EXHIBIT 4.2
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Between
GENUS, INC.,
SOUTHBROOK INTERNATIONAL INVESTMENTS,
LTD.,
▇▇▇▇▇▇▇▇ INVESTMENTS L.P.,
MONTROSE INVESTMENTS, LTD,
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, L.P.
and
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, LTD.
Dated as of February 2, 1998
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated
as of February 2, 1998, between Genus, Inc., a California corporation (the
"COMPANY"), and Southbrook International Investments, Ltd., a corporation
organized and existing under the laws of the British Virgin Islands
("SOUTHBROOK"), ▇▇▇▇▇▇▇▇ Investments L.P., a Delaware limited partnership
("▇▇▇▇▇▇▇▇"), Montrose Investments, Ltd, a Cayman Islands exempt limited
partnership ("MONTROSE"), ▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund, L.P., a New
York limited partnership ("▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic
Growth Fund, Ltd., a Cayman Islands exempt company ("▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED").
Southbrook, Westover, Montrose, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Limited
are each referred to herein as a "PURCHASER" and are collectively referred to
herein as the "PURCHASERS."
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, shares of the Company's 6%
Series A Convertible Preferred Stock, no par value (the "SERIES A
PREFERRED"), and the Company's 6% Series B Convertible Preferred Stock, no
par value (the "SERIES B PREFERRED" and together with the Series A Preferred,
the "PREFERRED STOCK").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and each Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED SHARES
1.1 PURCHASE AND SALE. (a) Subject to the terms and conditions set
forth herein, the Company shall issue and sell to the Purchasers, and the
Purchasers, severally and not jointly, shall purchase from the Company: (i)
100,000 shares of Series A Preferred (the "SERIES A SHARES"); and (ii) up to
100,000 shares of Series B Preferred (the "SERIES B SHARES"); and together
with the Series A Shares, the "SHARES").
(b) The Series A Preferred shall have the respective rights,
preferences and privileges set forth in EXHIBIT A attached hereto (the
"SERIES A TERMS"), which shall be incorporated into a certificate of
determination to be approved by the Purchasers and filed on or prior to the
Series A Closing (as defined below) by the Company with the Secretary of
State of California (the "SERIES A DETERMINATION"). The Series B Preferred
shall have respective rights, preferences and privileges identical to the
Series A Terms, mutatis mutandis, and shall rank pari passu with the Series A
Preferred with regard to dividends, liquidation, voting rights and any other
preferential rights designated therein, except that (i) the Conversion Price
(as defined below) for conversion of the Series B Shares shall be determined
as of the Original Issue Date (as defined below) for such Series B Shares and
(ii) the Initial Conversion Price for the Series B Shares shall be equal to
110% of the average Per Share Market Value for the 30 Trading Days
immediately preceding the Original Issue Date for the Series B Shares.
The Series B Preferred shall be authorized pursuant to a certificate of
determination prepared by the Company, subject to the approval of the
Purchasers, and filed at or prior to the Series B Closing Date (as defined
below), by the Company with the Secretary of State of California (such
certificate of determination, together with the Series A Determination, are
referred to as the "CERTIFICATES OF DETERMINATION").
For purposes of this Agreement, "CONVERSION PRICE," "ORIGINAL ISSUE
DATE," "CONVERSION DATE," "TRADING DAY" and "PER SHARE MARKET VALUE" shall
have the meanings set forth in EXHIBIT A; and "MARKET PRICE" as at any date
shall mean the average Per Share Market Value for the five (5) Trading Days
immediately preceding such date.
1.2 PURCHASE PRICE. The purchase price per Share shall be $50.00.
1.3 THE CLOSINGS.
(a) THE SERIES A CLOSING. (i) The closing of the purchase and
sale of the Series A Shares (the "SERIES A CLOSING") shall take place at the
offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
immediately following the execution hereof or such later date as the parties
shall agree, but not prior to the date that the conditions set forth in
Section 4.1 have been satisfied or waived by the appropriate party nor later
than February 10, 1998, provided, however, that if all conditions for such
closing (except those conditions which must be satisfied at such closing)
other than the filing of the Series A Determination have been satisfied by
February 10, 1998, the date for such closing may be extended to a date no
later than February 13, 1998. The date of the Series A Closing is
hereinafter referred to as the "SERIES A CLOSING DATE." At the Series A
Closing, the Company shall sell and issue to the Purchasers, and the
Purchasers shall, severally and not jointly, purchase from the Company,
100,000 Series A Shares for an aggregate purchase price of $5,000,000 (the
"SERIES A PURCHASE PRICE").
(ii) At the Series A Closing, (a) the Company shall deliver
to the Purchasers (i) one or more stock certificates representing the Series
A Shares purchased by such Purchaser as set forth next to such Purchaser's
name on SCHEDULE 1 attached hereto, each registered in the name of such
Purchaser, (ii) Warrants in the form of EXHIBIT B (the "SERIES A WARRANTS")
to purchase an aggregate of 300,000 shares of the Company's common stock, no
par value (the "COMMON STOCK") at an exercise price equal to 125% of the
closing bid price of the Common Stock on the day prior to the Series A
Closing Date, exercisable for three years from the Original Issue Date, each
registered in the name of such Purchaser and in the amounts set forth in
SCHEDULE 1 and (iii) all other documents, instruments and writings required
to have been delivered at or prior to the Series A Closing by the Company
pursuant to this Agreement and the Registration Rights Agreement, dated the
date hereof, by and between the Company and the Purchasers, in the form of
EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT"), and (b) each Purchaser shall
deliver to the Company the portion of the Series A Purchase Price set forth
next to its name on SCHEDULE 1, in United States dollars in immediately
available funds by wire transfer to an account designated in writing by the
Company for
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such purpose prior to the Series A Closing Date, and all documents,
instruments and writings required to have been delivered at or prior to the
Series A Closing by such Purchaser pursuant to this Agreement and the
Registration Rights Agreement.
(b) THE SERIES B CLOSING. (i) Subject to the terms and conditions
set forth in this Agreement, either party shall, if the average Per Share
Market Value for the thirty Trading Days prior to the date of the Series B
Subsequent Financing Notice is greater than $4.00, have the right to deliver
a written notice to the other party (a "SERIES B SUBSEQUENT FINANCING
NOTICE") requiring such other party to either sell or buy, as the case may
be, the Series B Shares for an aggregate purchase price of $5,000,000 (the
"SERIES B PURCHASE PRICE"). Either party may deliver a Series B Subsequent
Financing Notice to the other party no earlier than 90 days after the
effective date of the Underlying Shares Registration Statement (as defined in
the Registration Rights Agreement) relating to the securities issued at the
Series A Closing Date and no later than July 27, 1999. At the Series B
Closing each Purchaser shall be obligated (subject to the terms and
conditions herein) to purchase such portion of such Series B Shares as equals
such Purchaser's pro rata portion of the Series A Purchase Price. The
closing of the purchase and sale of the Series B Shares (the "SERIES B
CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ on such date
indicated in the Series B Subsequent Financing Notice (which may not be prior
to the 15th Trading Day or subsequent to the 30th Trading Day after receipt
by either party of the Subsequent Financing Notice, or as otherwise agreed to
by the parties); PROVIDED that in no case shall the Series B Closing take
place unless and until the conditions listed in Section 4.2 have been
satisfied or waived by the appropriate party. The date of the Series B
Closing is hereinafter referred to as the "SERIES B CLOSING DATE."
(ii) At the Series B Closing, (a) the Company shall deliver
to each Purchaser (i) a pro rata portion of the Series B Shares (determined
by reference to the amount of Series A Shares issued and sold at the Series A
Closing) to be issued and sold thereat (or such other amount upon which the
parties may agree), registered in the name of the appropriate Purchaser, (ii)
a pro rata portion of Warrants (determined by reference to the amount of
Series A Warrants issued and sold at the Series A Closing) in the form of
EXHIBIT B (the "SERIES B WARRANTS", and together with the Series A Warrants,
the "WARRANTS") to purchase an aggregate of 300,000 shares of Common Stock at
an exercise price equal to 125% of the closing bid price of the Common Stock
on the day prior to the Series B Closing Date, exercisable for three years
from the Original Issue Date, each registered in the name of such Purchaser
and (iii) the legal opinion referenced in Section 4.2(b)(xii), substantially
in the form attached hereto as EXHIBIT D, and (3) all other documents,
instruments and writings required to have been delivered at or prior to the
Series B Closing by the Company to the Purchasers pursuant to this Agreement;
and (b) each Purchaser shall deliver to the Company (i) its pro-rata portion
of the Series B Purchase Price in United States dollars in immediately
available funds by wire transfer to an account designated in writing by the
Company for such purpose on or prior to the Series B Closing Date and (ii)
all documents, instruments and writings required to have been delivered at or
prior to the Series B Closing by such Purchaser pursuant to this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws of
the State of California, with the requisite corporate power and authority to
own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set forth
in SCHEDULE 2.1(a) to the disclosure letter dated the date hereof, delivered
by the Company to the Purchasers and made a part hereof (the "DISCLOSURE
LETTER") (collectively the "SUBSIDIARIES"). Each of the Subsidiaries is a
corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the full corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Each of the Company and the Subsidiaries is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, would not, individually or in the
aggregate, (x) adversely affect the legality, validity or enforceability of
the Preferred Stock or any of the Transaction Documents (as defined below) in
any material respect, (y) have or result in a material adverse effect on the
results of operations, assets, prospects, or financial condition of the
Company and the Subsidiaries, taken as a whole or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under
any Transaction Document (any of (x), (y) or (z), being a "MATERIAL ADVERSE
EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the other Transaction
Documents, and otherwise to carry out its obligations hereunder and
thereunder. This Agreement, the Certificates of Determination, the Warrants
and the Registration Rights Agreement are collectively referred to as the
"TRANSACTION DOCUMENTS." The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required
by the Company. Each of the Transaction Documents has been duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, articles, by-laws or other charter documents.
Prior to each of the closing dates the respective Certificate of
Determination will have been filed with
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the Secretary of State of the State of California and will be in full force
and effect, enforceable against the Company in accordance with the terms
thereof.
(c) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is set forth in SCHEDULE 2.1(c) to the
Disclosure Letter. No shares of Common Stock are entitled to preemptive or
similar rights, nor is any holder of the Common Stock entitled to preemptive
or similar rights arising out of any agreement or understanding with the
Company by virtue of any of the Transaction Documents. Except as disclosed
in SCHEDULE 2.1(c) to the Disclosure Letter, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or, except as a result of the purchase and
sale of the Shares and Warrants, securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock. To the knowledge of the Company, except as specifically disclosed in
the SEC Documents (as defined below) or SCHEDULE 2.1(c) to the Disclosure
Letter, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT") or has the right to acquire by
agreement with or by obligation binding upon the Company beneficial ownership
of in excess of 5% of the Common Stock, other than as contemplated hereby. A
"PERSON" means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or
other entity of any kind.
(d) ISSUANCE OF SHARES AND WARRANTS. The Shares and Warrants are
duly authorized and, when issued and paid for in accordance with the terms
hereof, shall be validly issued, fully paid and nonassessable, free and clear
of all liens, encumbrances and rights of first refusal of any kind
(collectively, "LIENS"). The Company, at the Series A Closing Date and the
Series B Closing Date (each a "CLOSING DATE"), as the case may be, will have
and at all times while the Shares and any Warrants are outstanding will
maintain an adequate reserve of duly authorized shares of Common Stock to
enable it to perform its obligations under this Agreement, the Warrants and
the Certificates of Determination with respect to the number of Shares and
Warrants issued and outstanding at such Closing Date and in no circumstances
shall such reserved and available shares of Common Stock be less than the sum
of (i) 200% of the maximum number of shares of Common Stock which would be
issuable upon conversion of the Shares were such conversion effected on the
Original Issue Date for such Shares (ii) the number of shares of Common Stock
issuable upon exercise of the Warrants and (iii) the number of shares Common
Stock which would be issuable upon payment of dividends on the Shares,
assuming each Share is outstanding for two years. The shares of Common Stock
issuable upon conversion of the Shares or exercise of the Warrants and which
may be issued as payment of dividends on the Shares are collectively referred
to herein as the "UNDERLYING SHARES." When issued in accordance with the
Certificates of Determination, and upon exercise of the Warrants and payment
of the exercise price thereof, if any, the Underlying Shares will be duly
authorized, validly issued, fully paid and nonassessable, free and clear of
all Liens.
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(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of its
certificate of incorporation, bylaws or other charter documents (each as
amended through the date hereof) or (ii) subject to obtaining the consents
referred to in Section 2.1(f), conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument (evidencing a
Company debt or otherwise) to which the Company is a party or by which any
property or asset of the Company is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the
Company is subject (including Federal and state securities laws and
regulations), or by which any material property or asset of the Company is
bound or affected, except in the case of each of clauses (ii) and (iii), such
conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have or result
in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any
governmental authority, except for violations which, individually or in the
aggregate, would not have a Material Adverse Effect.
(f) CONSENTS AND APPROVALS. Except as specifically set forth in
SCHEDULE 2.1(f) to the Disclosure Letter, neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other Federal, state, local or other governmental authority or other person
in connection with the execution, delivery and performance by the Company of
the Transaction Documents, other than (i) the filings of the Certificates of
Determination with respect to the Preferred Stock with the Secretary of State
of California, which filings with respect to each of the Series A Shares and
the Series B Shares shall be effected prior to the Series A Closing Date and
the Series B Closing Date, as appropriate, (ii) the filing of Underlying
Shares Registration Statements with the Securities and Exchange Commission
(the "COMMISSION"), which shall be filed in accordance with and in the time
periods set forth in the Registration Rights Agreement, (iii) the
application(s) or any letter(s) acceptable to the Nasdaq Stock Market for the
listing of the Underlying Shares with the Nasdaq Stock Market (and with any
other national securities exchange or market on which the Common Stock is
then listed), and (iv) any filings, notices or registrations under applicable
state securities laws, unless, in all such cases, the failure to obtain such
consent, waiver, authorization or order, or to give such notice or make such
filing or registration would not have or result in, individually or in the
aggregate, a Material Adverse Effect (together with the consents, waivers,
authorizations, orders, notices and filings referred to in SCHEDULE 2.1(f) to
the Disclosure Letter, the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in
the Disclosure Materials (as hereinafter defined) there is no action, suit,
notice of violation, proceeding or investigation pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (Federal,
state, county, local or foreign) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the
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Transaction Documents or the Preferred Stock or (ii) could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party
or by which it or any of its properties is bound, (ii) is in violation of any
order of any court, arbitrator or governmental body applicable to it, or
(iii) is in violation of any statute, rule or regulation of any governmental
authority to which it is subject, except as could not reasonably be expected
to, in any such case (individually or in the aggregate), have or result in a
Material Adverse Effect.
(i) SCHEDULES. The Schedules to this Agreement and the Schedules
to the Disclosure Letter, together with the other Disclosure Materials,
furnished by or on behalf of the Company do not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(j) PRIVATE OFFERING. Neither the Company nor any Person acting
on its behalf has taken or will take any action which might subject the
offering, issuance or sale of the Securities to the registration requirements
of the Securities Act of 1933, as amended (the "SECURITIES ACT").
(k) SEC DOCUMENTS; FINANCIAL STATEMENTS; NO ADVERSE CHANGE. The
Company has filed all reports required to be filed by it under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), including pursuant to
Section 13(a) or 15(d) thereof, for the three years preceding the date hereof
(or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to herein as
the "SEC DOCUMENTS" and, together with the Schedules to this Agreement and
the Schedules to the Disclosure Letter, the "DISCLOSURE MATERIALS") on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such extension.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none
of the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All material
agreements to which the Company is a party or to which the property or assets
of the Company are subject have been filed as exhibits to the SEC Documents
as required; neither the Company nor any of its Subsidiaries is in breach of
any agreement where such breach would have or result in a Material Adverse
Effect. The financial statements of the Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects
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the financial position of the Company as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal year-end audit adjustments.
Since the date of the financial statements included in the Company's last
filed Quarterly Report on Form 10-Q for the period ended September 30, 1997,
there has been no event, occurrence or development that has had a Material
Adverse Effect which has not been specifically disclosed to the Purchasers by
the Company. The Company last filed audited financial statements with the
Commission on March 28, 1997, and has not received any comments from the
Commission in respect thereof.
(l) SENIORITY. No class of equity securities of the Company is
senior to the Preferred Stock in right of payment, whether upon liquidation,
dissolution or otherwise.
(m) INVESTMENT COMPANY. The Company is not, and is not controlled
by or under common control with an affiliate (an "AFFILIATE") of, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(n) CERTAIN FEES. Except for fees payable to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset
Management, LLC ("BSAM") pursuant to Section 3 of the letter agreement dated
January 9, 1998 between the Company and BSAM, as amended (the "ENGAGEMENT
LETTER") and a finder's fee payable to CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. in connection
with the introduction of BSAM to the Company (the parties hereto acknowledge
that CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. acted merely as a finder and not as an agent of
either the Purchasers or the Company and will not and has not, in connection
with the transactions contemplated by this Agreement, provided any other
services to the Purchasers or the Company except for introducing BSAM to the
Company), no fees or commissions will be payable by the Company to any
broker, financial advisor, finder, investment banker, or bank with respect to
the transactions contemplated by this Agreement. The Purchasers shall have
no obligation with respect to any fees or with respect to any claims made by
or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by this
Agreement. The Company shall indemnify and hold harmless each of the
Purchasers, its employees, officers, directors, agents, and partners, and
their respective Affiliates (as such term is defined under Rule 405
promulgated under the Securities Act), from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees.
(o) SOLICITATION MATERIALS. The Company has not (i) distributed
any offering materials in connection with the offering and sale of the
Shares, the Warrants or the Underlying Shares other than the Disclosure
Materials and any amendments and supplements thereto or (ii) solicited any
offer to buy or sell the Shares, the Warrants or the Underlying Shares by
means of any form of general solicitation or advertising. None of the
Disclosure Materials or any other information provided to the Purchasers by
or on behalf of the Company contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
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(p) FORM S-3 ELIGIBILITY. The Company is, and at each Closing
Date will be, eligible to register securities for resale with the Commission
under Form S-3 promulgated under the Securities Act.
(q) EXCLUSIVITY. The Company shall not issue and sell the
Preferred Stock to any Person other than the Purchasers pursuant to this
Agreement other than with the specific prior written consent of each of the
Purchasers.
(r) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The Company
has not in the two years preceding the date hereof received notice (written
or oral) from any stock exchange, market or trading facility on which the
Common Stock is or has been listed (or on which it has been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange or market. Immediately prior to and giving
effect to the transactions contemplated in this Agreement, the Company is in
compliance with all such maintenance requirements.
(s) PATENTS AND TRADEMARKS. The Company has, or has rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights (collectively,
the "INTELLECTUAL PROPERTY RIGHTS") which are necessary for use in connection
with its business, as currently conducted and as described in the SEC
Documents, and which the failure to so have would have a Material Adverse
Effect. Except as disclosed in SCHEDULE 2.1(s) to the Disclosure Letter, to
the best knowledge of the Company, there is no existing infringement by
another Person of any of the Intellectual Property Rights which are necessary
for use in connection with the Company's business.
(t) ACKNOWLEDGEMENT OF DILUTION. The Company acknowledges that
the issuance of the Underlying Shares upon (i) conversion of the Shares and
payment of dividends thereon in accordance with the Certificates of
Determination and (ii) exercise of the Warrants may result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its
obligation to issue Underlying Shares upon (x) conversion of the Shares and
payment of dividends thereon in accordance with the Certificates of
Determination and (y) upon exercise of the Warrants is unconditional and
absolute subject to the limitations set forth herein in the Certificate of
Determination or pursuant to the Warrants, regardless of the effect of any
such dilution.
(u) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
described on SCHEDULE 2.1(u) to the Disclosure Letter, (A) the Company has
not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority which has
not been satisfied and (B) no Person, including, but not limited to, current
or former shareholders of the Company, underwriters, brokers or agents, has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by this
Agreement or any other Transaction Document.
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(v) TITLE. The Company owns no real property and, except as
disclosed in SCHEDULE 2.1(v) to the Disclosure Letter, the Company and the
Subsidiaries have good and marketable title to all personal property owned by
them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all Liens, except for liens, claims or
encumbrances as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by
the Company and its Subsidiaries. Any real property and facilities held
under lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries.
(w) REGULATORY PERMITS. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
Federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Documents except where the
failure to possess such permits would not, individually or in the aggregate,
have a Material Adverse Effect ("MATERIAL PERMITS"), and neither the Company
nor any such Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
(a) ORGANIZATION; AUTHORITY. Each Purchaser is a corporation duly
incorporated or a limited partnership duly formed, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
formation with the requisite power and authority, corporate or otherwise, to
enter into and to consummate the transactions contemplated hereby and by the
Registration Rights Agreement and otherwise to carry out its obligations
hereunder and thereunder. The purchase by such Purchaser of the Shares and
the Warrants hereunder has been duly authorized by all necessary action on
the part of such Purchaser. Each of this Agreement and the Registration
Rights Agreement has been duly executed and delivered by such Purchaser and
constitutes the valid and legally binding obligation of such Purchaser,
enforceable against such Purchaser, in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity.
(b) INVESTMENT INTENT. Each Purchaser is acquiring the Shares,
the Warrants and the Underlying Shares for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Shares, Warrants or Underlying Shares or any part thereof or interest
therein, without prejudice, however, to such Purchaser's right, subject to
the provisions of this Agreement and the Registration Rights Agreement, at
all times to sell or otherwise dispose of all or any part of such Shares,
Warrants or Underlying Shares pursuant to an effective registration statement
under the Securities Act and in compliance with applicable State securities
laws or under an exemption from such registration.
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(c) PURCHASER STATUS. At the time such Purchaser was offered the
Shares and the Warrants, it was, and at the date hereof, it is, and at each
Closing Date and each exercise date under the Warrants, it will be, an
"accredited investor" as defined in Rule 501(a) under the Securities Act.
(d) EXPERIENCE OF PURCHASER. Each Purchaser either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Shares,
the Warrants and the Underlying Shares, and has so evaluated the merits and
risks of such investment.
(e) ABILITY OF PURCHASER TO BEAR RISK OF INVESTMENT. Each
Purchaser is able to bear the economic risk of an investment in the Shares,
the Warrants and the Underlying Shares and, at the present time, is able to
afford a complete loss of such investment.
(f) ACCESS TO INFORMATION. Each Purchaser acknowledges receipt of
the Disclosure Materials and further acknowledges that it has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and
to receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Shares, the Warrants and the Underlying
Securities and the merits and risks of investing in the Shares, the Warrants
and the Underlying Securities; (ii) access to information about the Company
and the Company's financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information
which the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with
respect to the investment and to verify the accuracy and completeness of the
information contained in the Disclosure Materials.
(g) RELIANCE. Each Purchaser understands and acknowledges that
(i) the Shares and the Warrants are being offered and sold to the Purchaser
without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under Section
4(2) of the Securities Act or Regulation D promulgated thereunder and (ii)
the availability of such exemption, depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the foregoing representations and
such Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) If any Purchaser should decide to
dispose of Shares or any portion of the Warrants (and upon conversion or
exercise thereof, as the case may be, any of the
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Underlying Shares) held by it, each Purchaser understands and agrees that it
may do so only pursuant to an effective registration statement under the
Securities Act or pursuant to an available exemption from the registration
requirements of the Securities Act. In connection with any transfer of any
Shares or any Underlying Shares other than pursuant to an effective
registration statement or to the Company, the Company may require the
transferor thereof to provide to the Company a written opinion of counsel
experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred securities under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register (i) any transfer of Shares or Warrants by one Purchaser to another
Purchaser, and agrees that no documentation other than executed transfer
documents shall be required for any such transfer, and (ii) any transfer of
Shares or Warrants by any Purchaser to an Affiliate of such Purchaser or to
an Affiliate of another Purchaser, or any transfer among any such Affiliates,
provided that transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act and that the
matters set forth in Sections 2.2(b) through (f) are true with respect to it.
Any such transferee shall be bound by the terms of this Agreement and shall
have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.
(b) Each Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Shares, the
Warrants and the Underlying Shares:
[NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE] [THE SECURITIES REPRESENTED HEREBY HAVE
NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
[FOR SHARES ONLY] THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CONVERSION SET FORTH IN A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF FEBRUARY 2,
1998, EXECUTED BY THE ORIGINAL HOLDER HEREOF. A COPY OF THAT AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICE OF GENUS, INC.
The Underlying Shares issuable upon conversion of the Shares or as
payment of dividends thereon or exercise of the Warrants shall not contain
the legend set forth above if in the written opinion of counsel to the
Company experienced in the area of United States securities laws
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such legend is not required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the
staff of the Commission). The Company agrees that it will provide each
Purchaser, upon request, with a certificate or certificates representing
Underlying Shares, free from such legend at such time as such legend is no
longer required hereunder.
3.2 STOP TRANSFER INSTRUCTION. The Company may not make any notation
on its records or give instructions to any transfer agent of the Company
which enlarge the restrictions of transfer set forth in Section 3.1.
3.3 FURNISHING OF INFORMATION. As long as any Purchaser owns Shares,
Warrants or Underlying Shares, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any
Purchaser owns Shares, Warrants or Underlying Shares, if the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
Act, it will prepare and furnish to the Purchasers and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any holder of Shares may
reasonably request, all to the extent required from time to time to enable
such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in this Section. Upon the request of any such Person, the Company
shall deliver to such Person a written certification of a duly authorized
officer as to whether it has complied with such requirements.
3.4 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall qualify or obtain exemptions for the Underlying
Shares under the securities or Blue Sky laws of such jurisdictions as the
Purchasers may request and shall continue such qualification at all times
through the third anniversary of the last Closing Date; PROVIDED, HOWEVER,
that neither the Company nor its Subsidiaries shall be required in connection
therewith to qualify as a foreign corporation where they are not now so
qualified or to take any action that would subject the Company to general
service of process in any such jurisdiction where it is not then so subject
or subject the Company to any material tax in any such jurisdiction where it
is not then so subject.
3.5 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer
or sale of the Shares, the Warrants or the Underlying Shares in a manner that
would require the registration under the Securities Act of the sale of the
Shares, the Warrants or the Underlying Shares to any Purchaser.
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3.6 CERTAIN AGREEMENTS. As long as any Purchaser owns Shares, the
Company shall not, and shall cause the Subsidiaries not to, without the
consent of the holders of all of the Shares then outstanding, (i) amend its
articles of incorporation, bylaws or other charter documents so as to
adversely affect any rights of any Purchaser; (ii) declare, authorize, set
aside or pay any dividend or other distribution with respect to the Common
Stock except as permitted under the Certificates of Determination and as
would not adversely affect the rights of any Purchaser hereunder or under the
Certificates of Determination; (iii) repay, repurchase or offer to repay,
repurchase or otherwise acquire shares of its Common Stock in any manner; or
(iv) enter into any agreement with respect to any of the foregoing.
3.7 LISTING AND RESERVATION OF UNDERLYING SHARES. (a) The Company
shall (i) not later than the applicable Closing Date prepare and file with
the Nasdaq Stock Market (as well as any other national securities exchange or
market on which the Common Stock is then listed) an additional shares listing
application or a letter acceptable to the Nasdaq Stock Market covering and
listing such number of shares of Common Stock, as required by the
Registration Rights Agreement, (ii) take all steps necessary to cause the
Underlying Shares to be approved for listing in the Nasdaq Stock Market (as
well as on any other national securities exchange or market on which the
Common Stock is then listed) as soon as possible thereafter, and (iii)
provide to the Purchasers evidence of such listing, and the Company shall
maintain the listing of its Common Stock on such exchange.
(b) The Company shall reserve for issuance shares of Common Stock
issuable upon conversion of the Shares and for payment of dividends thereupon
in shares of Common Stock pursuant to the terms of the Certificates of
Determination and upon exercise of the Warrants in accordance with their
terms the number of shares to be listed on the Nasdaq Stock Market (and such
other national securities exchange or market on which the Common Stock is
then listed or traded) as set forth in Section 3.7(a). Shares of Common
Stock reserved for issuance upon the conversion of the Shares as set forth in
Section 3.7(a) shall be allocated pro rata to each of the Purchasers in
accordance with the amount of Shares issued and delivered to such Purchaser
at each Closing, as applicable.
3.8 NO VIOLATION OF APPLICABLE LAW. Notwithstanding any provision of
this Agreement to the contrary, if the redemption of Shares or Underlying
Shares otherwise required under this Agreement or the Registration Rights
Agreement would be prohibited by the relevant provisions of the California
General Corporations Law, such redemption shall be effected as soon as it is
permitted under such law; PROVIDED, HOWEVER, that from the 5th day after such
redemption notice until such redemption price is paid in full, a late fee on
any such unpaid amount shall accrue at the rate of 15% per annum.
3.9 NOTICE OF BREACHES. (a) The Company and each Purchaser shall give
prompt written notice to the other of any breach of any representation,
warranty or other agreement contained in this Agreement or in the
Registration Rights Agreement, as well as any events or occurrences arising
after the date hereof and prior to, with respect to the Series B Closing, the
Series B Closing Date, which would reasonably be likely to cause any
representation or warranty or other agreement of such party,
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as the case may be, contained herein to be incorrect or breached as of such
Closing Date. However, no disclosure by either party pursuant to this
Section 3.9 shall be deemed to cure any breach of any representation,
warranty or other agreement contained herein or in the Registration Rights
Agreement.
(b) Notwithstanding the generality of Section 3.9(a), the Company
shall promptly notify each Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated hereby and by the Registration
Rights Agreement violates or would violate any written agreement or
understanding between such lender and the Company, and the Company shall
promptly furnish by facsimile to the holders of the Shares a copy of any
written statement in support of or relating to such claim or notice.
(c) The default by any Purchaser of any of its obligations,
representations or warranties under any Transaction Document shall not be
imputed to, and shall have no effect upon, any other Purchaser or affect the
Company's obligations under the Transaction Documents to any non-defaulting
Purchaser.
3.10 CONVERSION OBLIGATIONS OF THE COMPANY. The Company covenants to
convert Shares and to deliver Underlying Shares in accordance with the terms
and conditions and time period set forth in the respective Certificates of
Determination and to deliver Underlying Shares upon exercise of Warrants in
accordance with the terms and conditions and time periods set forth in the
Warrants.
3.11 SUBSEQUENT REGISTRATIONS. Other than Underlying Shares and other
"Registrable Securities" (as defined in the Registration Rights Agreement) to
be registered in accordance with the Registration Rights Agreement, the
Company shall not, for a period of not less than 90 Trading Days after the
date that each Underlying Shares Registration Statement relating to the
securities issued at the Series A Closing Date and the Series B Closing Date
is declared effective by the Commission, without the prior written consent of
the Purchasers, (i) issue or sell any of its or any of its Affiliates' equity
or equity-equivalent securities pursuant to Regulation S promulgated under
the Securities Act, or (ii) register for resale any securities of the
Company. Any days that any Purchaser is unable to sell Underlying Shares
under an Underlying Shares Registration Statement shall be added to such 90
Trading Day period for the purposes of (i) and (ii) above.
3.12 PRESS RELEASE. The Company shall issue a press release in
connection with the transactions contemplated herein, relating to the issue
and sale of the Shares and Warrants to the Purchasers which press release
shall be approved by the Company and BSAM.
3.13 USE OF PROCEEDS. The Company shall use all of the proceeds from
the sale of the Shares for working capital and general corporate purposes and
not for the satisfaction of any portion of Company borrowings or to redeem
Company equity or equity-equivalent securities. Pending application of the
proceeds of this placement in the manner permitted hereby, the Company will
invest such proceeds in interest bearing accounts and/or short-term,
investment grade interest bearing securities.
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3.14 REIMBURSEMENT. In the event that any Purchaser, other than by
reason of its gross negligence or willful misconduct, or the breach of any
representation, warranty or covenant in this Agreement or in connection with
any information furnished by such Purchaser for use in any Registration
Statement, becomes involved in any capacity in any action, proceeding or
investigation brought by or against any person, including stockholders of the
Company, in connection with or as a result of the consummation of the
transactions contemplated pursuant to the Transaction Documents, the Company
will reimburse such Purchaser for its legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith.
The reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliate of each Purchaser and
partners, directors, agents, employees and controlling persons (if any), as
the case may be, of each Purchaser and any such affiliate, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, each Purchaser and any such
affiliate and any such person. The Company also agrees that no Purchaser or
any such affiliates, partners, directors, agents, employees or controlling
persons shall have any liability to the Company or any person asserting
claims on behalf of or in right of the Company in connection with or as a
result of the consummation of the Transaction Documents except to the extent
that any losses, claims, damages, liabilities or expenses incurred by the
Company result from the gross negligence or willful misconduct of such
Purchaser or entity in connection with the transactions contemplated by this
Agreement.
3.15 SERIES B OBLIGATION. Notwithstanding anything to the contrary
contained in this Agreement, if there is a Change of Control prior to the
Series B Closing Date, neither the Company nor the Purchasers shall be
obligated to sell or to purchase the Series B Shares.
3.16 CONVERSION LIMITATION. In no event shall a Purchaser be permitted
to convert any shares of Preferred Stock in excess of the number of such
shares upon the conversion of which, (x) the number of shares of Common Stock
beneficially owned by such Purchaser (other than shares of Common Stock
issuable upon conversion of shares of Preferred Stock) PLUS (y) the number of
shares of Common Stock issuable upon the conversion of such shares of
Preferred Stock, would be equal to or exceed (z) 4.999% of the number of
shares of Common Stock then issued and outstanding, including shares issuable
on conversion of the Preferred Stock held by such Purchaser after application
of this Section 3.16. As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
thereunder. To the extent that the limitation contained in this Section 3.16
applies, the determination of whether shares of Preferred Stock are
convertible (in relation to other securities owned by a Purchaser) and of
which shares of Preferred Stock are convertible shall be in the sole
discretion of such Purchaser, and the submission of shares of Preferred Stock
for conversion shall be deemed to be such Purchaser's determination of
whether such shares of Preferred Stock are convertible (in relation to other
securities owned by a Purchaser) and of which shares of Preferred Stock are
convertible, in each case subject to such aggregate percentage limitation,
and the Company shall have no obligation to verify or confirm the accuracy of
such determination. This paragraph may be amended (i) in order to clarify an
ambiguity
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or otherwise to give effect to such limitation, by the board of directors of
the Company and the holders of two-thirds (2/3) of the shares of Preferred
Stock then outstanding. Nothing contained herein shall be deemed to
restrict the right of a Purchaser to convert such shares of Preferred Stock
at such time as such conversion will not violate the provisions of this
paragraph. The provisions of this Section 3.16 may be waived by a Purchaser
as to itself (and solely as to itself) upon not less than 65 days prior
notice to the Company, and the provisions of this Section 3.16 shall continue
to apply until such 65th day (or later, if stated in the notice of waiver).
3.17 PAYMENT RESTRICTIONS. Notwithstanding any provision of the
Transaction Documents (as defined in the Purchase Agreement) to the contrary,
if payment of any amounts payable by the Company to the Purchasers under the
Transaction Documents, including, without limitation, any amounts payable as
dividends, penalties or upon redemption of Shares or Underlying Shares, would
be prohibited in the absence of consent from Sumitomo Bank of California
pursuant to the Company's Credit Agreement dated August 15, 1997 with
Sumitomo Bank of California ("SUMITOMO"), as the same may be amended,
supplemented, superseded or replaced from time to time or any replacement
facility (the "CREDIT AGREEMENT"), then the Company shall use its best
efforts to obtain such consent as promptly as practicable after any such
payment is required, and any amounts payable by the Company with respect to
its obligation to pay any such dividends, penalties, or redemption payments
shall continue to accrue until such consent is obtained. Nothing contained in
this Section 3.17 shall be construed as a waiver by the Purchasers of any
rights they may have under any of the Transaction Documents.
3.18 BANK LOAN PAYMENT RESTRICTIONS. The Company hereby covenants it
will not, from the date of this Agreement through the later of (i) the date
which is 180 days from the date of this Agreement and (ii) the date which is
90 days subsequent to the date of the effectiveness of the Registration
Statement required to be filed by the Company with respect to the Series A
Shares under the Registration Rights Agreement, voluntarily repay or pay down
any portion of any of its bank debt, including, without limitation, any
amounts due under the Credit Agreement, and the Company hereby further
covenants that it will not, from the date of the Series B Closing Date
through the later of (i) the date which is 180 days from the Series B Closing
Date and (ii) the date which is 90 days subsequent to the date of the
effectiveness of the Registration Statement required to be filed by the
Company with respect to the Series B Shares under the Registration Rights
Agreement, repay or pay down any portion of any of its bank debt, including,
without limitation, any amounts due under the Credit Agreement; provided,
however, that the foregoing shall not prohibit the Company from paying any
such bank debt upon acceleration of such bank debt or at maturity.
3.19 STANDSTILL. The Company hereby agrees that, except for the
transactions contemplated by this Agreement, it will not, without the prior
written consent of the Purchasers, enter into any agreement to sell or sell
any of its or any of its Affiliates' equity or equity-equivalent securities
for the 45 day period subsequent to the date of this Agreement.
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ARTICLE IV
CONDITIONS
4.1 (a) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL THE SERIES A SHARES. The obligation of the Company to sell the Series A
Shares and the Series A Warrants hereunder is subject to the satisfaction or
waiver by the Company, at or before the Series A Closing, of each of the
following conditions:
(i) ACCURACY OF THE PURCHASERS' REPRESENTATIONS AND
WARRANTIES. The representations and warranties of each Purchaser shall be
true and correct in all material respects as of the date when made and as of
the Series A Closing Date, as though made on and as of such date;
(ii) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or prior to the
Series A Closing; and
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Registration Rights Agreement relating
to the issuance or conversion of any of the Shares or exercise any of the
Warrants.
(b) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE THE SERIES A SHARES. The obligation of each Purchaser hereunder to
acquire and pay for the Series A Shares and the Series A Warrants is subject
to the satisfaction or waiver by such Purchaser, at or before the Series A
Closing, of each of the following conditions:
(i) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company set forth in
this Agreement and in the Registration Rights Agreement shall be true and
correct in all material respects as of the date when made and as of the
Series A Closing Date as though made on and as of such date;
(ii) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Series A Closing;
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the
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transactions contemplated by this Agreement or the Registration Rights
Agreement relating to the issuance or conversion of any of the Shares or
exercise of any of the Warrants.
(iv) ADVERSE CHANGES. Since the date of the financial
statements included in the Company's Quarterly Report on Form 10-Q or Annual
Report on Form 10-K, whichever is more recent, last filed prior to the date
of this Agreement, no event which had a Material Adverse Effect and no
material adverse change in the financial condition or prospects of the
Company shall have occurred which is not disclosed in the Disclosure
Materials (for purposes hereof changes in the market price of the Common
Stock may be considered in determining whether there has occurred an event
which has had a Material Adverse Effect or whether a material adverse change
has occurred);
(v) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading
in the Common Stock shall not have been suspended by the Commission or on the
Nasdaq Stock Market which suspension shall remain in effect.
(vi) LISTING OF COMMON STOCK. The Company shall have filed
a listing application to list those shares required to be listed by the
Registration Rights Agreement in connection with the Series A Closing for
trading on the Nasdaq Stock Market;
(vii) LEGAL OPINION. The Company shall have delivered to the
Purchasers the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, professional
corporation, outside counsel to the Company, in substantially the form
attached hereto as EXHIBIT D;
(viii) REQUIRED APPROVALS. All Required Approvals shall have
been obtained other than those relating solely to the Series B Shares;
(ix) SHARES OF COMMON STOCK. On or prior to the Series A
Closing Date, the Company shall have duly reserved the number of Underlying
Shares required by the Transaction Documents to be reserved for issuance upon
conversion of Series A Shares and payment of dividends thereon and exercise
of the Warrants;
(x) DELIVERY OF STOCK CERTIFICATES. The Company shall have
delivered to each Purchaser or such Purchaser's designee the stock
certificate(s) representing the Series A Shares, registered in the name of
such Purchaser, each in form satisfactory to the Purchaser;
(xi) REGISTRATION RIGHTS AGREEMENT. The Company shall have
executed and delivered the Registration Rights Agreement;
(xii) CERTIFICATE OF DETERMINATION. The Series A
Determination shall have been duly filed with the Secretary of State of
California, and the Company shall have delivered a copy thereof to the
Purchaser certified as filed by the office of the Secretary of State of
California;
-19-
(xiii) CHANGE OF CONTROL. No Change of Control (as hereafter
defined) shall have occurred between the date hereof and the Series A Closing
Date;
(xiv) TRANSFER AGENT INSTRUCTIONS. The Irrevocable Transfer
Agent Instructions, in the form of EXHIBIT E attached hereto, shall have been
delivered to and acknowledged in writing by the Company's transfer agent;
(xv) BANK WAIVER. The Company shall have delivered to the
Purchasers a fully executed waiver and consent or amendment to the Credit
Agreement, which waiver or amendment shall be in form and substance
satisfactory to the Purchasers, of Sumitomo (the "BANK WAIVER"), which shall
permit the Company under the provisions of the Credit Agreement to pay up to
$250,000 to the Purchasers in payment of any penalties due to the Purchasers
under any of the Transaction Documents so long as there is no event of
default under the Credit Agreement;
(xvi) SUBSIDIARY. Ionex/Hei Corporation shall be in good
standing in the State of Massachusetts; and
(xvii) OFFICER'S CERTIFICATE. On the Series A Closing Date,
the Company shall deliver to the Purchasers an Officer's Certificate dated
the Series A Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations, warranties and
covenants as of such Series A Closing Date and confirming the compliance by
the Company with the conditions precedent set forth in this Section 4.1 as
of such Series A Closing Date.
4.2 (a) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL
THE SERIES B SHARES. The obligation of the Company to sell the Series B
Shares and the Series B Warrants hereunder is subject to the satisfaction or
waiver by the Company, at or before the Series B Closing, of each of the
following conditions:
(i) ACCURACY OF THE PURCHASERS' REPRESENTATIONS AND
WARRANTIES. The representations and warranties of each Purchaser shall be
true and correct in all material respects as of the date when made and as of
the Series B Closing Date, as though made on and as of such date;
(ii) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or prior to the
Series B Closing Date; and
(iii) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Registration Rights Agreement relating
to the issuance or conversion of any of the Shares or exercise of any of the
Warrants.
-20-
(b) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE THE SERIES B SHARES. The obligation of each Purchaser hereunder to
acquire and pay for the Series B Shares and the Series B Warrants is subject
to the satisfaction or waiver by each Purchaser, at or before the Series B
Closing of each of the following conditions:
(i) CLOSINGS. Prior to the Series B Closing, the Series A
Closing shall have occurred;
(ii) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company contained
herein and in the Registration Rights Agreement shall be true and correct in
all material respects as of the date when made and as of the Series B Closing
Date, as though made on and as of such date;
(iii) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by
the Company at or prior to the Series B Closing Date;
(iv) UNDERLYING SHARES REGISTRATION STATEMENTS. With respect
to the Series B Closing, the Underlying Shares Registration Statement with
respect to the Underlying Shares issuable on conversion of all outstanding
Series A Shares and as payment of dividends thereon and exercise of the
Warrants shall have been declared effective under the Securities Act by the
Commission; and on such Closing Date such Underlying Shares Registration
Statement shall be effective, not subject to any stop order and not be
subject to any suspension pursuant to Section 3(p) of the Registration Rights
Agreement, and shall have been effective and shall not have been subject to
any stop order for the ninety (90) days prior to such Closing Date and no
stop order shall be pending or threatened as at such Closing Date;
(v) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Registration Rights Agreement relating
to the issuance or conversion of any of the Shares or exercise of any of the
Warrants;
(vi) ADVERSE CHANGE TO STOCK PRICE. During the period which
is 30 Trading Days prior to the date of the Series B Closing, the closing bid
price on the Common Stock shall not have decreased by more than 35% from the
highest closing bid price during such period;
(vii) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading
in the Common Stock shall not have been suspended by the Commission or on the
Nasdaq Stock Market (except for any suspension of trading of limited duration
solely to permit dissemination of material information regarding the Company);
-21-
(viii) LISTING OF COMMON STOCK. The Common Stock shall have
been at all times since the Series A Closing Date, and on the Series B
Closing Date be listed for trading on the Nasdaq Stock Market or Nasdaq
SmallCap Market;
(ix) CHANGE OF CONTROL. No Change of Control in the Company
shall have occurred. "CHANGE OF CONTROL" means the occurrence of any of (i)
an acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of in excess of 50% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's board of
directors which is not approved by those individuals who are members of the
Company's board of directors on the date hereof in one or a series of related
transactions, (iii) the merger of the Company with or into another entity,
consolidation or sale of all or substantially all of the assets of the
Company in one or a series of related transactions or (iv) the execution by
the Company of an agreement to which the Company is a party or by which it is
bound, providing for any of the events set forth above in (i), (ii) or (iii);
(x) LEGAL OPINION. The Company shall have delivered to the
Purchasers the opinion of the Company's outside counsel, in substantially the
form attached hereto as EXHIBIT D dated the applicable Closing Date;
(xi) REQUIRED APPROVALS. All Required Approvals shall have
been obtained;
(xii) SHARES OF COMMON STOCK. On the Series B Closing Date,
the Company shall have duly reserved the number of Underlying Shares required
by this Agreement to be reserved for issuance upon conversion of Series B
Shares, respectively, and payment of dividends thereon;
(xiii) DELIVERY OF STOCK CERTIFICATES. The Company shall have
delivered to each Purchaser or such Purchaser's designee the stock
certificate(s) representing the Shares, being purchased at such Closing,
registered in the name of such Purchaser, each in form satisfactory to such
Purchaser;
(xiv) PERFORMANCE OF CONVERSION/EXERCISE OBLIGATIONS. The
Company shall have (a) delivered Underlying Shares upon conversion of Shares
and otherwise performed its obligations in accordance with the terms,
conditions and timing requirements of each Certificate of Determination and
(b) delivered Underlying Shares upon exercise of the Warrants and otherwise
performed its obligations in accordance with the terms of the Warrants;
(xv) SHAREHOLDER APPROVAL. If due to the issuance or
conversion of Shares issued in the Series B Closing, the Company would be
required to receive shareholder approval in order to satisfy the shareholder
approval provisions of the Nasdaq Stock Market, or any other exchange or
market on which the Common Stock is then listed or traded, with respect to
the issuance of 20% or more of a company's capital stock, or any similar
stockholder approval requirements, then the Company shall have satisfied such
shareholder approval requirement;
-22-
(xvi) TRANSFER AGENT INSTRUCTIONS. The Irrevocable Transfer
Agent Instructions, in the form of EXHIBIT E attached hereto, shall have been
delivered to and acknowledged in writing by the Company's transfer agent;
(xvii) BANK WAIVER. So long as the Credit Agreement is in
effect, the Bank Waiver shall be in full force and effect; and
(xviii) OFFICER'S CERTIFICATE. On the Series B Closing Date,
the Company shall deliver to the Purchasers an Officer's Certificate dated
the Series B Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations, warranties and
covenants as of such Series B Closing Date and confirming the compliance by
the Company with the conditions precedent set forth in this Section 4.2 as of
such Series B Closing Date.
ARTICLE V
MISCELLANEOUS
5.1 FEES AND EXPENSES. Each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement, except as
set forth in the Registration Rights Agreement. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance of
the Shares pursuant hereto.
5.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with
the Exhibits and Schedules hereto, including, without limitations, the
Schedules to the Disclosure Letter, the Registration Rights Agreement and
each Certificate of Determination (each when filed) and the Warrants contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, except that the provisions of Section
3 and Section 5 of the Engagement Letter shall survive.
5.3 NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to
have been received (a) upon hand delivery (receipt acknowledged) or delivery
by telex (with correct answer back received), telecopy or facsimile (with
transmission confirmation report) at the address or number designated below
(if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery
(if delivered on a business day after during normal business hours where such
notice is to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall as set forth below each parties
name on SCHEDULE 1, and if to the Company with copies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
-23-
fax: (▇▇▇) ▇▇▇-▇▇▇▇ and if to any Purchaser with copies to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., fax: (▇▇▇) ▇▇▇-▇▇▇▇, or such other
address as may be designated in writing hereafter, in the same manner, by
such person.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchasers; or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it
thereafter.
5.5 HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each of the
Purchasers. No Purchaser may assign this Agreement (other than to an
Affiliate of such Purchaser) or any rights or obligations hereunder without
the prior written consent of the Company, except that any Purchaser may
assign its rights hereunder and under the Transaction Documents without the
consent of the Company as long as such assignee demonstrates to the
reasonable satisfaction of the Company its satisfaction of the
representations and warranties set forth in Section 2.2 and its financial
ability to perform its obligations under the Transaction Documents. This
provision shall not limit a Purchaser's right to transfer securities or
transfer or assign rights hereunder or under the Registration Rights
Agreement.
5.7 NO 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.
5.8 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the
state and Federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or 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 improper. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
-24-
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.
5.9 SURVIVAL. The agreements and covenants contained in Article
III and this Article V shall survive the delivery and conversion of the
Shares pursuant to this Agreement and the representations and warranties of
the Company and the Purchasers contained in Article II shall survive each
Closing hereunder and any conversion of Shares and exercise of the Warrants.
5.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if
such facsimile signature page were an original thereof.
5.11 PUBLICITY. The Company and each Purchaser shall consult with
each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed, except that no prior consent shall
be required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such
public statement. The Company shall not publicly or otherwise disclose the
names of any of the Purchasers without each such Purchaser's prior written
consent.
5.12 SEVERABILITY. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement
shall not in any way be affecting or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision which shall be a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
5.13 REMEDIES. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. Each of the Company and the
Purchasers (severally and not jointly) agree that monetary damages would not
be adequate compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.14 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any
-25
Closing, and no action taken by any Purchaser pursuant hereto or thereto,
shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect
to such obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
5.15 NO RELIANCE. Each party acknowledges that (i) it has such
knowledge in business and financial matters as to be fully capable of
evaluating this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby, (ii) it is not relying on any
advice or representation of the other party in connection with entering into
this Agreement, the other Transaction Documents or such transactions (other
than the representations made in this Agreement or the other Transaction
Documents), (iii) it has not received from such party any assurance or
guarantee as to the merits (whether legal, regulatory, tax, financial or
otherwise) of entering into this Agreement or the other Transaction Documents
or the performance of its obligations hereunder and thereunder, and (iv) it
has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed necessary,
and has entered into this Agreement and the other Transaction Documents based
on its own independent judgment and on the advice of its advisors as it has
deemed necessary, and not on any view (whether written or oral) expressed by
such party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
-26-
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Preferred Stock Purchase Agreement to be duly executed by their respective
authorized persons as of the date first indicated above.
GENUS, INC. SOUTHBROOK INTERNATIONAL INVESTMENTS, LTD
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------ -------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President Title: Attorney-in-fact
and Chief Financial
Officer
▇▇▇▇▇▇▇▇ INVESTMENTS L.P.
By: HBK Investments L.P., as investment manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Agent
MONTROSE INVESTMENTS, LTD.
By: HBK Investments L.P., as investment manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Agent
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Principal
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, LTD.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Principal
SCHEDULE 1
COMPANY:
GENUS, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PURCHASERS:
SOUTHBROOK INTERNATIONAL INVESTMENTS, LTD.
c/o Trippoak Advisors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Portion of Series A Purchase Price - $2,500,000
Series A Shares - 50,000
Number of Shares
underlying Series A Warrant - 150,000
▇▇▇▇▇▇▇▇ INVESTMENTS L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Portion of Series A Purchase Price - $800,000
Series A Shares - 16,000
Number of Shares
underlying Series A Warrant - 48,000
MONTROSE INVESTMENTS, LTD.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Portion of Series A Purchase Price - $1,200,000
Series A Shares - 24,000
Number of Shares
underlying Series A Warrant - 72,000
-28-
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Portion of Series A Purchase Price - $100,000
Series A Shares - 2,000
Number of Shares
underlying Series A Warrant - 6,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, LTD.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Portion of Series A Purchase Price - $400,000
Series A Shares - 8,000
Number of Shares
underlying Series A Warrant - 24,000
-29-
SCHEDULE 2.1
GENUS, INC.
DISCLOSURE LETTER
To: Southbrook International Investments, Ltd., ▇▇▇▇▇▇▇▇ Investments L.P.,
Montrose Investments Ltd., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund, L.P., and
▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund Ltd. (the "Purchasers") under that
certain Convertible Preferred Stock Purchase Agreement, dated as of
February 2, 1998 (the "Purchase Agreement"), and Genus, Inc., a California
corporation (the "Company").
This Disclosure Letter is delivered pursuant to Section 2.1 of the Purchase
Agreement. The disclosure set forth in the attached Schedules represents
exceptions, qualifications and other disclosures pursuant to certain of the
representations and warranties set forth in Section 2.1 of the Purchase
Agreement. Capitalized terms used herein (or in the attached Schedules) and
defined in the Purchased Agreement shall have the meanings ascribed in the
Purchase Agreement, unless the context otherwise requires.
This Disclosure Letter may not be amended or revised without the written
consent of the Company and the Purchasers.
This Disclosure letter may be executed in any number of separate
counterparts, each of which when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one
and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Letter as
of February 12, 1998.
GENUS, INC.,
a California corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice
President and
Chief Financial Officer
Schedule 2.1(a)
ORGANIZATION AND QUALIFICATION
Subsidiaries
Genus Subsidiary Corporation
(a California corporation)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
General Ionex Corporation
(a Massachusetts corporation)
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ionex/HEI Corporation ("Ionex")
(a Massachusetts corporation)
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Genus Europa SARL
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ Evry Cedex, France
011-331-69-89-79-20
Genus Korea, Ltd.
▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇
#▇▇▇-▇, ▇▇▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
Genus, ▇▇
▇▇▇▇ Yokohama West Building
2-3-3 Shin Yokohama, Kouhoku-ku
Yokohama, Japan 222
011-81-45-476-0851
Because Ionex had failed to file Annual Reports as required by the
Secretary of the Commonwealth of Massachusetts, the Secretary of the
Commonwealth had administratively dissolved the corporation. Upon the
Company's filing of the Annual Reports and Application for Revival and
payment of fees, the Secretary of the Commonwealth revived Ionex on February
9, 1998 as if the corporation had not been dissolved.
Schedule 2.1 (c)
CAPITALIZATION
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, no par value, and 2,000,000 shares of Preferred
Stock, no par value. As of December 31, 1997, 16,969,546 shares of Common
Stock were outstanding and no other shares of capital stock were outstanding.
The Company has reserved 1,750,000 shares of Common Stock for issuance
under its 1989 Employee Stock Purchase Plan and as of December 31, 1997,
124,914 shares remained available for future grants. The Company has
reserved 3,503,000 shares of Common Stock for issuance under its 1991
Incentive Stock Option Plan and as of December 31, 1997, 885,236 shares
remained available for future grants.
The Company is obligated to issue warrants to purchase up to 150,000
shares of Common Stock pursuant to a purchase order agreement with Innotech
Corporation. The Company is obligated to issue warrants to purchase up to
100,000 shares of Common Stock to CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. pursuant to the
Engagement Letter dated January 8, 1998.
Pursuant to the Common Shares Rights Agreement, dated April 27, 1990,
between the Company and Bank of America, N.T. & S.A.,as Rights Agent (the
"Rights Agreement"), the Board of Directors of the Company authorized and
declared a dividend of one Common Share purchase right (a "Right") for each
Common Share of the Company outstanding as of July 3, 1990 and with respect
to each Common Share that would become outstanding between the Record Date
and the earlier of the Distribution Date and the Expiration Date, each Right
representing the right to purchase one Common Share upon the occurrence of
certain Triggering Events as set forth in the Rights Agreement. (The terms
in this paragraph which begin with a capitalized letter have the meanings set
forth in the Rights Agreement.)
Schedule 2.1(f)
CONSENTS AND APPROVALS
None
Schedule 2.1(k)
SEC DOCUMENTS, FINANCIAL STATEMENTS, NO ADVERSE CHANGE
None
Schedule 2.1(s)
PATENTS AND TRADEMARKS
None
Schedule 2.1(u)
REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION
None
Schedule 2.1(v)
TITLE
Liens Disclosed in the following financing statements:
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SECURED PARTY JURISDICTION FILING DATE FILE NUMBER FILE TYPE COMMENTS
---------------------------------------------------------------------------------------------------------------
Signal Capital California 03/04/88 88046502 Original Precautionary
Corporation
---------------------------------------------------------------------------------------------------------------
Signal Capital California 12/07/92 88046502 Continuation/
Corporation / Assignment
Assignee Fleet
Credit Corp.
---------------------------------------------------------------------------------------------------------------
Signal Capital California 03/04/88 88046503 Original Precautionary
Corporation
---------------------------------------------------------------------------------------------------------------
Signal Capital California 12/07/92 88046503 Continuation/
Corporation / Assignment
Assignee Fleet
Credit Corp.
---------------------------------------------------------------------------------------------------------------
JLA Credit California 12/09/92 92262193 Original Precautionary
Corporation
---------------------------------------------------------------------------------------------------------------
Gestetner Services, California 12/28/92 92274831 Original Equipment
Inc.
---------------------------------------------------------------------------------------------------------------
Energy Reduction California 02/02/94 94021670 Original Equipment
Systems, Inc.
---------------------------------------------------------------------------------------------------------------
Clarklift of San California 03/08/94 94046091 Original Equipment
▇▇▇▇, Inc./
Assignee ▇▇▇▇▇
Credit
Corporation
---------------------------------------------------------------------------------------------------------------
Gestetner Services California 05/04/95 9512860043 Original Equipment
Inc.
---------------------------------------------------------------------------------------------------------------
Oce California 08/10/95 9522660711 Original Equipment
---------------------------------------------------------------------------------------------------------------
Gestetner California 09/05/95 9525560216 Original Equipment
---------------------------------------------------------------------------------------------------------------
Lessor: California 10/12/95 9528960403 Original Equipment
General Electric
Capital Corp.
---------------------------------------------------------------------------------------------------------------
Lessor: California 10/12/95 9528960412 Original Equipment
General Electric
Capital Corp.
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
SECURED PARTY JURISDICTION FILING DATE FILE NUMBER FILE TYPE COMMENTS
---------------------------------------------------------------------------------------------------------------
Berkshire- California 11/17/95 ▇▇▇▇▇▇▇▇▇▇ Original 2.8 million letter
Newburyport of credit
Limited
Partnership
---------------------------------------------------------------------------------------------------------------
Berkshire- California 12/28/95 96003c0137 Assignment 2.8 million letter
Newburyport in full of credit assigned
Limited to Shawmut Bank,
Partnership N.A.
Hartford, CT
---------------------------------------------------------------------------------------------------------------
General Electric California 01/23/96 9602460481 Original Equipment
Capital Computer
Leasing Corp.
---------------------------------------------------------------------------------------------------------------
General Electric California 02/18/97 9705060799 Original Equipment
Capital Computer
Leasing Corp.
---------------------------------------------------------------------------------------------------------------
General Electric California 05/08/97 9705060799 Amendment Serial numbers
Capital Computer added to
Leasing Corp. Equipment
---------------------------------------------------------------------------------------------------------------
Leasetec Systems California 05/08/97 ? 9712560143 Original Equipment
Credit
---------------------------------------------------------------------------------------------------------------
Sumitomo Bank of California 8/18/97 9723160990 Original Broad Collateral
California
---------------------------------------------------------------------------------------------------------------
Sumitomo Bank of Texas 8/18/97 171308 Original Broad Collateral
California
---------------------------------------------------------------------------------------------------------------
Sumitomo Bank of Massachusetts 8/19/97 ? Original Broad Collateral
California
---------------------------------------------------------------------------------------------------------------
Sumitomo Bank of Santa ▇▇▇▇▇ 8/19/97 13819520 Original Fixture
California County,
California
---------------------------------------------------------------------------------------------------------------
Sumitomo Bank of Massachusetts 8/27/97 14286 Original
California
---------------------------------------------------------------------------------------------------------------
Sumitomo Bank of Austin, Texas occurring, but
California not of record yet
---------------------------------------------------------------------------------------------------------------
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Exhibit A
See Exhibit 4.4 to this Current Report on Form 8-K
EXHIBIT B
NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
GENUS, INC.
WARRANT
Dated ___________, 1998
Genus, Inc., a corporation organized and existing under the laws of the
State of California (the "COMPANY"), hereby certifies that, for value received,
____________________________, or its registered assigns ("HOLDER"), is entitled,
subject to the terms set forth below, to purchase from the Company up to a total
of _________ shares of Common Stock, no par value (the "COMMON STOCK"), of the
Company (each such share, a "WARRANT SHARE" and all such shares, the "WARRANT
SHARES") at an exercise price equal to $____ per share (as adjusted from time to
time as provided in Section 8, the "EXERCISE PRICE"), at any time and from time
to time from and after the date hereof and through and including ____________,
2001 (the "EXPIRATION DATE"), and subject to the following terms and conditions:
1. REGISTRATION OF WARRANT. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the record Holder hereof from time to
time. The Company may deem and treat the registered Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company shall
not be affected by notice to the contrary.
2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with
the Form of Assignment attached hereto duly completed and signed, to the
Company at the office specified in or pursuant to Section 3(b). Upon any
such registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "NEW
WARRANT"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion
of this Warrant not so transferred, if any, shall be issued to the
transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee of
all of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof
by the Holder to the office of the Company specified in or pursuant to
Section 3(b) for one or more New Warrants, evidencing in the aggregate the
right to purchase the number of Warrant Shares which may then be purchased
hereunder. Any such New Warrant will be dated the date of such exchange.
3. DURATION AND EXERCISE OF WARRANTS.
(a) This Warrant shall be exercisable by the registered
Holder on any business day before 5:30 P.M., Eastern Standard Time, at any
time and from time to time on or after the date hereof to and including the
Expiration Date. At 5:30 P.M., Eastern Standard Time on the Expiration Date,
the portion of this Warrant not exercised prior thereto shall be and become
void and of no value. This Warrant may not be redeemed by the Company.
(b) Subject to Sections 2(b), 6 and 11, upon surrender of
this Warrant, with the Form of Election to Purchase attached hereto duly
completed and signed, to the Company at its address for notice set forth in
Section 11 and upon payment of the Exercise Price multiplied by the number of
Warrant Shares that the Holder intends to purchase hereunder, in lawful money
of the United States of America, in cash or by certified or official bank
check or checks, all as specified by the Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 3 business
days after the Date of Exercise (as defined herein)) issue or cause to be
issued and cause to be delivered to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate for the
Warrant Shares issuable upon such exercise, free of restrictive legends other
than as required by the Purchase Agreement of even date herewith between the
Holder, the Company and the other purchasers named therein (the "PURCHASE
AGREEMENT"). Any person so designated by the Holder to receive Warrant
Shares shall be deemed to have become holder of record of such Warrant Shares
as of the Date of Exercise of this Warrant.
A "DATE OF EXERCISE" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares so indicated by the holder
hereof to be purchased.
(c) This Warrant shall be exercisable, either in its entirety
or, from time to time, for a portion of the number of Warrant Shares. If
less than all of the Warrant Shares which may be purchased under this Warrant
are exercised at any time, the Company shall issue or cause to be issued, at
its expense, a New Warrant evidencing the right to purchase the remaining
number of Warrant Shares for which no exercise has been evidenced by this
Warrant.
4. PIGGYBACK REGISTRATION RIGHTS. If at any time during the term
of this Warrant when there is not an effective registration statement
covering the resale of the Warrant Shares and naming the Holder as a selling
stockholder thereunder, the Company wishes to file any registration statement
with
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the Securities and Exchange Commission (other than registration statements of
the Company filed on Form S-8 or Form S-4, each as promulgated under the
Securities Act of 1933, as amended, pursuant to which the Company is
registering securities pursuant to a Company employee benefit plan or
pursuant to a merger, acquisition or similar transaction including
supplements thereto, but not additionally filed registration statements in
respect of such securities) the Company must provide, within not less than 20
days thereafter, notice to each of the Holder and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, attention ▇▇▇▇ ▇. ▇▇▇▇▇, of its intention to file such
registration statement and must provide the Holder with the option to include
any or all of the applicable Warrant Shares therein. The piggyback
registration rights granted to the Holder pursuant to this Section shall
continue until all of the Holder's Warrant Shares have been sold in
accordance with an effective registration statement or upon the expiration of
this Warrant. The Company will pay all registration expenses in connection
therewith.
5. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the issuance of Warrant Shares upon the exercise of
this Warrant; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name
other than that of the Holder, and the Company shall not be required to issue
or cause to be issued or deliver or cause to be delivered the certificates
for Warrant Shares unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has
been paid. The Holder shall be responsible for all other tax liability that
may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.
6. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and indemnity, if reasonably satisfactory to it. Applicants for
a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges
as the Company may prescribe.
7. RESERVATION OF WARRANT SHARES. The Company covenants that it
will at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling it
to issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holders (taking
into account the adjustments and restrictions of Section 8). The Company
covenants that all Warrant Shares that shall be so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in
accordance with the terms hereof, be duly and validly authorized, issued and
fully paid and nonassessable.
8. CERTAIN ADJUSTMENTS. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 8. Upon each such adjustment of
the Exercise Price pursuant to this Section 8, the Holder shall thereafter
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prior to the Expiration Date be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend or otherwise make a distribution
or distributions on shares of its Common Stock or on any other class of
capital stock (and not the Common Stock) payable in shares of Common Stock,
other than the dividends payable under the Purchase Agreement, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares, or (iii)
combine outstanding shares of Common Stock into a smaller number of shares,
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date
in the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale
or transfer of all or substantially all of the assets of the Company in which
the consideration therefor is equity or equity equivalent securities or any
compulsory share exchange pursuant to which the Common Stock is converted
into other securities or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event
to receive such amount of securities or property of the Company's business
combination partner equal to the amount of Warrant Shares such Holder would
have been entitled to had such Holder exercised this Warrant immediately
prior to such reclassification, consolidation, merger, sale, transfer or
share exchange. The terms of any such consolidation, merger, sale, transfer
or share exchange shall include such terms so as to continue to give to the
Holder the right to receive the securities or property set forth in this
Section 8(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to
holders of this Warrant) evidences of its indebtedness or assets or rights or
warrants to subscribe for or purchase any security (excluding those referred
to in Sections 8(a), (b) and (d)), then in each such case the Exercise Price
shall be determined by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be the
Exercise Price determined as of the record date mentioned above, and of which
the numerator shall be such Exercise Price on such record date less the then
fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share
of Common Stock as determined by a nationally recognized or major regional
investment banking firm or firm of
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independent certified public accountants of recognized standing (which may be
the firm that regularly examines the financial statements of the Company) (an
"APPRAISER") mutually selected in good faith by the holders of a majority in
interest of the Warrants then outstanding and the Company. Any determination
made by the Appraiser shall be final.
(d) If at any time while this Warrant is outstanding, the
Company shall issue or cause to be issued rights or warrants to acquire or
otherwise sell or distribute shares of Common Stock to all holders of Common
Stock for a consideration per share less than the Per Share Market Value (as
defined in the Purchase Agreement) then in effect, then, forthwith upon such
issue or sale, the Exercise Price shall be reduced to the price (calculated
to the nearest cent) determined by dividing (i) an amount equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior to
such issue or sale multiplied by the Exercise Price, and (B) the
consideration, if any, received or receivable by the Company upon such issue
or sale by (ii) the total number of shares of Common Stock outstanding
immediately after such issue or sale.
(e) For the purposes of this Section 8, the following clauses
shall also be applicable:
(i) RECORD DATE. In case the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or
exchangeable into shares of Common Stock, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(ii) TREASURY SHARES. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by
or for the account of the Company, and the disposition of any such shares
shall be considered an issue or sale of Common Stock.
(f) All calculations under this Section 8 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be.
(g) If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common
Stock; or
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to
subscribe for or
-5-
purchase any shares of capital stock of any class
or of any rights; or
(iv) the approval of any stockholders of the Company
shall be required in connection with any
reclassification of the Common Stock of the
Company, any consolidation or merger to which
the Company is a party, any sale or transfer of
all or substantially all of the assets of the
Company, or any compulsory share exchange whereby
the Common Stock is converted into other
securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the
affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 20
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up; PROVIDED,
HOWEVER, that the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice.
9. PAYMENT OF EXERCISE PRICE. The Holder may pay the Exercise
Price in one of the following manners:
(a) CASH EXERCISE. The Holder shall deliver immediately
available funds; or
(b) CASHLESS EXERCISE. The Holder shall surrender this
Warrant to the Company together with a notice of cashless exercise, in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y (A-B)/A
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
-6-
A = the closing sale prices of the Common Stock for the
Trading Day immediately prior to the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
been commenced, on the issue date.
10. FRACTIONAL SHARES. The Company shall not be required to issue
or cause to be issued fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares which shall be issuable upon the
exercise of this Warrant shall be computed on the basis of the aggregate
number of Warrant Shares purchasable on exercise of this Warrant so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 10, be issuable on the exercise of this Warrant,
the Company shall, at its option, (i) pay an amount in cash equal to the
Exercise Price multiplied by such fraction or (ii) round the number of
Warrant Shares issuable, up to the next whole number.
11. NOTICES. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section, (ii) the business day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iii)
upon actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be: (1) if to the Company, to
Genus, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: Chief Financial Officer, or (ii) if
to the Holder, to the Holder at the address or facsimile number appearing on
the Warrant Register or such other address or facsimile number as the Holder
may provide to the Company in accordance with this Section 11.
12. WARRANT AGENT.
(a) The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint
a new warrant agent.
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to
which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.
-7-
13. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
This Warrant may be amended only in writing signed by the Company and the
Holder.
(b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the
Company and the Holder any legal or equitable right, remedy or cause under
this Warrant; this Warrant shall be for the sole and exclusive benefit of the
Company and the Holder.
(c) This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect
any of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall be
a commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[SIGNATURE PAGE FOLLOWS]
-8-
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
GENUS, INC.
By:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice
President and Chief Financial Officer
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To ___________________:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase [___________]
shares of Common Stock, no par value ("COMMON STOCK"), of Genus, Inc. and
encloses herewith $________ in cash or certified or official bank check or
checks, which sum represents the aggregate Exercise Price (as defined in the
Warrant) for the number of shares of Common Stock to which this Form of Election
to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
-----------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the undersigned
requests that a New Warrant (as defined in the Warrant) evidencing the right
to purchase the shares of Common Stock not issuable pursuant to the exercise
evidenced hereby be issued in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated: , Name of Holder:
-------------- ----
(Print)
-------------------------
(By:)
-------------------------
(Name:)
(Title:)
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock, no par value, of
Genus, Inc. to which the within Warrant relates and appoints ________________
attorney to transfer said right on the books of ___________________ with full
power of substitution in the premises.
Dated:
,
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(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
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Address of Transferee
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In the presence of:
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Exhibit C
See Exhibit 4.3 to this Current Report on Form 8-K