EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of April 7,
2000 is made by and among AKSYS, LTD., a Delaware corporation, with headquarters
located at Two Marriott Drive, Lincolnshire, IL 60069 (the "Company"), and the
investors named on the signature pages hereto, together with their permitted
transferees (the "Investors").
RECITALS:
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
B. The Investors desire, upon the terms and conditions stated in this
Agreement, to purchase shares of the Company's Common Stock, for an aggregate
purchase price of $11,754,402. The purchase price per share of the Common Stock
is $7.75.
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
under which the Company has agreed to provide certain registration rights under
the Securities Act and the rules and regulations promulgated thereunder.
D. The capitalized terms used herein and not otherwise defined have the
meanings given them in Article 9 hereof.
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 Company and the Investors hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. At the Closing, subject to the terms
of this Agreement and the satisfaction or waiver of the conditions set forth in
Articles VI and VII hereof, the Company will issue and sell to each Investor,
and each Investor will (on a several and not a joint basis) purchase from the
Company, the number of Securities set forth beneath such Investor's name on the
signature pages hereof.
1.2 Payment. Each Investor will pay the purchase price for the number of
Securities set forth beneath its name on the signature pages hereof, by wire
transfer of immediately available funds in accordance with the Company's written
wire instructions, and the Company will deliver to each Investor certificates
representing the Securities so purchased by such Investor and the Company will
deliver such certificates against delivery of the purchase price as described
above.
1.3 Closing Date. Subject to the satisfaction or waiver of the conditions
set forth in Articles VI and VII hereof, the Closing will take place at 10:00
a.m. Central Time on April 11, 2000, or at another date or time agreed upon by
the parties to this Agreement (the "Closing Date"). The Closing will be held at
the offices of the Company or at such other place as the parties agree.
ARTICLE 2
INVESTOR'S REPRESENTATIONS AND WARRANTIES
Each Investor represents and warrants to the Company, severally and solely
with respect to itself and its purchase hereunder and not with respect to any
other Investor, that:
2.1 Investment Purpose. The Investor is purchasing the Securities for its
own account and not with a present view toward the public sale or distribution
thereof; provided, however, that by making the representation herein, the
Investor reserves the right to dispose of the Securities in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
2.2 Accredited Investor Status. The Investor is an "accredited investor"
as defined in Rule 501(a) of Regulation D. The Investor has delivered an
Investor Questionnaire in the form of Exhibit A to the Company and to U.S.
Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., certifying that the Investor is such an accredited
investor.
2.3 Reliance on Exemptions. The Investor understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Investor's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Securities.
2.4 Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company, and materials relating to the offer and sale of the Securities,
that have been requested by the Investor or its advisors, if any. The Investor
and its advisors, if any, have been afforded the opportunity to ask questions of
the Company. Neither such inquiries nor any other due diligence investigation
conducted by Investor or any of its advisors or representatives modify, amend or
affect the Investor's right to rely on the Company's representations and
warranties contained in Article III below. The Investor acknowledges and
understands that its investment in the Securities involves a significant degree
of risk, including the risks reflected in the SEC Documents.
2.5 Governmental Review. The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
2.6 Transfer or Resale. The Investor understands that:
(a) except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the Securities Act
or any applicable state securities laws and, consequently, the Investor may have
to bear the risk of owning the Securities for an indefinite period of time
because the Securities may not be transferred unless (i) the resale of the
Securities is registered pursuant to an effective registration statement under
the Securities Act; (ii) the Investor has delivered to the Company an opinion of
counsel (in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (iii) the Securities are sold or transferred pursuant to Rule 144
or (iv) the Securities are sold or transferred to an affiliate (as defined in
Rule 144) of the Investor;
(b) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 (including volume limitations
and manner of sale restrictions, if applicable) and, if Rule 144 is not
applicable, the seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the Securities Act)
under the Securities Act or the rules and regulations of the SEC thereunder; and
(c) except as set forth in the Registration Rights Agreement, neither
the Company nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
2.7 Legends. The Investor understands that until (a) the Securities may
be sold by the Investor under Rule 144(k) or (b) such time as the resale of the
Securities have been effected under the Securities Act as contemplated by the
Registration Rights Agreement, the certificates representing the Securities will
bear a restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of the certificates for such
Securities):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The legend set forth above will be removed and the Company will issue a
certificate without the legend to the holder of any certificate upon which it is
stamped, in accordance with the terms of Article V hereof.
2.8 Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of the Investor and are valid and binding agreements of the Investor
enforceable against Investor in accordance with their terms, subject to the
effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity.
2.9 Residency. The Investor is a resident of the jurisdiction set forth
immediately below such Investor's name on the signature pages hereto.
2.10 Acknowledgments Regarding Placement Agent. Purchaser acknowledges
that U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. is acting as placement agent (the
"Placement Agent") for the Securities being offered hereby and will be
compensated by the Company for acting in such capacity. Purchaser further
acknowledge that the Placement Agent has acted solely as placement agent in
connection with the offering of the Securities by the Company, that certain of
the information and data provided to Purchaser in connection with the
transactions contemplated hereby have not been subjected to independent
verification by the Placement Agent, and that the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material. Purchaser further
acknowledges that in making its decision to enter into this Agreement and
purchase the Securities it has relied on its own examination of the Company and
the terms of, and consequences, of holding the Securities. Purchaser further
acknowledges that the provisions of this Section 2.10 are also for the benefit
of, and may also be enforced by, the Placement Agent.
2.11 No Public Offering. Investor has not received any information
relating to the Securities by means of any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio or pursuant to a meeting or seminar whose
attendees were invited by general solicitation or advertising.
2.12 No Conflicts; No Violation.
(a) To the Investor's knowledge, the execution, delivery and
performance of this Agreement by the Investor will not (i) conflict with or
result in a violation of any provision of its charter documents, or (ii) result
in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Investor.
(b) The Investor is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that:
3.1 Organization and Qualification. The Company is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full corporate power and authority to own, lease,
use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. The Company is duly
qualified to do business and is in good standing in every jurisdiction in which
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified or in good standing in each such
jurisdiction would not have a Material Adverse Effect.
3.2 Authorization; Enforcement. (a) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement and the Registration Rights Agreement, to consummate the
transactions contemplated hereby and thereby and to issue the Securities in
accordance with the terms hereof; (b) the execution, delivery and performance of
this Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation the issuance of the Securities) have been duly
authorized by the Company's Board of Directors and no further consent or
authorization of the Company, its Board or Directors, or its shareholders is
required; (c) this Agreement and the Registration Rights Agreement have been
duly executed by the Company; and (d) each of this Agreement and the
Registration Rights Agreement constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
or moratorium or similar laws affecting the rights of creditors generally and
the application of general principles of equity.
3.3 Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (a) 50,000,000 shares of Common Stock, par value $.01
per share, of which 15,252,337 shares are issued and outstanding and 1,851,583
shares are reserved for issuance under the Company's stock option plans; (b)
1,000,000 shares of preferred stock, par value $.01 per share, 50,000 of which
have been designated Junior Participating Preferred Stock, Series A, none of
which are issued and outstanding. All of such outstanding shares of capital
stock are duly authorized, validly issued, fully paid and nonassessable. No
shares of capital stock of the Company, including the Securities issuable
pursuant to this Agreement, are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company. Except as
disclosed in Schedule 3.3 and except for the transactions contemplated hereby,
(i) there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever that could require the
Company to issue additional shares of capital stock of the Company; (ii) there
are no agreements or arrangements (other than the Registration Rights Agreement)
under which the Company is obligated to register the sale of any of its
securities under the Securities Act and (iii) there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) that will be triggered by
the issuance of the Securities. The Company has furnished to the Investors true
and correct copies of the Company's Certificate of Incorporation, as amended, as
in effect on the date hereof, the Company's By-laws as in effect on the date
hereof and the terms of all securities (other than employee stock options)
convertible into or exercisable for Common Stock of the Company and the material
rights of the holders thereof in respect thereto.
3.4 Issuance of Securities. The Securities are duly authorized and, upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, free from all taxes, liens, claims, encumbrances
and charges with respect to the issue
thereof, and will not be subject to preemptive rights or other similar rights of
stockholders of the Company.
3.5 No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement and the
Registration Rights Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) conflict with or result
in a violation of any provision of the Certificate of Incorporation or By-laws
or (ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment (including without limitation, the triggering of any anti-dilution
provision), acceleration or cancellation of, any agreement, indenture, patent,
patent license, or instrument to which the Company is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including U.S. federal and state securities laws and regulations and
regulations of any self-regulatory organizations to which the Company or its
securities are subject), applicable to the Company or by which any property or
asset of the Company is bound or affected (except in the case of clauses (i),
(ii) and (iii) for such conflicts, breaches, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect).
(b) The Company is not in violation of its Certificate of
Incorporation or By-laws and the Company is not in default (and no event has
occurred which with notice or lapse of time or both could put the Company in
default) under any agreement, indenture or instrument to which the Company is a
party or by which any property or assets of the Company is bound or affected,
except for defaults as would not, individually or in the aggregate, have a
Material Adverse Effect.
(c) The Company is not conducting its business in violation of any
law, ordinance or regulation of any governmental entity, except where the
failure to so comply would, individually or in the aggregate, have a Material
Adverse Effect.
(d) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws or
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement, in each case in accordance with the terms hereof
or thereof, or to issue and sell the Securities in accordance with the terms
hereof. Except as set forth in Schedule 3.5, all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company is not in violation of the listing requirements of
Nasdaq.
3.6 SEC Documents, Financial Statements. Since December 31, 1998, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits) incorporated by reference therein,
being hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to each Investor, or each Investor has had access to, true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents have been prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except
as set forth in the financial statements included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (A) liabilities
incurred in the ordinary course of business subsequent to December 31, 1999, and
(B) liabilities of the type not required under generally accepted accounting
principles to be reflected in such financial statements or (C) other liabilities
which would not, individually or in the aggregate, have Material Adverse Effect.
3.7 Absence of Certain Changes. Since December 31, 1999, there has been
no material adverse change in the assets, liabilities, business, properties,
operations, financial condition or results of operations of the Company, taken
as a whole.
3.8 Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its officers or
directors acting as such that could, individually or in the aggregate, have a
Material Adverse Effect.
3.9 Intellectual Property Rights. The Company owns or possesses the
licenses or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service
marks, service names, trade names and copyrights necessary to enable it to
conduct its business as now operated (the "Intellectual Property"), except where
the failure to possess such licenses or rights to use would not have,
individually or in the aggregate, a Marital Adverse Effect. There is no claim
or action or proceeding pending or, to the Company's knowledge, threatened that
challenges the right of the Company with respect to any Intellectual Property.
3.10 Tax Status. The Company has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith. To the knowledge of the Company, there are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. To the Company's knowledge, none of the Company's tax
returns is presently being audited by any taxing authority.
3.11 Environmental Laws. The Company (i) is in compliance with all
applicable foreign federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business as presently conducted and
(iii) is in compliance with all terms and conditions of any such permit, license
or approval, except where, in each of the three foregoing clauses, the failure
to so comply would not have, individually or in the aggregate, a Material
Adverse Effect.
3.12 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances within the prior six months that would
require registration under the Securities Act of the issuance of the Securities
to the Investors. The issuance of the Securities to the Investors will not be
integrated with any other issuance of the Company's securities (past, current or
future) for purposes of the Securities Act.
3.13 No Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby,
except for dealings with U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., whose commissions and
fees will be paid for by the Company.
3.14 Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which
the Company is engaged.
3.15 Employment Matters. The Company is in compliance with all federal,
state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours
except where failure to be in compliance would not have a Material Adverse
Effect.
3.16 Investment Company Status. The Company is not and upon consummation
of the sale of the Securities will not be an "investment company," a company
controlled by an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
ARTICLE 4
COVENANTS
4.1 Best Efforts. Each party will use its best efforts to satisfy in a
timely fashion each of the conditions to be satisfied by it under Articles VI
and VII of this Agreement.
4.2 Form D; Blue Sky Laws. The Company will file a Notice of Sale of
Securities on Form D with respect to the Securities, as required under
Regulation D, and to provide a copy thereof to each Investor promptly after such
filing. The Company will take such action as it reasonably determines to be
necessary to qualify the Securities for sale to the Investors under this
Agreement under applicable securities (or "blue sky") laws of the states of the
United States (or to obtain an exemption from such qualification), and will
provide evidence of any such action so taken to the Investors on or prior to the
date of the Closing. The Company will file with the SEC a Current Report on
Form 8-K disclosing this Agreement and the transactions contemplated hereby
within 10 business days after the Closing Date.
4.3 Reporting Status; Eligibility to Use Form S-3. The Company's Common
Stock is registered under Section 12 of the Exchange Act. Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company will timely file all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination. The Company currently meets, and will use its reasonable best
efforts to continue to meet, the "registrant eligibility" requirements for a
secondary offering set forth in the general instructions to Form S-3 to enable
the registration of the Registrable Securities as defined in the Registration
Rights Agreement.
4.4 Expenses. The Company and each Investor is liable for, and will pay,
its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, attorneys' and
consultants' fees and expenses.
4.5 Financial Information. The financial statements of the Company will
be prepared in accordance with United States generally accepted accounting
principles, and will fairly present in all material respects the consolidated
financial position of the Company and results of its operations and cash flows
as of, and for the periods covered by, such financial statements (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
4.6 Listing. On or before the tenth business day after the date of this
Agreement, the Company will secure the listing of the Securities upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and, so long as any Investor owns any of the Securities, will
maintain such listing of the Securities. The Company will use its best efforts
to obtain and, so long as any Investor owns any of the Securities, maintain the
listing and trading of its Common Stock on Nasdaq, the American Stock Exchange
or the New York Stock Exchange and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the National Association of Securities Dealers, Inc. and such exchanges, as
applicable. Until an Investor transfers, assigns or sells all of the Securities
owned by it, the Company will promptly provide to each Investor copies of any
notices it receives regarding the continued eligibility of the Securities for
listing on Nasdaq or other principal exchange or quotation system on which the
Securities are listed.
4.7 Compliance with Law. As long as an Investor owns any of the
Securities, the Company will use commercially reasonable efforts to conduct its
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without limitation,
all applicable local, state and federal environmental laws and regulations, the
failure to comply with which would have a Material Adverse Effect.
4.8 No Integration. The Company will not make any offers or sales of any
security (other than the Securities) under circumstances that would cause the
offering of the Securities to be integrated with any other offering of
securities by the Company (i) for the purpose of any stockholder approval
provision applicable to the Company or its securities or (ii) for purposes of
any registration requirement under the Securities Act.
4.9 Sales by Investors. Each Investor will sell any Securities sold by it
in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
No Investor will make any sale, transfer or other disposition of the Securities
in violation of federal or state securities laws.
4.10 Investor Questionnaire. Each Investor will execute a questionnaire
prepared by the Company, certifying the information required to be included in
any registration statement filed in satisfaction of the Company's obligations
under the Registration Rights Agreement.
ARTICLE 5
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
5.1 Issuance of Certificates. The Company will instruct its transfer
agent to issue certificates, registered in the name of each Investor or its
nominee, for the Securities. All such certificates will bear the restrictive
legend described in Section 2.7, except as otherwise specified in this Article
V. In addition, the Company will issue irrevocable Transfer Agent Instructions
to the transfer agent in the form of Exhibit B hereto. The Company will not
give to its transfer agent any instruction with respect to the Securities other
than as described in this Article V and stop transfer instructions to give
effect to Section 2.7 hereof (prior to registration of the Securities under the
Securities Act). Nothing in this Section will affect in any way the Investors'
obligations and agreement set forth in Section 2.7 hereof to comply with all
applicable prospectus delivery requirements, if any, upon resale of the
Securities.
5.2 Unrestricted Securities. If, unless otherwise required by applicable
state securities laws, (a) the Securities represented by a certificate have been
sold under an effective registration statement filed under the Securities Act,
(b) a holder of Securities provides the Company and the Transfer Agent with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, which counsel and opinion shall be
reasonably satisfactory to the Company, to the effect that a public sale or
transfer of such Securities may be made without registration under the
Securities Act and such sale either has occurred or may occur without
restriction on the timing or manner of such sale or transfer or (c) the
Securities represented by a certificate can be sold without restriction as to
the number of securities sold under Rule 144(k), the Company will permit the
transfer of the Securities, and the Transfer Agent will issue one or more
certificates, free from any restrictive legend, in such name and in such
denominations as specified by such holder in accordance with the Transfer Agent
Instructions. Notwithstanding anything herein to the contrary, the Securities
may be pledged as collateral in connection with a bona fide margin account or
other lending arrangement; provided that such pledge will not alter the
provisions of this Article V with respect to the removal of restrictive legends.
5.3 Enforcement of Provision. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the Investor by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Article V will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section,
that the Investor will be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company to issue and sell the Securities to each
Investor at the Closing is subject to the satisfaction by such Investor, on or
before the Closing Date, of each of the following conditions. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion:
6.1 The Investor will have executed this Agreement and the Registration
Rights Agreement and the Accredited Investor Questionnaire and will have
delivered those agreements and questionnaire to the Company.
6.2 The Investor will have delivered the purchase price for the Securities
to the Company in accordance with this Agreement.
6.3 The representations and warranties of the Investor must be true and
correct as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be correct as of such date), and the
Investor will have performed and complied in all material respects with the
covenants
and conditions required by this Agreement to be performed or complied with by
the Investor at or prior to the Closing.
6.4 No statute, rule, regulation, executive order, decree, ruling or
injunction will have been enacted, entered, promulgated or endorsed by or in any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
ARTICLE 7
CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE
The obligation of each Investor hereunder to purchase the Securities from
the Company at the Closing is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions. These conditions are for
each Investor's respective benefit and may be waived by such Investor at any
time in its sole discretion:
7.1 The Company will have executed this Agreement and the Registration
Rights Agreement and will have delivered those Agreements to the Investor.
7.2 The Company will have delivered to the Investors duly executed
certificates, against payment therefor, representing the Securities in the
amounts specified in Section 1.1 hereof.
7.3 The representations and warranties of the Company must be true and
correct in all material respects as of the Closing as though made at that time
(except for representations and warranties that speak as of a specific date,
which representations and warranties must be true and correct as of such date)
and the Company must have performed and complied in all material respects with
the covenants and conditions required by this Agreement to be performed or
complied with by the Company at or prior to the Closing. The Investor must have
received a certificate or certificates dated as of the Closing Date and executed
by the Chief Executive Officer or the Chief Financial Officer of the Company
certifying as to the matters in contained in this Section 7.3 and as to such
other matters as may be reasonably requested by such Investor, including, but
not limited to, the Company's Certificate of Incorporation, By-laws, Board of
Directors' resolutions relating to the transactions contemplated hereby and the
incumbency and signatures of each of the officers of the Company who may execute
on behalf of the Company any document delivered at the Closing.
7.4 No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction will have been enacted, entered, promulgated or endorsed by
or in any court or governmental authority of competent jurisdiction or any self-
regulatory organization having authority over the matters contemplated hereby
which prohibits the consummation of any of the transactions contemplated by this
Agreement.
7.5 Trading and listing of the Common Stock on Nasdaq must not have been
suspended by the SEC or Nasdaq.
7.6 The Investors will have received an opinion of the Company's counsel,
dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Investors and in substantially the form attached hereto as
Exhibit C.
7.7 The Irrevocable Transfer Agent Instructions, in substantially the form
attached hereto as Exhibit B will have been delivered to the Company's transfer
agent and acknowledged in writing by such transfer agent.
ARTICLE 8
INDEMNIFICATION
In consideration of each Investor's execution and delivery of this
Agreement and its acquisition of the Securities hereunder, and in addition to
all of the Company's other obligations under this Agreement and the Registration
Rights Agreement, the Company will defend, protect, indemnify and hold harmless
each Investor and each other holder of the Securities to whom rights are
assigned under Section 10.7 of this Agreement and all of their stockholders,
officers, directors, employees and direct or indirect investors and any of the
foregoing person's agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (regardless of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by an Indemnitee as a result of, or
arising out of, or relating to (a) any breach of any representation or warranty
made by the Company herein or in any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained herein or in any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee and arising out of
or resulting from the execution, delivery, performance, breach or enforcement of
this Agreement or the Registration Rights Agreement by the Company. To the
extent that the foregoing undertaking by the Company is unenforceable for any
reason, the Company will make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law. Notwithstanding the foregoing the indemnification agreement
contained in this Article VIII does not apply to amounts paid in settlement of
Indemnified Liabilities if such settlement is made without the prior written
consent of the Company, which consent will not be unreasonably withheld. The
Company may participate in, and assume and control, the defense of any claim
with counsel mutually satisfactory to the Company and the Indemnities. If, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnitee and the indemnifying party is
inappropriate due to actual or potential conflicts of interest between the
Indemnitee and any other party represented by such counsel in such proceeding or
the actual or potential defendants in, or targets of, any such action including
the Indemnitee, and any such Indemnitee reasonably determines that there may be
legal defenses available to such Indemnitee that are different from or in
addition to those available to the indemnifying party, then the Indemnitee is
entitled to assume such defense and may retain its own counsel, with the
reasonable, out-of-
pocket fees and expenses to be paid by the indemnifying party. The Company will
pay for only one separate legal counsel for the Indemnitees collectively, and
such legal counsel will be selected by the Indemnitees holding a majority in
interest of the Securities held by all Indemnitees.
The indemnification provisions set forth above shall not be available to
any Indemnitee to the extent (i) that such Indemnitee is in material breach of
any provision of this Agreement or the Registration Rights Agreement or (ii) the
Indemnified Liabilities are covered under the indemnification provisions set
forth in Article VI of the Registration Rights Agreement, in which case the
Registration Agreement shall control the terms of any indemnification obligation
of the Company relating to such Indemnified Liabilities.
ARTICLE 9
DEFINITIONS
9.1 "Closing" means the closing of the purchase and sale of the
Securities under this Agreement.
9.2 "Closing Date" has the meaning set forth in Section 1.3.
9.3 "Common Stock" means the common stock, par value $0.01 per share, of
the Company.
9.4 "Company" means Aksys, Ltd.
9.5 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
9.6 "Indemnified Liabilities" has the meaning set forth in Article VIII.
9.7 "Indemnitees" has the meaning set forth in Article VIII.
9.8 "Intellectual Property" has the meaning set forth in Section 3.9.
9.9 "Investors" means the investors whose names are set forth on the
signature pages of this Agreement, and their permitted transferees.
9.10 "Knowledge" means the actual knowledge without independent
investigation.
9.11 "Material Adverse Effect" means a material adverse effect on (a) the
assets, liabilities, financial condition or results of operation of the
Company's business, taken as a whole or (b) the ability of the Company to
perform its obligations pursuant to the transactions contemplated by this
Agreement or under the agreements or instruments to be entered into or filed in
connection herewith.
9.12 "Nasdaq" means the Nasdaq National Market System.
9.13 "Placement Agent" has the meaning set forth in Section 2.10.
9.14 "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement by and among the parties to
this Agreement, in the form attached hereto as Exhibit D.
9.15 "Regulation D" means Regulation D as promulgated under by the SEC
under the Securities Act.
9.16 "Rule 144" and "Rule 144(k)" mean Rule 144 and Rule 144(k),
respectively, promulgated under the Securities Act, or any successor rule.
9.17 "SEC" means the United States Securities and Exchange Commission.
9.18 "SEC Documents" has the meaning set forth in Section 3.6.
9.19 "Securities" means the Common Stock sold pursuant to this agreement.
9.20 "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute.
ARTICLE 10
GOVERNING LAW; MISCELLANEOUS
10.1 Governing Law; Jurisdiction. This Agreement will be governed by and
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of Delaware with respect to any dispute arising under this Agreement,
the agreements entered into in connection herewith or the transactions
contemplated hereby or thereby.
10.2 Counterparts; Signatures by Facsimile. This Agreement may be
executed in two or more counterparts, all of which are considered one and the
same agreement and will become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
10.3 Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
10.4 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
10.5 Entire Agreement; Amendments. This Agreement and the Registration
Rights Agreement (including all schedules and exhibits thereto) constitute the
entire agreement among
the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the party to be charged with
enforcement.
10.6 Notices. Any notices required or permitted to be given under the
terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and will be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally, by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications are:
If to the Company: Aksys, Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
(▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
If to an Investor: To the address set forth immediately below such
Investor's name on the signature pages hereto.
Each party will provide written notice to the other parties of any change
in its address.
10.7 Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties and their successors and permitted assigns. The
Company will not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors, and no Investor may assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, an Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is an accredited investor (within the meaning
of Regulation D under the Securities Act) and agrees in writing to be bound by
this Agreement. This provision does not limit the Investor's right to transfer
the Securities pursuant to the terms of this Agreement or to assign the
Investor's rights hereunder to any such transferee pursuant to the terms of this
Agreement. Notwithstanding the foregoing, any transferee who purchases the
Securities in a public sale shall not have any rights under this Agreement.
10.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
10.9 Survival. The representations and warranties of the Company and the
agreements and covenants set forth herein will survive for two (2) years
following the Closing hereunder. The Company makes no representations or
warranties in any oral or written information provided to Investors, other than
the representations and warranties included herein.
10.10 Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
10.11 No Strict Construction. The language used in this Agreement is
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.
10.12 Equitable Relief. The Company recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Investors. The Company therefore
agrees that the Investors are entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
***************************
IN WITNESS WHEREOF, the undersigned Investors and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
AKSYS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
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Title: President and CEO
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INVESTORS:
/s/ Safeco Resource Series Trust
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/s/ Safeco Common Stock Trust
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/s/ Narragansett I, LP
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/s/ Narragansett Offshore, Ltd.
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/s/ Western United Life Assurance Co.
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/s/ Special Situations Cayman Fund, LP
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/s/ Special Situations Private Equity Fund, LP
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/s/Special Situations Fund III, LP
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