial officer of the Company, dated as of the Closing Date, to the foregoing
effect.
(d) Reservation of Common Stock. As of the Closing Date or as soon
as possible thereafter, the Company shall have reserved out of its authorized
and unissued Common Stock, solely for the purpose of effecting the conversion of
the Note, 3,000,000 shares of its Common Stock and shall have sufficient
authorized and unissued shares of Common Stock to reserve such amount. If such
condition is waived, in whole or in part, by the Purchaser, or if an extension
to fulfill the same is granted, Section 4(e) shall be applicable.
(e) Good Standing Certificates. The Company shall have delivered
to Purchaser a certificate evidencing the incorporation and good standing of the
Company in Massachusetts issued by the Secretary of the Commonwealth of
Massachusetts as of a date within ten days of the Closing Date and a certified
copy of the Company's articles of organization, certified by the Secretary of
the Commonwealth of Massachusetts, as of a date within ten days of the Closing
Date.
(f) Certificate of the Clerk. The Company shall have delivered to
such Purchaser a certificate of the Clerk of the Company, in the form attached
hereto as Exhibit G and dated as of the Closing Date, certifying as to adoption
without subsequent modification or amendment of the form
-18-
of resolutions of the Board of Directors of the Company consistent with Section
3(b) of this Agreement and certifying as to the Company's articles of
organization and by-laws, each as in effect at the Closing.
(g) Filings; Authorizations. The Company shall have made all
filings under all applicable federal and state securities laws necessary to
consummate the issuance of the Securities pursuant to this Agreement in
compliance with such laws, except for any filings that may be made after the
Closing.
(h) No Injunctions. No temporary restraining order, preliminary or
permanent injunction or other order or decree, and no other legal restraint or
prohibition shall exist which prevents or arguably prevents the consummation of
the transactions contemplated by the Transaction Documents, nor shall any
proceeding have been commenced or threatened with respect to the foregoing.
(i) No Material Adverse Effect. Between the time of execution of
this Agreement and the Closing Date, no Material Adverse Effect shall occur or
become known (whether or not arising in the ordinary course of business).
(j) Canadian Securities Clearance. The Company shall have received
an order, in a form reasonably acceptable to the Purchaser, from the Quebec
Securities Commission granting relief from the registration and prospectus
requirements under the securities laws of the Province of Quebec in connection
with the issuance by the Company of the Note to the Purchaser, which order shall
not impose any restrictions or conditions on (i) the conversion of the Note, or
(ii) the sale of any or all of the shares of Common Stock underlying the Note
provided that such sale is through an exchange or market outside of the Province
of Quebec.
(k) Approval by the Company's Board of Directors. The Transaction
Documents shall have been approved by the Board of Directors of the Company, in
the form hereof and, if attached as an Exhibit hereto, in the form so attached,
at a general or special meeting in accordance with Company by-laws, and other
requirements.
SECTION 7. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be deemed to be a contract made under the laws of the State of
California, and for all purposes shall be, governed by, and considered in
accordance with, the law of the State of California. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in Santa ▇▇▇▇▇ County, California, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices
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to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. 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 in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other parties hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(c) Headings. The headings of this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(d) Entire Agreement. This Agreement, the Note and the documents
referenced herein and therein constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the Note, the Registration
and Standstill Agreement and the Voting Agreement supersede all prior agreements
and understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(e) Amendments. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and Purchaser.
(f) Waivers. No provision of this Agreement may be amended or
waived other than by an instrument in writing signed by the Company and the
Purchaser. No consideration shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.
(g) Expenses. Except as otherwise provided herein, the Company and
Purchaser shall bear their own legal and other expenses with respect to this
Agreement and the transactions contemplated hereby.
(h) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided that such notice is also delivered via regular mail; or (iii) 1
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to
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the party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
Sipex Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, CFO
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Day
If to Purchaser, to its address and facsimile number set forth on the
signature page hereto executed by it, with copies to such Purchaser's
representatives as set forth thereon, or at such other address and/or facsimile
number and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party 5 days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission, or (C) provided by a courier or overnight courier
service shall be rebuttal evidence of personal service, receipt by facsimile,
receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
(i) Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(j) Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(k) 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
-21-
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(l) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser.
Purchaser may assign its rights under this Agreement to any person or persons to
whom the Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the Purchaser.
(m) Survival. Unless this Agreement is terminated under Section
8(o) of this Agreement, the representations and warranties of the Company and
the Purchaser contained in Sections 2 and 3 of this Agreement and the agreements
and covenants set forth in Sections 3, 4 and 5 of this Agreement shall survive
until such time as no Securities remain outstanding. Purchaser shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
(n) Publicity. On or promptly following the Closing Date, the
Company shall file a Form 8-K describing the terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act,
and attaching the material Transaction Documents (including, without limitation,
this Agreement and the form of Note, Registration and Standstill Agreement and
Voting Agreement as exhibits to such filing (including all attachments, the "8-K
Filing"). Subject to the foregoing, neither the Company nor Purchaser shall
issue 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 Purchaser (although the Purchaser shall
be consulted by the Company in connection with any such press release prior to
its release and shall be given the opportunity to review its contents), to make
any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations. Each of the
Company and the Purchaser shall have the right to approve before issuance any
press releases or any other public statements by the other party with respect to
the transactions contemplated by the Transaction Documents.
(o) Termination. In the event that the Closing shall not have
occurred with respect to the Purchaser on or before 30 Business Days from the
date hereof due to the Company's or such Purchaser's failure to satisfy the
conditions set forth in Sections 6 and 7 of this Agreement (and the nonbreaching
party's failure to waive such unsatisfied conditions), the nonbreaching party
shall have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any
non-breaching party to any other party, and the Company shall return any and all
funds paid hereunder to the Purchaser no later than the close of business on the
Business Day following such termination; provided, however, that if this
Agreement is terminated pursuant to this Section 8(o).
(p) Remedies. Purchaser and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such
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holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the
event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Purchaser. The Company therefore agrees that the Purchaser shall
be entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and without posting a bond or
other security.
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IN WITNESS WHEREOF, the parties have caused this Securities Purchase
Agreement to be duly executed as of the date first written above.
"COMPANY"
SIPEX CORPORATION
By: /s/ Walid Maghribi
-----------------------------------------
Name: Walid Maghribi
Title: Chief Executive Officer and President
[Signature of the Purchaser on Following Page]
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
"PURCHASER"
ALONIM INVESTMENTS INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
(signature of authorized representative)
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Its: Attorney
Address: 237 Hymus; ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Tax I.D. or SSN: ________________________
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
EXHIBIT A
FORM OF NOTE
EXHIBIT B
FORM OF REGISTRATION AND STANDSTILL AGREEMENT
EXHIBIT C
FORM OF VOTING AGREEMENT
EXHIBIT D
FORM OF DEED OF TRUST
EXHIBIT E
FORM OF SECURITY AGREEMENT
EXHIBIT F
PROFORMA POLICY
EXHIBIT G
CERTIFICATE OF THE CLERK
SCHEDULE A
WIRE INSTRUCTIONS