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EXHIBIT 1.1
NOTE PURCHASE AGREEMENT
DATED AS OF _________
BY AND BETWEEN
AXYS PHARMACEUTICALS, INC.
AND
BUYER
------------------
DEBT SECURITIES
AND
WARRANTS
------------------
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COMPANY
NOTE PURCHASE AGREEMENT
DEBT SECURITIES
AND
WARRANTS
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS................................................................. 1
2. PURCHASE AND SALE........................................................... 8
(a) Purchase............................................................. 8
(b) Form of Payment...................................................... 9
(c) Closing.............................................................. 9
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE BUYER................... 9
(a) Note Purchase Agreement.............................................. 9
(b) Documents and Information............................................ 9
(c) Buyer Status........................................................ 10
(d) Absence of Brokers, Finder, Etc..................................... 10
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE COMPANY................ 10
(a) Organization and Authority.......................................... 10
(b) Qualifications...................................................... 10
(c) Capitalization...................................................... 10
(d) Concerning the Shares and the Common Stock.......................... 12
(e) Corporate Authorization............................................. 12
(f) Non-contravention................................................... 13
(g) Approvals, Filings, Etc............................................. 14
(h) Information Provided................................................ 14
(i) Conduct of Business................................................. 14
(j) SEC Filings......................................................... 15
(k) Absence of Certain Proceedings...................................... 15
(l) Liabilities......................................................... 15
(n) Absence of Certain Changes.......................................... 16
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PAGE
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(o) Intellectual Property............................................... 16
(p) Internal Accounting Controls........................................ 16
(q) Compliance with Law................................................. 16
(r) Properties.......................................................... 17
(s) Labor Relations..................................................... 17
(t) Insurance........................................................... 17
(u) Tax Matters......................................................... 17
(v) Investment Company.................................................. 17
(w) Absence of Brokers, Finders, Etc.................................... 17
(x) Registration Statement, Indenture, Etc.............................. 18
(y) ERISA Compliance.................................................... 19
(z) Concerning the Collateral........................................... 19
5. CERTAIN COVENANTS.......................................................... 21
(a) Nasdaq Listing...................................................... 21
(b) State Securities Laws............................................... 21
(c) Limitation on Certain Actions....................................... 21
(d) Indenture........................................................... 22
(e) Use of Proceeds..................................................... 22
(f) Concerning the Registration Statement............................... 22
(g) Best Efforts........................................................ 24
(h) Debt Obligation..................................................... 24
6. CONDITIONS TO COMPANY'S OBLIGATION TO SELL................................. 24
7. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.............................. 24
8. INDEMNIFICATION AND CONTRIBUTION........................................... 26
(a) Indemnification..................................................... 26
(b) Contribution........................................................ 27
(c) Other Rights........................................................ 27
9. MISCELLANEOUS.............................................................. 28
(a) Governing Law....................................................... 28
(b) Headings............................................................ 28
(c) Severability........................................................ 28
(d) Notices............................................................. 28
(e) Counterparts........................................................ 28
(f) Entire Agreement.................................................... 29
(g) Waiver.............................................................. 29
(h) Amendment........................................................... 29
(i) Further Assurances.................................................. 29
(j) Expenses............................................................ 29
(k) Termination......................................................... 30
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PAGE
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(l) Survival............................................................ 30
(m) Public Statements, Press Releases, Etc.............................. 30
(n) Construction........................................................ 31
DISCLOSURE SCHEDULE
-------------------
4(a) List of Subsidiaries
4(c) Capitalization
4(f) Non-contravention
4(i) Conduct of the Business
4(j) SEC Filings
4(k) Certain Proceedings
4(l) Liabilities
4(n) Certain Changes
4(q) Compliance With Law
4(r) Properties
4(z) Certain Filings and Notices
ANNEXES
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ANNEX I Form of Note
ANNEX II Form of Issuing Agent Instruction
ANNEX III Form of Common Stock Purchase Warrant, if applicable
ANNEX IV Form of Supplemental Indenture
ANNEX V Form of Opinion of Company Counsel to Be Delivered on the
Closing Date
ANNEX VI Form of Opinion of General Counsel of Company to Be Delivered on the
Closing Date
ANNEX VII Form of Prospectus Supplement
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NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT, dated as of _______ (this
"Agreement"), by and between Axys Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), with headquarters located at ______________, and BUYER, a
____________ corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer wishes to purchase from the Company and the
Company wishes to sell to the Buyer, upon the terms and subject to the
conditions of this Agreement, the Note with Warrants (such capitalized term and
all other capitalized terms used in this Agreement having the meanings provided
in Section 1) in the principal amount set forth on the signature page of this
Agreement;
WHEREAS, the Company has filed the Registration Statement with the
SEC relating to debt securities, warrants and Common Stock, which has been
declared effective by the SEC, and is offering a portion of such securities to
the Buyer to be purchased pursuant to this Agreement and the Prospectus;
WHEREAS, on or before the Closing Date the Company and the Trustee
shall execute and deliver, one to the other, the applicable Supplemental
Indenture in the form referred to herein; and
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. DEFINITIONS.
(a) As used in this Agreement, the terms "Agreement", "Buyer" and
"Company" shall have the respective meanings assigned to such terms in the
introductory paragraph of this Agreement.
(b) All the agreements or instruments herein defined shall mean
such agreements or instruments as the same may from time to time be supplemented
or amended or the terms thereof waived or modified to the extent permitted by,
and in accordance with, the terms thereof and of this Agreement.
(c) The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
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"Account" shall have the meaning to be provided or provided in the
applicable Supplemental Indenture.
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the subject Person. For purposes
of this definition, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Blackout Period" means the period of up to 15 consecutive
Trading Days after the date the Company notifies the Buyer as provided in
Section 5(f)(1)(B) as a result of an event or circumstance described therein
relating to or affecting the Registration Statement, during which period, by
reason of Section 5(f)(1)(B), the Company is not required to use its best
efforts to maintain the effectiveness of the Registration Statement.
"Business Day" means any day other than a Saturday, Sunday or a
day on which commercial banks in The City of New York or the State of California
are authorized or required by law or executive order to remain closed.
"California UCC" means the Uniform Commercial Code as in effect
in the State of California.
"Chattel Paper" shall have the meaning to be provided or provided
in the Supplemental Indenture,
"Claims" means any losses, claims, damages, liabilities or
expenses (joint or several), incurred by a Person.
"Closing Date" means 12:00 noon, New York City time, on _________,
or such other date and time as is mutually agreed between the Company and the
Buyer.
"Code" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder and published interpretations thereof.
"Collateral" shall, if the Note being sold pursuant to this
Agreement is secured, have the meaning to be provided or provided in the
applicable Supplemental Indenture.
"Common Stock" means the Common Stock, par value $.001 per share,
of the Company.
"Contract" shall have the meaning to be provided or provided in
the Supplemental Indenture.
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"Conversion Price" shall, if the Note being sold pursuant to the
Indenture is convertible into shares of Common Stock, have the meaning to be
provided or provided in the applicable Supplemental Indenture.
"Conversion Shares" means, if the Note being sold pursuant to the
Indenture is convertible into shares of Common Stock, the shares of Common Stock
and the related Preferred Share Purchase Rights issuable upon conversion of the
Note.
"Corporate Trust Office" shall have the meaning to be provided or
provided in the Indenture.
"Disclosure Schedule" means the Disclosure Schedule prepared by
the Company and furnished to the Buyer prior to the date of execution and
delivery of this Agreement by the Buyer.
"Encumbrances" means all mortgages, deeds of trust, claims,
security interests, liens, pledges, leases, subleases, charges, escrows,
options, proxies, rights of occupancy, rights of first refusal, preemptive
rights, covenants, conditional limitations, hypothecations, prior assignments,
easements, title retention agreements, indentures, security agreements or any
other encumbrances of any kind.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder and published interpretations
thereof.
"Event of Default" shall have the meaning to be provided or
provided in the Supplemental Indenture.
"Holder" shall have the meaning to be provided or provided in the
Supplemental Indenture.
"Indemnified Person" means any underwriter (as defined in the ▇▇▇▇
▇▇▇) who participates in the offering of Securities in accordance with the plan
of distribution contained in the Prospectus, the directors, if any, of such
underwriter and the officers, if any, of such underwriter, and each Person, if
any, who controls any such underwriter within the meaning of the 1933 Act or the
1934 Act.
"Indenture" means the Indenture, to be dated as of _________,
2000, by and between the Company and the Trustee in the form filed as Exhibit
4.1 to the Registration Statement.
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"Instrument" shall have the meaning to be provided or provided in
the Supplemental Indenture.
"Intellectual Property" means all franchises, patents, trademarks,
service marks, tradenames (whether registered or unregistered), copyrights,
corporate names, licenses, trade secrets, proprietary software or hardware,
proprietary technology, technical information, discoveries, designs and other
proprietary rights, whether or not patentable, and confidential information
(including, without limitation, know-how, processes and technology) used in the
conduct of the business of the Company or any Subsidiary, or in which the
Company or any Subsidiary has an interest.
"Interest Shares" means, if the Note being sold pursuant to the
Indenture earns interest payable in shares of Common Stock, the shares of Common
Stock and the related Preferred Share Purchase Rights issuable in payment of
interest on the Note.
"Issuing Agent Instruction", in the event the Company offers any
Notes, means the letter from the Company to the Transfer Agent in the form of
ANNEX II to this Agreement.
"Lien" shall have the meaning to be provided or provided in the
applicable Supplemental Indenture.
"Majority Holders" shall have the meaning to be provided or
provided in the applicable Supplemental Indenture.
"Margin Stock" shall have the meaning provided in Regulation U of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221).
"Maturity" shall have the meaning to be provided or provided in
the Indenture.
"Nasdaq" means the Nasdaq National Market.
"NASD" means the National Association of Securities Dealers, Inc.
"New York UCC" means the Uniform Commercial Code as in effect in
the State of New York.
"10-K" means the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 (including any information or documents
incorporated therein by reference).
"10-Q" means the Company's Quarterly Report on Form 10-Q for the
quarter ended ___________, 2000, as filed with the SEC.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
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"1939 Act" means the Trust Indenture Act of 1939, as amended.
"1939 Act Rules and Regulations" means the rules and regulations
of the SEC under the 1939 Act.
"1933 Act" means the Securities Act of 1933, as amended.
"Note" means, in the event the Company offers any debt securities
under the Indenture, the debt security of the Company to be issued or issued
pursuant to this Agreement.
"Other Buyers" means the buyers named in the Other Note Purchase
Agreements.
"Other Note Purchase Agreements" means the several Note Purchase
Agreements, dated as of the date hereof, by and between the Company and the
buyers named therein, relating to the Other Notes.
"Other Notes" means, in the event the Company offers any debt
securities under the Indenture, the several Notes issued by the Company pursuant
to the Other Note Purchase Agreements.
"Permitted Liens" shall have the meaning to be provided or
provided in the applicable Supplemental Indenture.
"Person" means any natural person, corporation, partnership,
limited liability company, trust, incorporated organization, unincorporated
association, or similar entity or any government, governmental agency or
political subdivision.
"Placement Agent" means _____________.
"Pledged Securities" shall, if the Note being sold pursuant to
this Agreement is secured in whole or in part by securities, have the meaning to
be provided or provided in the Supplemental Indenture.
"Preferred Share Purchase Rights" means the Preferred Share
Purchase Rights issued or issuable pursuant to the Rights Agreement (or any
similar rights hereafter issued by the Company with respect to the Common
Stock).
"Prospectus" means the prospectus forming part of the Registration
Statement at the time the Registration Statement is declared effective and any
amendment or supplement thereto (including the Prospectus Supplement), including
any documents or information incorporated therein by reference.
"Prospectus Supplement" means the applicable Prospectus Supplement
in the form attached hereto as ANNEX VII, to be filed with the SEC as provided
in Section 5(f).
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"Purchase Price" means the purchase price for the Note set forth
on the signature page of this Agreement.
"register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415, and the
declaration or ordering of effectiveness of such Registration Statement or
Statements by the SEC.
"Registered Securities" means [the Warrant Shares] any stock or
other securities of any Person into which or for which the Common Stock may
hereafter be changed, converted or exchanged by the Company or its successor, as
the case may be, and any other securities issued to holders of such Common Stock
(or such stock or other securities into which or for which such securities are
so changed, converted or exchanged) upon any reclassification, share
combination, share subdivision, share dividend, merger, consolidation or similar
transaction or event.
"Registration Period" means, if the Company issues any Warrants
in connection with this Agreement, the period from the SEC Effective Date to the
Warrant Expiration Date (or, such earlier date on which (x) the Warrant shall
have been fully exercised, or (y) the Warrant shall no longer remain
outstanding.)
"Registration Statement" means the Registration Statement on Form
S-3 of the Company under the 1933 Act (Registration No. 333-35828) as amended by
any post-effective amendment thereto, including any documents or reports
incorporated therein by reference.
"Rights Agreement" means the Rights Agreement, dated as of October
8, 1998, between the Company and Computershare Investor Services LLC, as Rights
Agent.
"Rule 415" means Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a delayed or continuous basis.
"Rule 144" means Rule 144 under the 1933 Act or any other similar
rule or regulation of the SEC that may at any time provide a "safe harbor"
exemption from registration under the 1933 Act so as to permit a holder of
securities to sell such securities to the public without registration under the
1933 Act.
"SEC" means the Securities and Exchange Commission.
"SEC Effective Date" means _________, which was the date the
Registration Statement was declared effective by the SEC.
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"SEC Filing Date" means the date the Registration Statement was
first filed with the SEC.
"SEC Reports" means (1) the 10-K, (2) the Company's definitive
Proxy Statement for its 2000 Annual Meeting of Stockholders, (3) Quarterly
report or Form 10-Q for the quarter ended __________ and (4) Current Reports on
Form 8-K dated February 22, 2000, May 15, 2000 and ___________, in each case as
filed with the SEC and including the information and documents (other than
exhibits) incorporated therein by reference.
"Securities" means, collectively, the Note, the Warrant and the
Shares.
"Security Interest" shall, if the Note being sold pursuant to this
Agreement is secured, have the meaning to be provided or provided in the
Supplemental Indenture.
"Shares" means the Conversion Shares, the Interest Shares and the
Warrant Shares, as the case may be.
"Subsidiary" means any corporation or other entity of which a
majority of the capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by the
Company.
"Supplemental Indenture" means the Supplemental Indenture to be
dated _____, by and between the Company and the Trustee relating to the Notes
being sold under this Agreement.
"Trading Day" shall have the meaning to be provided or provided in
the Supplemental Indenture.
"Transaction Documents" means, collectively, this Agreement, the
Indenture, the applicable Supplemental Indenture, the Securities, the Issuing
Agent Instruction and the other agreements, instruments and documents
contemplated hereby and thereby.
"Transfer Agent" means ______________, or any successor thereof,
serving as transfer agent and registrar for the Common Stock.
"Trustee" means , as Trustee under the Indenture and the
applicable Supplemental Indenture.
"Violation" means
(i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any post-effective
amendment thereof or the omission or alleged omission to state therein a
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material fact required to be stated therein or necessary to make the
statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not
misleading,
(iii) any violation or alleged violation by the Company of the
1933 Act, the 1934 Act, any state securities law or any rule or
regulation under the 1933 Act, the 1934 Act or any state securities law,
or
(iv) any breach or alleged breach by any Person other than the
Buyer of any representation, warranty, covenant, agreement or other term
of any of the Transaction Documents.
"Warrant" means, if the securities being issued by the Company
under this Agreement include Warrants, Warrant to be issued or issued pursuant
to this Agreement.
"Warrant Expiration Date" means, if the securities being issued by
the Company under this Agreement include Warrants, the "Expiration Date" as
defined in such Warrants.
"Warrant Shares" means, if the securities being issued by the
Company under this Agreement include Warrants exercisable for shares of Common
Stock, the shares of Common Stock and the related Preferred Share Purchase
Rights issuable or issued upon exercise of such Warrant.
2. PURCHASE AND SALE; PURCHASE PRICE.
(a) PURCHASE. Upon the terms and subject to the conditions of this
Agreement, the Buyer hereby agrees to purchase from the Company, and the Company
hereby agrees to sell to the Buyer on the Closing Date, the Note in the
principal amount set forth on the signature page of this Agreement and having
the terms and conditions as set forth in the Indenture and the Supplemental
Indenture and the Warrant registered in the name of the Buyer or its nominee,
having the terms and conditions as set forth in the Warrant.
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(b) FORM OF PAYMENT. Payment by the Buyer of the Purchase Price to
the Company on the Closing Date shall be made by wire transfer of immediately
available funds to an account designated by the Company in writing to the Buyer
prior to the Closing Date.
(c) CLOSING. The issuance and sale of the Note [of the Warrant]
shall occur on the Closing Date at the offices of counsel to the Placement Agent
if any, or such other place as shall be mutually agreed in writing at least two
Business Days prior to the Closing Date. At the closing, upon the terms and
subject to the conditions of this Agreement, (1) the Company shall issue and
deliver to the Buyer the Note [and Warrant] against payment by the Buyer to
the Company of an amount equal to the Purchase Price, and (2) the Buyer shall
pay to the Company an amount equal to the Purchase Price against delivery by the
Company to the Buyer of the Note and [Warrant].
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE BUYER.
The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows:
(a) NOTE PURCHASE AGREEMENT. The Buyer has all requisite power and
authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the other agreements executed or to be
executed on behalf of the Buyer in connection herewith and to consummate the
transactions contemplated hereby and thereby; and this Agreement has been duly
and validly authorized, duly executed and delivered by the Buyer and, assuming
due execution and delivery by the Company, is a valid and binding agreement of
the Buyer enforceable in accordance with its terms, except as the enforceability
hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and general principles of equity, regardless of
whether enforcement is considered in a proceeding in equity or at law.
(b) DOCUMENTS AND INFORMATION. The Buyer has received the
Registration Statement and the Prospectus, including the SEC Reports
incorporated by reference therein (but excluding certain exhibits thereto), and
has had an opportunity to review and to ask questions of the Company regarding
the Registration Statement and the Prospectus.
(c) BUYER STATUS. The Buyer is not a "broker" or "dealer" as those
terms are defined in the 1934 Act which is required to be registered with the
SEC pursuant to Section 15 of the 1934 Act.
(d) ABSENCE OF BROKERS, FINDERS, ETC. (1) the Buyer has not dealt
with any broker, finder or similar Person who is entitled to any commission,
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for or other compensation by reason of the transactions contemplated by this
agreement, other than the Placement Agent, and (2) the Buyer shall pay, and
indemnify and hold harmless the Company from, any claim made against the Company
by any such broker, finder or similar Person in the event of a breach of the
Buyer's representation and warranty set forth in clause (1) of this Section
3(d).
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE
COMPANY.
The Company represents and warrants to, and covenants and agrees
with, the Buyer that:
(a) ORGANIZATION AND AUTHORITY. Each of the Company and PPGx, Inc.
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and (i) each of the Company and
PPGx, Inc. has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as described in the SEC
Reports and as currently conducted, and (ii) the Company has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the other Transaction Documents to be executed and
delivered by the Company in connection herewith, and to consummate the
transactions contemplated hereby and thereby; and the Company does not have any
Subsidiaries or equity investment in any other Person other than the
Subsidiaries and other Persons listed in SECTION 4(a) of the Disclosure
Schedule.
(b) QUALIFICATIONS. Each of the Company and PPGx, Inc. is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions where such qualification is necessary except where the failure so
to qualify would not be reasonably expected to have a material adverse effect on
the business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and the Subsidiaries, taken as a whole.
(c) CAPITALIZATION. (1) The authorized capital stock of the
Company consists of (A) __________ shares of Common Stock, of which _________
shares were outstanding at the close of business on _________ and (B)
____________ shares of Preferred Stock, $__ par value, of which ________ shares
have been designated ____________, _______ of which shares were outstanding at
the close of business on __________; from _________ to the Closing Date there
will be (x) no material increase in the number of shares of Common Stock
outstanding (except for shares of Common Stock issued upon exercise of options
and warrants outstanding on the date hereof, or options or similar rights
granted subsequent to the date of this Agreement pursuant to the Company's stock
option plans currently in effect, in each case under the Company's stock option
plans disclosed in the SEC Reports) and (y) no issuance of securities
convertible into, exchangeable for, or otherwise
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entitling the holder to acquire, shares of Common Stock (except for securities
issued pursuant to the Other Note Purchase Agreements and except for Preferred
Share Purchase Rights issuable in connection with the issuance of shares of
Common Stock issued in accordance with the immediately preceding clause (x)).
The 10-K discloses as of December 31, ____ all outstanding options or warrants
for the purchase of, or other rights to purchase or subscribe for, or securities
convertible into, exchangeable for, or otherwise entitling the holder to
acquire, Common Stock or other capital stock of the Company, or any contracts or
commitments to issue or sell Common Stock or other capital stock of the Company
or any such options, warrants, rights or other securities and, except as set
forth in SECTION 4(c) of the Disclosure Schedule or except as contemplated by
the Common Stock Purchase Agreement, from December 31, _____ to the date hereof
there has been, and to the Closing Date there will be, no change in the amount
or terms of any of the foregoing except for the grant of options to purchase
shares of Common Stock pursuant to the Company's stock option plans in effect on
the date of this Agreement, which plans are disclosed in the SEC Reports.
(2) [If the Notes are secured and the Collateral includes Pledged
Securities: As of ____________, the Company owned beneficially and of record
_____________ shares of __________ and to the Company's knowledge the authorized
capital stock of _________ consists of _____________ shares of ___________ of
which _______ shares were outstanding on such date];
(3) The Company has duly reserved from its authorized and unissued
shares of Common Stock the full number of shares required for (A) all options,
warrants, convertible securities and other rights to acquire shares of Common
Stock which are outstanding and (B) all shares of Common Stock and options and
other rights to acquire shares of Common Stock which may be issued or granted
under the stock option and similar plans which have been adopted by the Company
or any Subsidiary; and, immediately following the Closing Date, after giving
effect to any antidilution or similar adjustment arising by reason of issuance
of the Note, the Other Notes, [and the Warrant and the warrants issuable to the
purchasers of the Other Notes,] the total number of shares of Common Stock
reserved and required to be reserved from the authorized and unissued shares of
Common Stock for purposes of all such options, warrants, convertible securities,
other rights, and stock option and similar plans (excluding the Note, the Other
Notes [and the Warrant and the warrants issuable to the purchasers of the Other
Notes,]) will be . Each outstanding class or series of securities of the Company
for which any such antidilution adjustment will occur is identified in SECTION
4(c) of the Disclosure Schedule, together with the amount of such antidilution
adjustment for each such class or series. The outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable and all outstanding options, warrants, rights and other
securities entitling the holders to purchase or otherwise acquire Common Stock
have been duly authorized by the Company. None of the holders of such
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outstanding shares of capital stock is subject to personal liability solely by
reason of being such a holder. None of the outstanding shares of capital stock
or options, warrants and other rights to acquire Common Stock has been issued in
violation of the preemptive rights of any security holder of the Company. The
offers and sales of the outstanding shares of capital stock of the Company and
options, warrants and other rights to acquire Common Stock were at all relevant
times either registered under the 1933 Act and applicable state securities laws
or exempt from such requirements. No holder of any of the Company's securities
had any rights, "demand," "piggy-back" or otherwise, to have such securities
registered by reason of the intention to file, filing or effectiveness of the
Registration Statement, except as set forth in SECTION 4(c) of the Disclosure
Schedule.
(d) CONCERNING THE SHARES AND THE COMMON STOCK. The Shares, as
applicable, have been duly authorized and (x) if the Notes being sold pursuant
to this Agreement are convertible into shares of Common Stock, the Conversion
Shares, when issued upon conversion of such Note in accordance with its terms,
(y) if the Notes being sold pursuant to this Agreement earn interest and such
interest is payable in shares of Common Stock, the Interest Shares, if and when
issued in payment of interest on such Note, and (z) if the securities being sold
by the Company pursuant to this Agreement include Warrants, the Warrant Shares,
when issued upon exercise of such Warrant in accordance with its terms,
including payment in full of any exercise price, in each such case will be duly
and validly issued, fully paid and non-assessable and will not subject the
holder thereof to personal liability by reason of being such holder. There are
no preemptive or similar rights of any stockholder of the Company or any other
Person to acquire any of the Securities. If the Notes being sold by the Company
are convertible into shares of Common Stock, the Company has duly reserved
_______ shares of Common Stock for issuance upon conversion of such Notes and
the Other Notes and if the securities being issued by the Company include
Warrants exercisable for shares of Common Stock, the Company has duly reserved
_______ shares of Common Stock for issuance upon exercise of the Warrant and the
warrants to be issued pursuant to the Other Note Purchase Agreements, and such
shares shall remain so reserved, and the Company shall from time to time reserve
such additional shares of Common Stock as shall be required to be reserved
pursuant to the Supplemental Indenture, [the Warrant and such warrants] as long
as the Note may be converted [or the Warrant may be exercised]. The Common Stock
is listed for trading on Nasdaq and (1) the Company and the Common Stock meet
the criteria for continued listing and trading on Nasdaq; (2) the Company has
not been notified in writing since January 1, 1998 by the NASD or the Nasdaq
Stock Market of any failure or potential failure to meet the criteria for
continued listing and trading on Nasdaq and (3) no suspension of trading in the
Common Stock is in effect. If the securities being issued by the Company include
Warrants, the Company knows of no reason that the Warrant Shares will not be
eligible for listing on Nasdaq.
17
(e) CORPORATE AUTHORIZATION. This Agreement and the other
Transaction Documents have been duly and validly authorized by the Company; this
Agreement has been duly executed and delivered by the Company and, assuming due
execution and delivery by the Buyer, this Agreement is, and, when executed and
delivered by the Company and the Trustee, the Indenture and Supplemental
Indenture will be, and when executed by the Company, authenticated by the
Trustee and issued to the Buyer against payment therefor to the Company of the
Purchase Price, the Note will be [and, when executed by the Company, the
[Warrant will be,] valid and binding obligations of the Company enforceable in
accordance with their respective terms, except as the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and general principles of equity, regardless of
whether enforcement is considered in a proceeding in equity or at law [and
except as rights to indemnification or contribution under Section 8 of this
Agreement may be limited by applicable securities laws or the public policy
related to such laws.]
(f) NON-CONTRAVENTION. Except as disclosed in SECTION 4(f) of the
Disclosure Schedule, the execution and delivery of the Transaction Documents by
the Company and the consummation by the Company of the transactions contemplated
by the Transaction Documents do not and will not, with or without the giving of
notice or the lapse of time, or both, (i) result in any violation of any
provision of the certificate of incorporation or by-laws or similar instruments
of the Company or any Subsidiary, (ii) conflict with or result in a breach by
the Company or any Subsidiary of any of the terms or provisions of, or
constitute a default under, or result in the modification of, or result in the
creation or imposition of any lien, security interest, charge or encumbrance
(other than, if the Notes are secured, pursuant to the Supplemental Indenture)
upon any of the properties or assets of the Company or any Subsidiary pursuant
to, any indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective properties or assets are bound or
affected, in any such case which would have a material adverse effect on the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and the Subsidiaries, taken as a whole,
or the validity or enforceability of, or the ability of the Company to perform
its obligations under, the Transaction Documents, (iii) conflict with or result
in a breach by the Company or any Subsidiary of the terms or provisions of, or
constitute a default under, or result in the modification of, or entitle any
party other than the Company to terminate, or require any consent or approval of
any such party with respect to, any material agreement to which the Company is a
party that relates to any Subsidiary, (iv) violate or contravene any applicable
law, rule or regulation or any applicable decree, judgment or order of any
court, federal or state regulatory body, administrative agency or other
governmental body in the United States or in any other country having
jurisdiction over the Company or any Subsidiary or any of
18
their respective properties or assets which (x) if the securities being sold by
the Company will be secured by any Collateral, relates to or affects such
Collateral or (y) would have a material adverse effect on the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company and the Subsidiaries, taken as a whole, or the validity
or enforceability of, or the ability of the Company to perform its obligations
under, the Transaction Documents, or (v) have any adverse effect on any material
permit, certification, registration, approval, consent, license or franchise
necessary for the Company or any Subsidiary to own or lease and operate any of
its properties and to conduct any of its business or the ability of the Company
or any Subsidiary to make use thereof.
(g) APPROVALS, FILINGS, ETC. No authorization, approval or consent
of, or filing with, any United States or foreign court, governmental body,
regulatory agency, self-regulatory organization, or stock exchange or market or
the stockholders of the Company is required to be obtained or made by the
Company or any Subsidiary for (A) the execution, delivery and performance by the
Company of the Transaction Documents, (B) the issuance and sale of the
Securities as contemplated by the Transaction Documents, (C) if the securities
being sold by the Company will be secured by any Collateral, for the grant by
the Company of the Lien on such Collateral pursuant to the Supplemental
Indenture, (D) if the securities being sold by the Company will be secured by
any Collateral, to perfect the Lien purported to be created by the Supplemental
Indenture and (E) the performance by the Company of its other obligations under
the Transaction Documents, other than (1) listing of the Shares on Nasdaq, (2)
effectiveness of the Registration Statement under the 1933 Act, (3)
qualification of the Indenture under the 1939 Act, (4) as may be required under
applicable state securities or "blue sky" laws, and (5) if the securities being
sold by the Company will be secured by any Collateral, filing of financing
statements under the provisions of applicable state Uniform Commercial Codes.
(h) INFORMATION PROVIDED. The Transaction Documents, the
Registration Statement and the Prospectus, taken as a whole do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, it being understood that for purposes of
this Section 4(h), any statement contained in such information shall be deemed
to be modified or superseded for purposes of this Section 4(h) to the extent
that a statement in any document included in such information which was prepared
or filed with the SEC on a later date modifies or replaces such statement,
whether or not such later prepared or filed statement so states.
(i) CONDUCT OF BUSINESS. Except as set forth in the SEC Reports or
SECTION 4(i) of the Disclosure Schedule, since __________, neither the Company
nor any Subsidiary has (i) incurred any obligation or liability (absolute or
19
contingent), other than in the ordinary course of business, which individually
or in the aggregate is material to the Company and the Subsidiaries, taken as a
whole; (ii) canceled, without payment in full, any note, loan or other
obligation receivable or other debt or claim held by it other than in the
ordinary course of business, which individually or in the aggregate is material
to the Company and the Subsidiaries, taken as a whole; (iii) sold, assigned,
transferred, abandoned, mortgaged, pledged or subjected to lien any of its
properties, tangible or intangible, or rights under any material contract,
permit, license, franchise or other agreement which individually or in the
aggregate is material to the Company and the Subsidiaries, taken as a whole;
(iv) conducted its business in a manner different from its business as conducted
on such date which individually or in the aggregate is material to the Company
and the Subsidiaries, taken as a whole; or (v) declared, made or paid or set
aside for payment any cash or non-cash distribution on any shares of its capital
stock. Except as disclosed in the Registration Statement or the Prospectus, the
Company and each Subsidiary owns, possesses or has obtained all governmental,
administrative and third party licenses, permits, certificates, registrations,
approvals, consents and other authorizations necessary to own or lease (as the
case may be) and operate its properties, whether tangible or intangible, and to
conduct its business or operations as currently conducted, except such licenses,
permits, certificates, registrations, approvals, consents and authorizations the
failure of which to obtain would not reasonably be expected to have a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company and the Subsidiaries,
taken as a whole.
(j) SEC FILINGS. The Company has timely filed all reports required
to be filed under the 1934 Act and any other material reports or documents
required to be filed with the SEC since January 1, 1998. Except as disclosed in
SECTION 4(j) of the Disclosure Schedule, all of such reports and documents
complied, when filed, in all material respects, with all applicable requirements
of the 1933 Act and the 1934 Act. The Company meets the requirements for the use
of Form S-3 for the registration of the sale of the Securities as described in
the Registration Statement. The Company has not filed any reports with the SEC
under the 1934 Act since December 31, 1999 other than the SEC Reports.
(k) ABSENCE OF CERTAIN PROCEEDINGS. Except as disclosed in the SEC
Reports or SECTION 4(k) of the Disclosure Schedule, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body, or governmental agency pending or, to the knowledge of the Company and the
Subsidiaries, threatened against or affecting the Company or any Subsidiary
wherein an unfavorable decision, ruling or finding would have a material adverse
effect on the business, properties, operations, condition (financial or other),
results of operations or, to the knowledge of the Company or any Subsidiary
after due inquiry, prospects of the Company and the Subsidiaries, taken as a
whole, or the transactions contemplated by the Transaction Documents or which
would adversely
20
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, the Transaction Documents; and to the
best of the Company's knowledge there is not pending or contemplated any, and
there has been no, investigation by the SEC involving the Company or any
director or officer of the Company.
(l) FINANCIAL STATEMENTS; LIABILITIES. The financial statements
included in the 10-Q present fairly the consolidated financial position,
consolidated results of operations and consolidated cash flows of the Company
and the Subsidiaries at the dates and for the periods covered thereby, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered thereby and on a basis
consistent with the audited financial statements appearing in the 10-K, and
include all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the consolidated financial position, consolidated
results of operations and consolidated cash flows of the Company and the
Subsidiaries at the dates of for the periods covered thereby. Except as to the
extent disclosed, reflected or reserved against in the financial statements of
the Company and the notes thereto included in the SEC Reports or as disclosed in
SECTION 4(l) of the Disclosure Schedule, to the knowledge of the Company after
due inquiry, neither the Company nor any Subsidiary has any liability, debt or
obligation, whether accrued, absolute, contingent or otherwise, and whether due
or to become due which, individually or in the aggregate, are material to the
Company and the Subsidiaries, taken as a whole, other than in the ordinary
course of their respective businesses.
(m) MATERIAL LOSSES. Since the date as of which information is
given in the Registration Statement and the Prospectus, neither the Company nor
any Subsidiary has sustained any loss or interference with its business or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, which loss or interference would be material to the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and the Subsidiaries, taken as a whole.
(n) ABSENCE OF CERTAIN CHANGES. Since ___________, except as
disclosed or contemplated in the Registration Statement, the Prospectus and
SECTION 4(n) of the Disclosure Schedule, there has been no material adverse
change and no material adverse development in the business, properties,
operations, condition (financial or other), results of operations or, to the
knowledge of the Company or any Subsidiary after due inquiry, prospects of the
Company and the Subsidiaries, taken as a whole.
(o) INTELLECTUAL PROPERTY. Except as disclosed in the Registration
Statement and Prospectus, each of the Company and each Subsidiary (1) to the
knowledge of the Company and the Subsidiaries after reasonable investigation for
the purposes hereof, owns, or possesses adequate rights to use, all patents,
patent rights, inventions, trade secrets, know-how, proprietary techniques,
including processes and substances, trademarks, service marks, trade names and
copyrights described or referred to in the SEC Reports or owned or used by it or
which are necessary for the conduct of its business, except for failure to own
or possess any such rights as would not individually or in the aggregate be
reasonably expected to have a material adverse effect on the business,
properties, operations, condition (financial or other) or results of operations
of the Company and the Subsidiaries, taken as a whole, and (2)
21
has not received written notice of any claim, that the conduct of its business
will conflict with any such rights of others which conflict or claim is material
to the business, properties, operations, condition (financial or other) or
results of operations of the Company and the Subsidiaries, taken as whole.
(p) INTERNAL ACCOUNTING CONTROLS. The Company maintains a system
of internal accounting controls for the Company and the Subsidiaries which meets
the requirements of Section 13(b)(2) of the 1934 Act in all material respects.
(q) COMPLIANCE WITH LAW. Except as disclosed in SECTION 4(q) of
the Disclosure Schedule, the Company and its Subsidiaries are in substantial
compliance with applicable statutes, laws, rules, regulations, ordinances,
decisions or orders of any governmental agency or body or any court, domestic or
foreign, including, without limitation, those relating to the use, operation,
handling, transportation, disposal or release of hazardous or toxic substances
or wastes or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances or wastes, except where such
non-compliance would not individually or in the aggregate be reasonably expected
to have a material adverse effect on the business, properties, operations,
condition (financial or other), results of operations or prospects of the
Company and the Subsidiaries, taken as a whole; and neither the Company nor any
Subsidiary has received written notice of any pending investigation which would
reasonably be expected to lead to such a claim.
(r) PROPERTIES. Except as disclosed in SECTION 4(r) of the
Disclosure Schedule, the Company and each Subsidiary has good title to all
property, real and personal (tangible and intangible), and other assets owned by
it which are individually or in the aggregate material to the Company and the
Subsidiaries, taken as a whole, free and clear of all security interests,
pledges, charges, mortgages, liens or other encumbrances, except for Permitted
Liens. The leases, licenses or other contracts or instruments under which the
Company and each Subsidiary leases, holds or is entitled to use any property,
real or personal, which individually or in the aggregate are material to the
Company and the Subsidiaries, taken as a whole, are valid, subsisting and
enforceable with only such exceptions as do not materially interfere with the
use of such property made, or proposed to be made by the Company or any
Subsidiary. Neither the Company nor any Subsidiary has received written notice
of any material violation of any applicable law, ordinance, regulation, order or
requirement relating to its owned or leased properties.
(s) LABOR RELATIONS. No material labor problem exists or, to the
knowledge of the Company or any Subsidiary, is imminent with respect to any of
the employees of the Company or any Subsidiary.
22
(t) INSURANCE. The Company and each Subsidiary maintains insurance
against loss or damage by fire or other hazard and such other insurance,
including but not limited to, product liability insurance, in such amounts and
covering such risks as the Company reasonably believes is adequate for the
conduct of its business and the value of its properties.
(u) TAX MATTERS. The Company and each Subsidiary has filed all
federal, state and local income and franchise tax returns required to be filed
and has paid all taxes shown by such returns to be due, and no tax deficiency
has been determined adversely to the Company or any Subsidiary which has had
(nor does the Company or any Subsidiary have any knowledge of any tax deficiency
which, if determined adversely to the Company or any Subsidiary, would have) a
material adverse effect on the business, properties, operations, condition
(financial or other), results of operations, or prospects of the Company and the
Subsidiaries, taken as a whole.
(v) INVESTMENT COMPANY. Neither the Company nor any Subsidiary is
an "investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the SEC
thereunder.
(w) ABSENCE OF BROKERS, FINDERS, ETC. No broker, finder, or
similar Person is entitled to any commission, fee, or other compensation by
reason of the transactions contemplated by this Agreement, other than the
Placement Agent, and the Company shall pay, and indemnify and hold harmless the
Buyer from, any claim made against the Buyer by any Person for any such
commission, fee or other compensation.
(x) REGISTRATION STATEMENT, INDENTURE, ETC. (1) The Registration
Statement has been declared effective under the 1933 Act and no stop order or
other proceeding relating to the Registration Statement is pending or
threatened. The Indenture has been qualified under the 1939 Act.
(2) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein), on the SEC Filing Date,
on the SEC Effective Date, on the date of execution and delivery of this
Agreement by the parties hereto and on the Closing Date (and each such amendment
and supplement at the time of its filing with the SEC and on the Closing Date)
did not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(3) The Prospectus as of its date(s), on the date of execution and
delivery of this Agreement by the parties hereto, on the date(s) the Prospectus
was
23
first filed with SEC pursuant to Rule 424(b) under the 1933 Act, and on the
Closing Date, did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading.
(4) On the SEC Effective Date, the date(s) the Prospectus was
first filed with the SEC pursuant to Rule 424(b) under the 1933 Act, on the date
of execution and delivery of this Agreement by the parties hereto, on the
Closing Date and when any amendment or supplement to the Prospectus is filed
with the SEC, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the SEC any amendment or
supplement thereto), did and will comply with the applicable provisions of the
1933 Act, the Rules and Regulations, the 1934 Act and the rules and regulations
thereunder, the 1939 Act and the 1939 Act Rules and Regulations and will contain
all statements required to be stated therein in accordance with the 1933 Act,
the Rules and Regulations, the 1934 Act and the rules and regulations
thereunder.
(5) On the date of execution and delivery of this Agreement by the
parties hereto and on the Closing Date, the Indenture and the Supplemental
Indenture complied and will comply with all applicable provisions of the 1939
Act and the 1939 Act Rules and Regulations.
(6) The Company meets the requirements for use of Form S-3 for
registration of the offer and sale of the Securities to the Buyer in accordance
with Rule 415 of the Rules and Regulations. Copies of the Registration Statement
and all amendments thereto and the applicable Prospectus Supplement, a copy of
such Prospectus Supplement is attached hereto as ANNEX VII, have been delivered
to the Buyer.
(7) The Securities conform to the description thereof in the
Registration Statement and the Prospectus.
(y) ERISA COMPLIANCE. The Company and each Subsidiary is in
substantial compliance with all presently applicable provisions of ERISA except
for such non-compliance as would not reasonably be expected to have a material
adverse effect on the Company and Subsidiaries, taken as a whole; no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or any Subsidiary would have any
liability; neither the Company nor any Subsidiary has incurred or expects to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Code;
and each "pension plan" for which the Company or any Subsidiary would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all
24
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(z) CONCERNING THE COLLATERAL. If the securities being sold by the
Company will be secured by any Collateral, then:
(1) Each contract that constitutes Collateral has been duly
executed and delivered by the Company, and, to the best of the Company's
knowledge, the other parties thereto, and is a legal, valid and binding
obligation of the Company and, to the best of the Company's knowledge, each
other party thereto, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to or affecting
creditors' rights generally and general principles of equity, regardless of
whether enforcement is considered in a proceeding in equity or at law. The
Company is not in breach, and, to the Company's knowledge no other party to any
such contract is in breach, of its obligations thereunder nor, to the Company's
knowledge, does any such party have any right to terminate any such contract.
(2) Upon execution and delivery of the Supplemental Indenture by
the Company and the Trustee and (A) in the case of Collateral other than the
Pledged Securities, if any, to the extent that a security interest in such
Collateral can be perfected by filing under the applicable UCC, completion of
the filings referred to in Schedule ____ to ANNEX IV to this Agreement, and (B)
in the case of the Collateral, to the extent that a security interest in such
Collateral can be perfected by possession, possession of such Collateral by the
Trustee or its authorized representative, the Trustee will have a perfected
first priority security interest in, and will have all of the rights currently
held by the Company to, the Collateral as provided in the Supplemental Indenture
free of adverse claims (as defined in the applicable UCC).
(3) Except for the Lien granted to the Trustee for the ratable
benefit of the Holders pursuant to the applicable Supplemental Indenture, the
Company owns each item of any Collateral free and clear of any and all Liens or
claims of others. No security agreement, financing statement or other public
notice with respect to all or any part of any Collateral is on file or of record
in any public office, except such as may have been filed in favor of the
Trustee, for the ratable benefit of the Holders, pursuant to the applicable
Supplemental Indenture.
(4) If the Collateral includes Pledged Securities on the Closing
Date, the Pledged Securities will be duly and validly pledged under the
Supplemental Indenture in accordance with law, and the Company warrants and
covenants to defend the Trustee's right, security interest and special property
interest in and to the such Pledged Securities against the claims and demands of
all persons whomsoever. The Company is the exclusive record, equitable and
beneficial owner of, and has good title to, all Pledged Securities free and
clear of all adverse claims (as defined in the applicable UCC)
25
(except for the Security Interest in the Pledged Securities created in favor of
the Trustee), and the Company has the unqualified legal right to pledge the
securities under the Supplemental Indenture. Each certificate evidencing any of
the Pledged Securities is issued in the name of the Company and, except as
stated on SCHEDULE I to the Supplemental Indenture, bears no restrictive or
cautionary legend. The Company has delivered to the Trustee for each such
certificate three stock powers duly signed in blank by the Company with all
appropriate signature guarantees. The Security Interest created by the
Supplemental Indenture or intended so to be represents a valid lien on and
security interest in the Pledged Securities, and, so long as the Trustee
maintains possession (within the meaning of the UCC) of the Pledged Securities,
such Security Interest is superior and prior in right to the rights of all third
persons. At such time as the Trustee is deemed to have received possession of
the Pledged Securities for purposes of the Supplemental Indenture, no filings or
recordings (including, without limitation, filings under the UCC) will be
necessary to be made to perfect, protect and preserve the security interest of
the Trustee in the Pledged Securities created by the Supplemental Indenture or
intended so to be; provided, however, that the Trustee may make appropriate
protective filings to evidence such security interest under the UCC.
(5) [Reserved]
(6) The Liens granted pursuant to the Supplemental Indenture (1)
with respect to Collateral, to the extent that a security interest can be
perfected by filing under the applicable UCC, will constitute upon the
completion of all the filings or notices listed in SECTION 4(z) of the
Disclosure Schedule and (2) with respect to the Collateral, to the extent that a
security interest can be perfected by possession, will constitute upon
possession (within the meaning of the UCC) of such Collateral by the Trustee,
perfected Liens on all Collateral, which are free of adverse claims (as defined
in the applicable UCC) prior to all other Liens on such Collateral and which are
enforceable as such against all creditors of the Company.
(7) No amount payable to the Company under or in connection with
any Account that constitutes part of the Collateral is evidenced by any
Instrument (other than checks in the ordinary course of business) or Chattel
Paper which has not been delivered to the Trustee.
(8) No consent (other than consents that have been obtained) of
any party (other than the Company) to any Contract that constitutes part of the
Collateral is required, or purports to be required, in connection with the
execution, delivery and performance of the applicable Supplemental Indenture.
(9) The Company's chief executive office and chief place of
business is located at ______________________.
26
(10) The Company has full power, authority and legal right to
grant the Trustee the Lien on the Collateral pursuant to the applicable
Supplemental Indenture.
(aa) RIGHTS AGREEMENT. Assuming that the Buyer does not hold any
shares of Common Stock other than as acquired upon [conversion of the Note]
[exercise of the Warrant], the execution and delivery of this Agreement by the
Company, the issuance of the Securities as contemplated by the Transaction
Documents and the other transactions contemplated by the Transaction Documents
will not result in the Buyer becoming an "Acquiring Person," as defined in the
Rights Agreement; and the holders of the [Note] [Warrant] will be entitled, with
respect to the [Conversion Shares][Warrant Shares], and the holders of the
[Conversion Shares][Warrant Shares] will be entitled, in each case to the
benefits available to the holders of Common Stock under the Rights Agreement.
5. CERTAIN COVENANTS.
(a) NASDAQ LISTING; REPORTING STATUS. If the securities being sold
by the Company are convertible into or exchangeable for Common Stock or on which
interest will be paid and such interest may be paid in shares of Common Stock,
prior to the Closing Date, the Company will file with Nasdaq an application or
other document required by Nasdaq for the listing of the Shares, as applicable,
with Nasdaq and shall provide evidence of such filing to the Buyer. So long as
the Buyer beneficially owns any portion of any of the Securities the Company
will use its best efforts to maintain the listing of the Common Stock on Nasdaq
or another national securities exchange. During the Registration Period, the
Company shall timely file all reports required to be filed with the SEC pursuant
to Section 13 or 15(d) of the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would permit such termination.
(b) STATE SECURITIES LAWS. On or before the Closing Date, the
Company shall take such action as shall be necessary to qualify, or to obtain an
exemption for, the offer and sale of the Securities to the Buyer as contemplated
by the Transaction Documents under such of the securities laws of jurisdictions
in the United States as shall be applicable thereto. In connection with the
foregoing obligations of the Company in this Section 5(b), the Company shall not
be required (1) to qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 5(b), (2) to subject
itself to general taxation in any such jurisdiction, (3) to file a general
consent to service of process in any such jurisdiction, (4) to provide any
undertakings that cause more than nominal expense or burden to the Company or
(5) to make any change in its charter or by-laws which the Company determines to
be contrary to the best interests of the Company and its stockholders. The
Company shall furnish the Buyer with copies of all filings,
27
applications, orders and grants or confirmations of exemptions relating to such
securities laws on or before the Closing Date.
(c) LIMITATION ON CERTAIN ACTIONS. If the securities being sold by
the Company constitute Notes, from the date of execution and delivery of this
Agreement by the parties hereto to the date of issuance of such Notes, the
Company (1) shall comply with Article Five of the Supplemental Indenture as if
the Supplemental Indenture had been executed and delivered by the Company and
the Trustee and the Notes were outstanding, (2) shall not take any action which,
if the Notes were outstanding, would constitute an Event of Default or, with the
giving of notice or the passage of time or both, would constitute an Event of
Default.
(d) INDENTURE; SUPPLEMENTAL INDENTURE; FINANCING STATEMENTS, ETC.
If the securities being sold by the Company constitutes Notes, the Company
agrees to execute and deliver to the Trustee on or before the Closing Date the
Indenture in the form filed as Exhibit 4.1 to the Registration Statement and the
Supplemental Indenture in the form of ANNEX IV to this Agreement. If the
securities being sold by the Company will be secured by any Collateral, the
Company shall prepare and on or before the date that is two Business Days
prior to the Closing Date execute and deliver to the Trustee Uniform Commercial
Code financing statements on Form UCC-1 relating to such Collateral in which the
Company is granting a security interest to the Trustee for the benefit of the
holders of the such securities for filing with the appropriate officials.
(e) USE OF PROCEEDS. The Company represents and agrees that: (1)
it does not own or have any present intention of acquiring any Margin Stock; (2)
the proceeds of sale of the securities being sold by the Company will be used
for general working capital purposes and in the operation of the Company's
business; (3) none of such proceeds will be used, directly or indirectly (A) to
make any loan to or investment in any other Person that is principally engaged
in any business other than the types of business permitted by Section 5.04 of
the applicable Supplemental Indenture or that would otherwise fail to comply
with the Indenture or the applicable Supplemental Indenture or (B) for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any Margin Stock or for the purpose of maintaining, reducing or retiring any
indebtedness which was originally incurred to purchase or carry any stock that
is currently a Margin Stock or for any other purpose which would constitute the
transactions contemplated by this Agreement as a "purpose credit" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System;
and (4) neither the Company nor any agent acting on its behalf has taken or will
take any action which would cause this Agreement or the transactions
contemplated hereby to violate Regulation T, Regulation U or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the 1934 Act, in each case as in effect now or as the same may hereafter be in
effect.
28
(f) CONCERNING THE REGISTRATION STATEMENT.
(1) (A) If applicable, the Company shall use its best efforts to
keep the Registration Statement effective pursuant to Rule 415 with respect to
the Warrant Shares at all times during the Registration Period, subject to
5(f)(1)(B).
(B) Notwithstanding Section 5(f)(1)(A), if at any time the Company
notifies the Buyer as contemplated by clause (C) of the first sentence of
Section 5(f)(3) and the Company also notifies the Buyer that the event giving
rise to such notice related to a development involving the Company which
occurred subsequent to the later of (X) the SEC Effective Date and (y) the
latest date prior to such notice on which the Company has amended or
supplemented the Registration Statement, then the Company shall not be required
to use best efforts to keep the Registration Statement effective during a
Blackout Period; provided, however, that in any period of 365 consecutive days
the Company shall not be entitled to avail itself of its rights under this
Section 5((f)(1)(B) with respect to more than (i) an aggregate of 20 Trading
Days, whether or not consecutive.
(2) The Company will file the applicable Prospectus Supplement, in
the form attached hereto as ANNEX VII, with the SEC within the time provided by
Rule 424 of the 1933 Act Rules and Regulations. The Company will not, on or
prior to the Closing Date, file any amendment or supplement to the Registration
Statement or the Prospectus; or any document under the 1934 Act which would be
deemed to be incorporated by reference therein, unless in each case a copy
thereof shall first have been submitted to the Buyer within a reasonable period
of time prior to the filing thereof.
(3) The Company will notify the Buyer promptly, and will confirm
such advice in writing (A) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (B) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (C) of the happening of any event that
makes any statement made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading and (D) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the SEC relating to the Company, the Registration Statement,
any preliminary prospectus or the Prospectus. If the SEC shall issue any order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time. The Company will use its best efforts to comply with the
provisions of and make all requisite filings with the SEC pursuant to Rule 430A
and to notify the Buyer promptly of all such filings.
(4) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(5) The Company shall make generally available to its security
holders as soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of
29
Rule 158 under the ▇▇▇▇ ▇▇▇) covering a 12-month period beginning not later than
the first day of the Company's fiscal quarter next following the SEC Effective
Date and the first day of the Company's final quarter next following the date
the Prospectus Supplement is filed with the SEC.
(g) BEST EFFORTS. Each of the parties shall use its best efforts
timely to satisfy each of the conditions to the other party's obligations to
sell and purchase the securities set forth in Section 6 or 7, as the case may
be, of this Agreement on or before the Closing Date.
(h) DEBT OBLIGATION. If the securities being sold by the Company
constitutes Notes, so long as any portion of such Notes are outstanding, the
Company shall cause its books, records and financial statements to reflect such
Notes as a debt of the Company in its unpaid principal amount and, whenever
appropriate, as a valid senior, secured debt obligation of the Company for money
borrowed.
6. CONDITIONS TO COMPANY'S OBLIGATION TO SELL.
The Company's obligation to sell to the Buyer the securities on
the Closing Date is conditioned upon satisfaction of the following conditions
precedent on or before the Closing Date (any or all of which may be waived by
the Company in its sole discretion):
(1) On the Closing Date, no legal action, suit or proceeding shall
be pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
(2) The representations and warranties of the Buyer contained in
this Agreement shall have been true and correct on the date of this Agreement
and on the Closing Date as if made on the Closing Date (except for
representations given as of a specific date, which representations shall be true
and correct as of such date); and on or before the Closing Date the Buyer shall
have performed all
30
covenants and agreements of the Buyer contained in the Transaction Documents and
required to be performed by the Buyer on or before the Closing Date; and
(3) The Registration Statement shall have been declared effective
by the SEC and no stop order or similar proceeding relating to the Registration
Statement shall be pending or threatened.
7. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.
The Buyer's obligation to purchase the securities from the Company
on the Closing Date is conditioned upon satisfaction of the following conditions
precedent on or before the Closing Date (any or all of which may be waived by
the Buyer in its sole discretion):
(1) The Trustee shall have executed and delivered to the Company
the Indenture and the applicable Supplemental Indenture and copies thereof, as
so executed and duly executed and delivered by the Company, shall have been
furnished to the Buyer;
(2) The Buyer shall have received customary search reports of the
relevant Uniform Commercial Code filing offices, the content of which reports
shall be reasonably satisfactory to the Buyer;
(3) If the securities being sold by the Company will be secured by
any Collateral, all filings of financing statements necessary or appropriate
under the Uniform Commercial Code in connection with the applicable Supplemental
Indenture shall have been made and the Buyer shall have received reasonably
satisfactory evidence of such filings;
(4) On the Closing Date, no legal action, suit or proceeding shall
be pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
(5) The representations and warranties of the Company contained in
the Transaction Documents shall have been true and correct on the date of this
Agreement and shall be true and correct on the Closing Date as if given on and
as of the Closing Date (except for representations given as of a specific date,
which representations shall be true and correct as of such date and except for
the approvals and filings referred to in clauses (3) and (5) of Section 4(g),
which shall have been obtained or made on or before the Closing Date), and on or
before the Closing Date the Company shall have performed all covenants and
agreements of the Company contained herein or in any of the other Transaction
Documents required to be performed by the Company on or before the Closing Date;
31
(6) If the securities being sold by the Company constitute Notes,
no event which, if such Notes were outstanding, would constitute an Event of
Default or which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default shall have occurred and be continuing;
(7) No stop order or similar proceeding relating to the
Registration Statement shall be pending or threatened; the Company shall have
filed the applicable Prospectus Supplement with the SEC; and, on or after the
date of execution and delivery of this Agreement but on or before the Closing
Date, the Company shall not have made or filed with the SEC any amendment or
supplement to the Registration Statement or the Prospectus other than such
Prospectus Supplement;
(8) The Company shall have delivered to the Buyer a certificate,
dated the Closing Date, duly executed by its Chief Executive Officer or Chief
Financial Officer, to the effect set forth in subparagraphs (4), (5), (6) and
(7) of this Section 7(b);
(9) The Company shall have delivered to the Buyer a certificate,
dated the Closing Date, of the Secretary of the Company certifying (1) the
Certificate of Incorporation and By-Laws of the Company as in effect on the
Closing Date, (2) all resolutions of the Board of Directors (and committees
thereof) of the Company relating to this Agreement and the Transaction Documents
and the transactions contemplated hereby and thereby and (3) such other matters
as reasonably requested by the Buyer;
(10) The Transfer Agent shall have acknowledged in writing receipt
of the Issuing Agent Instruction and a copy of such acknowledgment shall have
been furnished to the Buyer;
(11) On the Closing Date, the Buyer shall have received an opinion
of counsel for the Company, dated the Closing Date, addressed to the Buyer, in
form, scope and substance reasonably satisfactory to the Buyer, substantially in
the form of ANNEX V to this Agreement;
(12) On the Closing Date, the Buyer shall have received an opinion
of General Counsel of the Company, dated the Closing Date, addressed to the
Buyer, in form, scope and substance reasonably satisfactory to the Buyer,
substantially in the form of ANNEX VI to this Agreement;
(13) On the Closing Date, (i) trading in securities on the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., or the Nasdaq
shall not have been suspended or materially limited and (ii) a general
moratorium on
32
commercial banking activities in the State of California or the State of New
York shall not have been declared by either federal or state authorities; and
(14) After the date of this Agreement but on or prior to the
Closing Date the Company shall have filed with the SEC or delivered to the Buyer
for use in connection with the sale of Securities to the Buyer any amendment or
supplement to the Registration Statement or the Prospectus, or filed with the
SEC any document under the 1934 Act which is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, in any such case
which amendment, supplement or document has not been approved by the Buyer; and
8. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION. (1) To the extent not prohibited by
applicable law, the Company will indemnify and hold harmless each Indemnified
Person against any Claims to which any of them may become subject under the 1933
Act, the 1934 Act or otherwise, insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any Violation or any of the transactions contemplated by the
Transaction Documents. Subject to the restrictions set forth in Section 8(a)(3)
with respect to the number of legal counsel, the Company shall reimburse each
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any documented reasonable legal fees or other documented and
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, an Indemnified Person shall not be entitled to indemnification under
this Section 8(a)(1) for: (I) a Claim arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information relating to an
Indemnified Person furnished in writing to the Company by such Indemnified
Person expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto if the Prospectus
or such amendment or supplement thereto was timely made available by the
Company; and (II) amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Securities by the Indemnified
Persons.
(2) Promptly after receipt by an Indemnified Person under this
Section 8(a) of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 8(a),
deliver to the indemnifying party a notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that an
Indemnified Person shall have the right to retain its own counsel with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the Indemnified Person and the indemnifying party would be
inappropriate due to actual or potential
33
differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding; provided further, however, that
no indemnifying person shall be responsible for the fees and expenses of more
than one separate counsel for all Indemnified Persons hereunder and one separate
counsel in each jurisdiction in which a Claim is pending or threatened. The
failure to deliver notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person under this Section 8(a), except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 8(a) shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
(b) CONTRIBUTION. To the extent any indemnification by an
indemnifying party as set forth in Section 8(a) above is applicable by its terms
but is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 8(a) to the fullest extent permitted by law. In determining
the amount of contribution to which the respective parties are entitled, there
shall be considered the relative fault of each party, the parties' relative
knowledge of and access to information concerning the matter with respect to
which the Claim was asserted, the opportunity to correct and prevent any
statement or omission and any other equitable considerations appropriate under
the circumstances; provided, however, that (a) no contribution shall be made
under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 8(a) and (b) no
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any other Person
who was not guilty of such fraudulent misrepresentation.
(c) OTHER RIGHTS. The indemnification and contribution provided in
this Section shall be in addition to any other rights and remedies available at
law or in equity.
9. MISCELLANEOUS.
(a) GOVERNING LAW. This agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
(b) HEADINGS. The headings, captions and footers of this Agreement
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
34
(c) SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
(d) NOTICES. Any notices required or permitted to be given under
the terms of this Agreement shall be in writing and shall be sent by mail,
personal delivery, telephone line facsimile transmission or courier and shall be
effective five days after being placed in the mail, if mailed, or upon receipt,
if delivered personally, by telephone line facsimile transmission or by courier,
in each case addressed to a party at such party's address (or telephone line
facsimile transmission number) shown in the introductory paragraph or on the
signature page of this Agreement or such other address (or telephone line
facsimile transmission number) as a party shall have provided by notice to the
other party in accordance with this provision. In the case of any notice to the
Company, such notice shall be addressed to the Company at its address shown in
the introductory paragraph of this Agreement, Attention: Chief Financial Officer
(telephone line facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), and a copy shall also be given
to: ____________, Attention: ________ (telephone line facsimile number
__________), and in the case of any notice to the Buyer, a copy shall be given
to: _____________ (telephone line facsimile transmission number __________), in
each case with a copy to: __________ (telephone line facsimile transmission
number ___________).
(e) COUNTERPARTS. This Agreement may be executed in counterparts
and by the parties hereto on separate counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument. A telephone line facsimile transmission of this Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.
Although this Agreement is dated as of the date first set forth above, the
actual date of execution and delivery of this Agreement by each party is the
date set forth below such party's signature on the signature page hereof. Any
reference in this Agreement or in any of the documents executed and delivered by
the parties hereto in connection herewith to (1) the date of execution and
delivery of this Agreement by the Buyer shall be deemed a reference to the date
set forth below the Buyer's signature on the signature page hereof, (2) the date
of execution and delivery of this Agreement by the Company shall be deemed a
reference to the date set forth below the Company's signature on the signature
page hereof and (3) the date of execution and delivery of this Agreement, or the
date of execution and delivery of this Agreement by the Buyer and the Company,
shall be deemed a reference to the later of the dates set forth below the
signatures of the parties on the signature page hereof.
(f) ENTIRE AGREEMENT; BENEFIT. This Agreement, including the
Annexes and Schedules, constitutes the entire agreement between the parties
35
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties, or undertakings, other than those set forth or referred to
herein and therein. This Agreement, including the Annexes and Schedules,
supersedes all prior agreements and understandings, whether written or oral,
between the parties hereto with respect to the subject matter hereof. This
Agreement and the terms and provisions hereof are for the sole benefit of only
the Company, the Buyer and their respective successors and permitted assigns and
in no event shall the Buyer have any liability to any stockholder or creditor of
the Company or any other Person (other than the Company) in any way relating to
or arising from this Agreement or the transactions contemplated hereby.
(g) WAIVER. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, or course of dealing between the parties, shall not operate as a
waiver thereof or an amendment hereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
(h) AMENDMENT. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Buyer or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given. No course of dealing between the parties hereto shall operate
as an amendment of this Agreement.
(i) FURTHER ASSURANCES. Each party to this Agreement will perform
any and all acts and execute any and all documents as may be necessary and
proper under the circumstances in order to accomplish the intents and purposes
of this Agreement and to carry out its provisions.
(j) EXPENSES. The Company shall be responsible for its expenses
(including, without limitation, the legal fees and expenses of its counsel)
incurred by the Company in connection with the negotiation and execution of, and
closing under, and performance of, this Agreement. Whether or not the Effective
Date occurs, the Company will promptly pay, or reimburse the Buyer for, in
either case, upon submission of reasonably satisfactory documentation, the fees
and expenses of the Buyer's legal counsel not in excess of $_________ in
connection with the negotiation and execution of, and closing under, this
Agreement. All reasonable expenses incurred in connection with registrations,
filings or qualifications pursuant to this Agreement shall be paid by the
Company, including, without limitation, all registration, listing and
qualifications fees, printers fees, accounting fees, and the fees and
disbursements of counsel for the Company but excluding (a) fees and expenses of
investment bankers retained by the Buyer and (b) brokerage commissions incurred
by the Buyer. The
36
Company shall promptly pay all expenses incurred by the Buyer, including
reasonable fees and disbursements of counsel, as a consequence of, or in
connection with the negotiation, preparation or execution of any amendment,
modification or waiver of any of the Transaction Documents upon submission of
reasonably satisfactory documentation. Except as otherwise provided in this
Section 9(j), each of the Company and the Buyer shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby.
Nothing herein shall limit the rights of the Placement Agent under its
Engagement Agreement with the Company.
(k) TERMINATION. The Buyer shall have the right to terminate this
Agreement by giving notice to the Company at any time prior to the closing on
the Closing Date if:
(1) the Company shall have failed, refused, or been unable at or
prior to the date of such termination of this Agreement to perform any of
its obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is
not fulfilled at the closing on the Closing Date; or
(3) the closing shall not have occurred on a Closing Date on or
before _________, other than solely by reason of a breach of this
Agreement by the Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.
(l) SURVIVAL. The respective representations, warranties,
covenants and agreements of the Company and the Buyer contained in this
Agreement and the other Transaction Documents shall survive the execution and
delivery of this Agreement and the other Transaction Documents and the closing
hereunder and delivery of and payment for the Note and issuance of the Warrants,
and shall remain in full force and effect regardless of any investigation made
by or on behalf of the Buyer or any Person controlling or acting on behalf of
the Buyer or by the Company or any Person controlling or acting on behalf of the
Company.
37
(m) PUBLIC STATEMENTS, PRESS RELEASES, ETC. The Company and the
Buyer shall have the right to approve before issuance any press releases or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations,
including the 1933 Act and the rules and regulations promulgated thereunder
(although the Buyer shall be consulted by the Company prior to the release or
making of any such press release or other public disclosure that identifies the
Buyer and shall be provided with a copy thereof).
(n) CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
38
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers or other representatives thereunto
duly authorized as of the date first set forth above and on the dates set forth
below their respective signatures.
COMPANY
By:
------------------------------------------
Name:
Title:
Date:
BUYER
By:
------------------------------------------
Name:
Title:
Date:
39
[Schedules and Annexes Intentionally Omitted]