EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below (this "Agreement"), is entered into by and between
XXXXXX HEALTHCARE, INC. a Texas corporation, with headquarters located at 000
Xxxxxxxxxx Xxxxxxxxx, Xxxxx Xxxx, Xxxxx 00000 (the "Company"), and each entity
named on a signature page hereto (each, a "Buyer") (each agreement with a Buyer
being deemed a separate and independent agreement between the Company and such
Buyer, except that each Buyer acknowledges and consents to the rights granted to
each other Buyer under such agreement and the Transaction Agreements, as defined
below, referred to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, INTER ALIA, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares of Series E Convertible Preferred
Stock, par value $0.10 per share and having a stated value of $1000 per share,
of the Company (the "Convertible Preferred Stock") which will be convertible
into shares of Common Stock, $.01 par value per share of the Company (the
"Common Stock"), upon the terms and subject to the conditions of such
Convertible Preferred Stock, together with the Warrants (as defined below)
exercisable for the purchase of shares of Common Stock, and subject to
acceptance of this Agreement by the Company;
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. AGREEMENT TO PURCHASE; PURCHASE PRICE.
A. PURCHASE; CERTAIN DEFINITIONS.
(i) The undersigned hereby agrees to purchase from the Company
Convertible Preferred Stock having a stated value in the amount set forth on the
Buyer's signature page of this Agreement (the "Preferred Stock,"; which term
includes the Initial preferred Stock as defined below) out of a total offering
of such Convertible Preferred Stock having a stated value of $2,500,000, and
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having the terms and conditions set forth in the Statement of Designations of
the Series E Convertible Preferred Stock of the Company attached hereto as ANNEX
I (the "Certificate of Designations").
(ii) Subject to the terms and conditions of this Agreement and the
other Transaction Agreements, the Buyer will purchase (x) Convertible Preferred
Stock having a stated value of $1,500,000 multiplied by the Buyer's Allocable
Share (the "Initial Preferred Stock") on the Initial Closing Date (as those
terms are defined below) and (y) the balance of the Preferred Stock (the
"Additional Preferred Stock") on the Additional Closing Date (as defined below).
(iii) The purchase price to be paid by the Buyer shall be equal to
the amount set forth on the Buyer's signature page of this Agreement, and shall
be payable in United States Dollars.
B. CERTAIN DEFINITIONS As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:
(i) "Additional Closing Date" means the date of the closing of the
purchase and sale of the Additional Preferred Stock, as provided herein.
(ii) "Buyer's Allocable Share" means the fraction of which the
numerator is the stated value of the Buyer's Preferred Stock specified on the
Buyer's signature page of this Agreement and the denominator is $2,500,000.
(iii) "Closing Date" means the Initial Closing Date or the
Additional Closing Date, as the case may be.
(iv) "Converted Shares" means the shares of Common Stock issuable
upon conversion of the Preferred Stock.
(v) "Effective Date" means the effective date of the Registration
Statement covering the Registrable Securities (as those terms are defined in the
Registration Rights Agreement defined below).
(vi) "Initial Closing Date" means the date of the closing of the
purchase and sale of the Initial Preferred Stock, as provided herein.
(vii) "Purchase Price" means the purchase price for the Preferred
Stock.
(viii)"Securities" means the Preferred Stock, the Warrants and the
Common Stock issuable upon conversion of the Preferred Stock or the exercise of
the Warrants.
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(ix) "Shares" means the shares of Common Stock representing any or
all of the Converted Shares and the Warrant Shares.
(x) "Strategic Partner" means a third party unaffiliated with the
Company as of the date hereof which party (i) is engaged in a business which is
the business in which the Company is engaged or a similar or related business,
and (ii) subsequently purchases equity securities of the Company (or securities
convertible into equity securities of the Company), where such purchase is
accompanied or followed by any one or more of the following: the licensing by
the Company of all or any portion of its technology to such third party, the
licensing by such third party of all or any portion of its technology to the
Company, or any other coordination of all or a portion of their respective
business activities or operations by the Company and such third party. By way of
illustration and not in limitation of the foregoing, if a third party entity
engaged in the manufacturing or distribution of rehabilitation equipment or
similar products (exclusively or as one of multiple fields of endeavor)
purchases an equity interest in the Company where the Company and such third
party intend that such investment is to be accompanied by any one or more of a
licensing agreement by one or the other of the other party's technology or by a
cross-licensing agreement, by an OEM agreement, by a joint development agreement
or by other coordination of design, production or marketing activities, such
third party would be a Strategic Partner.
(xi) "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
C. FORM OF PAYMENT; DELIVERY OF CERTIFICATES.
(i) The Buyer shall pay the Purchase Price for the relevant
Preferred Stock by delivering immediately available good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in the Joint Escrow
Instructions attached hereto as ANNEX II (the "Joint Escrow Instructions") on
the date prior to the relevant Closing Date.
(ii) No later than the relevant Closing Date, but in any event
promptly following payment by the Buyer to the Escrow Agent of the relevant
Purchase Price, the Company shall deliver one or more certificates representing
the Preferred Stock and the Warrants to be issued hereunder, each duly executed
on behalf of the Company and issued in the name of the Buyer (collectively, the
"Certificates") to the Escrow Agent.
(iii) By signing this Agreement, each of the Buyer and the Company,
subject to acceptance by the Escrow Agent, agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set forth in
full.
D. METHOD OF PAYMENT. Payment into escrow of the Purchase Price
shall be made by wire transfer of funds to:
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Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx & Prager LLP, Esqs.
Account No.: [To be provided to the Buyer by Xxxxxxx & Xxxxxx
LLP]
Re: Xxxxxx Healthcare, Inc.
Not later than 5:00 p.m., New York time, on the date which is three (3)
Nasdaq/SmallCap Market trading days after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Escrow
Agent by facsimile, the Buyer shall deposit with the Escrow Agent the Purchase
Price for the Preferred Stock in immediately available funds. Time is of the
essence with respect to such payment, and failure by the Buyer to make such
payment, shall allow the Company to cancel this Agreement.
E. ESCROW PROPERTY. The Purchase Price delivered to the Escrow Agent
as contemplated by Section 1(d) hereof is referred to as the "Escrow Funds." The
Escrow Funds and the Certificates delivered to the Escrow Agent as contemplated
by Section 1(c) hereof are referred to as the "Escrow Property."
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
A. Without limiting Buyer's right to sell the Common Stock pursuant
to the Registration Statement, the Buyer is purchasing the Preferred Stock and
the Warrants and will be acquiring the Shares for its own account for investment
only and not with a view towards the public sale or distribution thereof and not
with a view to or for sale in connection with any distribution thereof.
B. The Buyer is (i) an "accredited investor" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in the
Securities.
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C. All subsequent offers and sales of the Securities by the Buyer
shall be made pursuant to registration of the Shares under the 1933 Act or
pursuant to an exemption from registration.
D. The Buyer understands that the Securities are being offered and
sold to it in reliance on 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 Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities.
E. The Buyer 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 Preferred Stock and the offer of
the Shares which have been requested by the Buyer, including those set forth on
ANNEX III hereto. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Buyer has also had the opportunity to obtain and to review
the Company's (1) Annual Report on Form 10-K, as amended, for the fiscal year
ended December 31 1999, (2) Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2000; (3) Current Reports on Form 8-K filed on September 1, 2000
and September 21, 2000; and (4), Proxy Statement dated July 28, 2000
(collectively, the "Company's SEC Documents").
F. The Buyer understands that its investment in the Securities
involves a high degree of risk.
G. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
H. This Agreement and the other Transaction Agreements to which the
Buyer is a party have been duly and validly authorized, executed and delivered
on behalf of the Buyer and are valid and binding agreements of the Buyer
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants
to the Buyer as of the date hereof and as of each Closing Date that, except as
otherwise provided in the Company Disclosure Materials attached hereto as ANNEX
IV hereto:
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A. CONCERNING THE PREFERRED STOCK AND THE SHARES. The Preferred
Stock has been duly authorized, and when issued and paid for in accordance with
the terms of this Agreement, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability
solely by reason of acquiring the Preferred Stock hereunder. There are no
preemptive rights of any stockholder of the Company, as such, to acquire the
Preferred Stock, the Warrants or the Shares which have not been waived.
B. REPORTING COMPANY STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has the requisite corporate power to own its properties and to carry
on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition or results of operation of the Company and its
subsidiaries taken as a whole. The Company has registered its stock and is
obligated to file reports pursuant to Section 12 of the 1934 Act. The Common
Stock is listed and traded on The Nasdaq/SmallCap Market. The Company has
received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such listing, and the Company has maintained
all requirements for the continuation of such listing.
C. AUTHORIZED SHARES. The authorized capital stock of the Company
consists of (i) 50,000,000 shares of Common Stock, $.01 par value per share, of
which approximately 15,172,001shares have been issued and are outstanding as of
the date hereof and (ii) 10,000,000 shares of Preferred Stock, par value $ .10
per share, which have been issued in four series as follows:
SERIES AUTHORIZED ISSUED OUTSTANDING
------------------------------ ---------- ------ -----------
Series A Convertible Preferred 5,000 2,500 100
Series B Convertible Preferred 8,000 4,700 2,900
Series C Convertible Preferred 2,250 750 750
Series D Convertible Preferred 3,885 2,775 1,170.46
All issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. The Company has sufficient
authorized and unissued shares of Common Stock as may be necessary to effect the
issuance of the Shares as required by Section 4(h) of this Agreement. The Shares
have been duly authorized and, when issued upon conversion of, or as dividends
on, the Preferred Stock or upon exercise of the Warrants, each in accordance
with its respective terms, 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.
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D. SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS AGREEMENT AND
STOCK. This Agreement and the Registration Rights Agreement, the form of which
is attached hereto as ANNEX V (the "Registration Rights Agreement"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the Company and
this Agreement is, and each of the other Transaction Agreements, when executed
and delivered by the Company, will be, a valid and binding agreement of the
Company enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.
E. NON-CONTRAVENTION. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Registration Rights Agreement, and the
Preferred Stock do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, each as currently in
effect, (ii) any indenture, mortgage, deed of trust, or other material agreement
or instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its properties or assets, or (iv) the Company's listing agreement for its
Common Stock, except such conflict, breach or default which would not have a
material adverse effect on the business, operations, condition (financial or
otherwise), or results of operations of the Company and its subsidiaries, taken
as a whole, or on the transactions contemplated herein.
F. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
G. SEC FILINGS. None of the Company's SEC Documents contained, at
the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein in light of the circumstances under which they were
made, not misleading. The Company has since September 30, 1999 timely filed all
requisite forms, reports and exhibits thereto with the SEC.
H. ABSENCE OF CERTAIN CHANGES. Since June 30, 2000, there has been
no material adverse change and no material adverse development in the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company, except as disclosed in the Company's SEC Documents.
Since June 30, 2000, except as provided in the Company's SEC
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Documents, the Company has not (i) incurred or become subject to any material
liabilities (absolute or contingent) except liabilities incurred in the ordinary
course of business consistent with past practices; (ii) discharged or satisfied
any material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or made any
payment or distribution of cash or other property to stockholders with respect
to its capital stock, or purchased or redeemed, or made any agreements to
purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts or claims, except
in the ordinary course of business consistent with past practices; (v) suffered
any substantial losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any changes in employee compensation, except in the
ordinary course of business consistent with past practices; or (vii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment.
I. FULL DISCLOSURE. There is no fact known to the Company (other
than general economic conditions known to the public generally or as disclosed
in the Company's SEC Documents) that has not been disclosed in writing to the
Buyer that (i) would reasonably be expected to have a material adverse effect on
the business, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole , (ii) would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement or any of the
agreements contemplated hereby (collectively, including this Agreement, the
"Transaction Agreements"), or (iii) would reasonably be expected to materially
and adversely affect the value of the rights granted to the Buyer in the
Transaction Agreements.
J. ABSENCE OF LITIGATION. Except as set forth in the Company's SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
properties, business, operations, condition (financial or otherwise), or results
of operation of the Company and its subsidiaries taken as a whole or the
transactions contemplated by any of the Transaction Agreements or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, any of the Transaction
Agreements.
K. ABSENCE OF EVENTS OF DEFAULT. Except as set forth in the
Company's SEC Documents, no Event of Default (or its equivalent term), as
defined in the respective agreement to which the Company is a party, and no
event which, with the giving of notice or the passage of time or both, would
become an Event of Default (or its equivalent term) (as so defined in such
agreement), has occurred and is continuing, which would have a material adverse
effect on the business, operations, condition (financial or otherwise), or
results of operations of the Company and its subsidiaries, taken as a whole.
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L. PRIOR ISSUES. Except as set forth in the Company's SEC Documents,
during the twelve (12) months preceding the date hereof, the Company has not
issued any convertible securities. As of the date hereof, the outstanding
unconverted principal amount of each convertible security issued by the Company
is as set forth in ANNEX VI hereto.
M. NO UNDISCLOSED LIABILITIES OR EVENTS. The Company has no
liabilities or obligations other than those disclosed in the Company's SEC
Documents or those incurred in the ordinary course of the Company's business
since June 30, 2000, and which individually or in the aggregate, do not or would
not have a material adverse effect on the properties, business, operations,
condition (financial or otherwise), or results of operations of the Company and
its subsidiaries, taken as a whole. No event or circumstances has occurred or
exists with respect to the Company or its properties, business, operations,
condition (financial or otherwise), or results of operations, which, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed. There are no proposals currently under consideration or
currently anticipated to be under consideration by the Board of Directors or the
executive officers of the Company (other than the transactions contemplated by
the Transaction Agreements) which proposal would (x) change the certificate of
incorporation or other charter document or by-laws of the Company, each as
currently in effect, with or without shareholder approval, which change would
reduce or otherwise adversely affect the rights and powers of the shareholders
of the Common Stock or (y) materially or substantially change the business,
assets or capital of the Company, including its interests in subsidiaries.
N. NO DEFAULT. Except as provided in the Company's SEC Documents,
the Company is not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material
indenture, mortgage, deed of trust or other material instrument or agreement to
which it is a party or by which it or its property is bound.
O. NO INTEGRATED OFFERING. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since April1, 2000, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under Rule
506 of Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
P. DILUTION. The number of Shares issuable upon conversion of the
Preferred Stock and the exercise of the Warrants may increase substantially in
certain circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines prior to the
conversion of the Preferred Stock. The Company's executive officers and
directors have studied and fully understand the nature of the Securities being
sold hereby and recognize that they have a potential dilutive effect. The board
of directors of the Company has concluded, in its good faith business judgment,
that such issuance is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Shares upon
conversion of the Preferred Stock and upon exercise of the Warrants is binding
upon the Company
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and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company, and the Company will
honor every Notice of Conversion (as defined in the Certificate of Designations)
relating to the conversion of the Preferred Stock and every Notice of Exercise
Form (as contemplated by the Warrants) relating to the exercise of the Warrants
unless the Company is subject to an injunction (which injunction was not sought
by the Company) prohibiting the Company from doing so.
Q. BROKERS, FINDERS. Except for payment of fees to Union Atlantic LC
or Union Atlantic Capital, LC (the "Placement Agent"), payment of which is the
sole responsibility of the Company, the Company has taken no action which would
give rise to any claim by any person for brokerage commission, finder's fees or
similar payments by Buyer relating to this Agreement or the transactions
contemplated hereby. Buyer shall have no obligation with respect to such fees or
with respect to any claims made by or on behalf of other persons for fees of a
type contemplated in this Section 3(q) that may be due in connection with the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Buyer, its employees, officers, directors, agents, and partners, and
their respective affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as and when incurred.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the
Preferred Stock have not been and are not being registered under the provisions
of the 1933 Act and, except as provided in the Registration Rights Agreement,
the Shares have not been and are not being registered under the 1933 Act, and
may not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.
B. RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that the
Preferred Stock and the Warrants, and, until such time as the Common Stock has
been registered under the 1933 Act as contemplated by the Registration Rights
Agreement and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Securities
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shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of any such Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION
OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
C. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter
into the Registration Rights Agreement on or before the Closing Date.
D. FILINGS. (i) The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Securities to the Buyer
under any United States laws and regulations applicable to the Company, or by
any domestic securities exchange or trading market, and to provide a copy
thereof to the Buyer promptly after such filing.
(ii) Subject to the conditions of the immediately following
sentence, the Company undertakes and agrees to take all steps necessary to have
a meeting and vote of the stockholders of the Company no later than the Meeting
Date (as defined below) regarding authorization of the Company's issuance to the
holders of the Preferred Stock and Warrants of shares of Common Stock in excess
of twenty percent (20%) of the outstanding shares of Common Stock on the date of
this Agreement in accordance with NASDAQ Rule 4310(c)(25)(H)(i) or Rule
4460(i)(1), as may be applicable. The term "Meeting Date" means the date which
is the earlier of (x) seventy-five (75) days after the date on which the Company
has issued, after the date of this Agreement, shares of Common Stock which, in
the aggregate equal or exceed ten percent (10%) of the outstanding shares of
Common Stock on the date hereof or (y) the date on which the Company holds its
next regular or special stockholders meeting. The Company will recommend to the
stockholders that such authorization be granted and will seek proxies from
stockholders not attending the meeting naming a director or officer of the
Company as such stockholder's proxy and directing the proxy to vote, or giving
the proxy the authority to vote, in favor of such authorization. Upon
determination that the stockholders have voted in favor of such authorization,
the Company shall promptly make a public filing of same as required by the rules
of the SEC. If for any reason (y) the meeting is not held by the Meeting Date or
(z) the requisite stockholder approval is not obtained at the meeting, then in
lieu of issuing any shares in violation of NASDAQ Rule 4310(c)(25)(H) or Rule
4460(i)(1), as may be applicable, or any of the other Cap Regulations, the
Company shall redeem the outstanding Preferred Stock as set forth in Section VI
of the Certificate of Designation within ten (10) days after the Meeting Date.
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(iii) In furtherance of the provisions of the immediately preceding
subparagraph (ii) hereof, the Company (a) commits to using its best efforts to
obtain any stockholder authorization contemplated by said subparagraph (ii), and
(b) represents to the Buyer that the Company has obtained the binding
irrevocable commitment or proxy (each, a "Principal Voter Proxy") of each
Principal Voter (as defined below) that such Principal Voter will vote in favor
of any stockholder authorization contemplated by said subparagraph (ii). A
"Principal Voter" is a person who meets any one or more of the following
criteria: (A) a person who is a director or principal officer of the Company
(each, a "Company Principal") and who, directly or indirectly, holds any shares
of Common Stock of the Company; (B) a spouse of a Company Principal who resides
in the household of the Company Principal (a "Principal's Spouse") and who,
directly or indirectly, holds any shares of Common Stock of the Company, (C) a
parent, sibling or child of a Company Principal who resides in the household of
a Company Principal or of a Principal's Spouse (each, a "Principal's Relative")
and who, directly or indirectly, holds any shares of Common Stock or (D) any
other person or entity, including, without limitation, for profit or non-profit
corporations, partnerships and trusts, whose voting rights regarding Common
Stock of the Company is subject to the direction, control or other influence of
any Company Principal, Principal's Spouse or Principal's Relative. The Company
will deliver such Principal Voter Proxies to the Buyer or the Buyer's designee
on the Initial Closing Date.
E. REPORTING STATUS. So long as the Buyer beneficially owns any of
the Securities, the Company shall 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. The Company will take all reasonable action under its control to
obtain and to continue the listing and trading of its Common Stock (including,
without limitation, all Registrable Securities) on The Nasdaq/Small Cap market
and will comply in all material respects with the Company's reporting, filing
and other obligations under the by-laws or rules of the National Association of
Securities Dealers, Inc. ("NASD") or The Nasdaq/Small Cap Market.
F. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Preferred Stock (excluding amounts paid by the Company for legal fees,
finder's fees and escrow fees in connection with the sale of the Preferred
Stock) for internal working capital purposes, and, unless specifically consented
to in advance in each instance by the Buyer, the Company shall not, directly or
indirectly, use such proceeds for any loan to or investment in any other
corporation (other than 80% owned subsidiaries), partnership enterprise or other
person or for the repayment of any outstanding loan by the Company to any other
party (Other than repayment of a portion of the Company's loans from Comerica
Bank, Texas.)
G. CERTAIN AGREEMENTS. (i) The Company covenants and agrees that it
will not, without the prior written consent of the Buyer, enter into
12
(x) any subsequent or further offer or sale of Common Stock or securities
convertible into Common Stock (collectively, "New Common Stock"), or
(y) any subsequent offer or contract for an equity line or similar
arrangement which contemplates the issuance of New Common Stock
with any third party (a "New Investor") on any date which is earlier than one
hundred eighty (180) days after the Effective Date except for the Private Equity
Credit Agreement dated November 20, 2000.
(ii) The foregoing provisions shall not restrict the Company from
issuing (A) shares of Common Stock upon the exercise of certain warrants and
options for the purchase of shares outstanding as of the date hereof, (B)
additional shares of Common Stock or other securities issued pursuant to the
Company's existing stock option plans, (C) shares issued as required by the
terms of the Company's currently outstanding shares of Series A, B, C or D
Preferred Stock or other currently outstanding convertible securities identified
in the Company's SEC Documents, (D) up to an aggregate of 2,000,000 shares or
warrants to acquire shares of restricted Common Stock to satisfy unpaid accounts
payable as of December 31, 2000; provided, however, that only the holders of
1,201,000 of such Common Stock may be granted registration rights in connection
with the issuance thereof, (E) shares of Common Stock issuable under the terms
of the Company's convertible promissory note in favor of Maxxim Medical, Inc.,
as amended, (F) in the event the Company has not sold its Cybex Medical division
as required by the terms of its Seconded Amended and Restated Loan Agreement
with Comerica Bank-Texas, (I) by November 1, 2000, 200,000 shares of Common
Stock or warrants to purchase Common Stock, and, (II) by the first day of each
month thereafter, an additional 25,000 shares of Common Stock or warrants to
purchase Common Stock, or (G) up to 225 shares of the Series E Convertible
Preferred Stock and warrants to purchase up to 500,000 shares to the Placement
Agent or its designees in connection with the transactions contemplated hereby
and the shares of Common Stock issuable thereon pursuant to the terms of the
Certificate of Designations. In addition, the limitations contained in Section
4(g)(i) shall not apply to any transaction involving issuance of securities as
consideration in a merger, consolidation or acquisition of assets or in
connection with a transaction with a Strategic Partner (the primary purpose of
which is not to raise equity capital or other financing capital), or as
consideration for the acquisition of a business, product or license by the
Company.
(iii) In the event the Company breaches the provisions of this
Section 4(g), the Conversion Price (as defined in the Certificate of
Designations) shall be amended to be equal to (x) 90% of (y) the amount
determined in accordance with the provisions of the Certificate of Designations
without regard to this provision.
H. AVAILABLE SHARES. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield the aggregate of (i) two hundred percent (200%) of the
number of shares of Common Stock issuable at
13
conversion as may be required to satisfy the conversion rights of each Buyer
pursuant to the terms and conditions of the Certificate of Designations or to
represent payment of dividends on the Preferred Stock and (ii) the number of
shares issuable upon exercise as may be required to satisfy the exercise rights
of each Buyer pursuant to the terms and conditions of the Warrants.
I. WARRANTS. The Company agrees to issue to the Buyer on each
Closing Date transferable, divisible warrants with a cashless exercise provision
(the "Warrants") for the purchase of Common Stock of the Company equal to fifty
percent (50%) of the number of shares which would be issued assuming conversion
of the preferred Stock at the Fixed Conversion Price (as defined in the
Certificate of Designation) on the Closing Date. The Warrants shall bear an
exercise price per share equal to 110% of the Fixed Conversion Price. The
Warrants will expire on the last day of the calendar month in which the fifth
anniversary of the relevant Closing Date occurs. The Warrants shall be in the
form annexed hereto as ANNEX VII, together with registration rights as provided
in the Registration Rights Agreement.
J. LIMITATION ON ISSUANCE OF SHARES. If applicable to the Company at
the relevant time, the Company may be limited in the number of shares of Common
Stock it may issue by virtue of (i) the number of authorized shares or (ii) the
applicable rules and regulations of the principal securities market on which the
Common Stock is listed or traded, including, but not necessarily limited to,
NASDAQ Rule 4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be applicable
(collectively, the "Cap Regulations"). Without limiting the other provisions
thereof, the Preferred Stock shall provide that (i) the Company will take all
steps reasonably necessary to be in a position to issue shares of Common Stock
on conversion of the Preferred Stock without violating the Cap Regulations and
(ii) if, despite taking such steps, the Company still can not issue such shares
of Common Stock without violating the Cap Regulations, the holder of a share of
Preferred Stock which can not be converted as result of the Cap Regulations
after all such shares of Preferred Stock which can be converted under the Cap
Regulations have been converted (each such share, an "Unconverted Share") shall
have the option, exercisable in such holder's sole and absolute discretion, to
elect either of the following remedies:
(x) if permitted by the Cap Regulations, require the Company to
issue shares of Common Stock in accordance with such holder's notice of
conversion at a conversion purchase price equal to the average of the
closing price per share of Common Stock for any three (3) trading days
(which need not be consecutive, but subject to certain equitable
adjustments for certain events occurring during such period) during the
sixty (60) trading days immediately preceding the date of notice of
conversion; or
(y) require the Company to redeem each Unconverted Share being
redeemed ( a "Redeemed Share") for an amount (the "Cap Redemption Amount")
payable in cash, equal to:
14
V x M
-----------------
CP
where:
"V" means the outstanding stated value (as defined in the
Certificate of Designations) plus accrued dividends through the date of
payment of the Redemption Amount for the Redeemed Share (the "Redemption
Payment Date");
"CP" means the Conversion Price in effect on the Redemption Date (as
defined below)
"Redemption Date" means the date contemplated by a specific
provision of this Certificate of Designations or, if no such date is
specified, the date of redemption specified in the notice from the Holder
electing redemption of a Redeemed Share; and
"M" means the highest closing price during the period beginning on
the Redemption Date and ending on the Redemption Payment Date.
A holder of more than one Unconverted Share may elect one of the above remedies
with respect to some of such Unconverted Shares and the other remedy with
respect to other Unconverted Shares. The Cap Redemption Amount payable under the
provisions of this Section 4(j) shall be payable within (10) ten days after the
Redemption Date. The Certificate of Designations shall contain provisions
substantially consistent with the above terms, with such additional provisions
as may be consented to by the Buyer. The provisions of this paragraph are not
intended to limit the scope of the provisions otherwise included in the
Certificate of Designations. Anything herein or in the Certificate of
Designations to the contrary notwithstanding, the remedy contained in clause (y)
of this Section 4(j) shall not be available to the Buyer until after the earlier
of (i) the Special Meeting or (ii) the expiration of sixty (60) days from the
date a holder of Securities has exercised a right pursuant to which the last
share of Common Stock issuable under the Cap Regulations is to be issued. If
prior to such date, the Cap Regulations no longer apply to limit the Company's
issuance of shares of Common Stock in connection with the Securities or the
transactions contemplated by the Transaction Agreements, the remedies contained
clauses (x) and (y) of this Section 4(j) shall not be exercisable by the Buyer.
K. REIMBURSEMENT. If (i) the Buyer, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if the Buyer is impleaded in any
such action, proceeding or investigation by any person, or (ii) the Buyer, other
than by reason of its
15
gross negligence or willful misconduct or by reason of its trading of the Common
Stock in a manner that is illegal under the federal or state securities laws,
becomes involved in any capacity in any action, proceeding or investigation
brought by the SEC against or involving the Company or in connection with or as
a result of the consummation of the transactions contemplated by the Transaction
Documents, or if the Buyer is impleaded in any such action, proceeding or
investigation by any person, then in any such case, the Company will reimburse
the Buyer for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, as such
expenses are incurred. In addition, other than with respect to any matter in
which Buyer is a named party, the Company will pay to the the Buyer reasonable
out-of-pocket costs with respect to assisting in preparation for hearings,
trials or pretrial matters, or otherwise with respect to inquiries, hearing,
trials, and other proceedings relating to the subject matter of this Agreement.
The reimbursement obligations of the Company under this SECTION 4(K) shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliates of the Buyer that are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Buyer and any such affiliate, and shall be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Buyer and any such affiliate and any such person.
L. RELEASE. Effective upon the mutual execution hereof, the
Company, for itself and on behalf of all affiliated persons and entities,
representatives, and all predecessors in interest, successors and assigns
(collectively, the "Releasing Parties"), hereby releases and forever discharges
each of Investor, and Investor"s direct and indirect partners, officers,
directors, employees, affiliates, representatives, agents, trustees,
beneficiaries, predecessors in interest, successors in interest and nominees, of
and from any and all claims, demands, actions and causes of action, whether
known or unknown, fixed or contingent, arising prior to the date of execution of
this Agreement, that the Company may have had, may now have or may hereafter
acquire with respect to any matters whatsoever under, relating to or arising
from any prior Purchase Agreement, Registration Agreement, and the agreements
entered into in connection therewith (sometimes collectively referred to as the
"Prior Agreements"). The Company also fully waives (i) any defenses it may have
with respect to honoring the terms of the Prior Agreements, or any (ii) offsets
it may have with respect to the amounts owed under the Prior Agreements.
Additionally, the Company represents, warrants and covenants that it has not,
and at the time this release becomes effective will not have, sold, assigned,
transferred, or otherwise conveyed to any other person or entity all or any
portion of its rights, claims, demands, actions, or causes of action herein
released.
M. CONSENT. By its execution and delivery of this Agreement, Buyer
which is also a party to the Securities Purchase Agreement dated as of May 19,
2000 between the Company and each entity named on a signature page thereto (the
"Series D Securities Purchase Agreement"), consents to the transactions
contemplated hereby and waives any rights it otherwise might have under the
Series D Securities Purchase Agreement, the Series D Convertible Preferred Stock
Statement of Designations or the Registration Rights Agreement dated as of May
19, 2000 between
16
the Company and each entity named on a signature page thereto with respect to
any rights of first refusal or registration rights it may have pursuant to the
terms thereof, or to take or refrain from taking any other action, as a result
of the execution and delivery of this Agreement or the consummation of any of
the transactions contemplated hereby.
N. FUTURE PURCHASES. (i) After the Effective Date, the Company may
give notice (the "Additional Closing Date Notice") to the Buyer, with a copy to
the Escrow Agent, specifying the date of the closing for the purchase of the
Additional Preferred Stock. The date for such closing (the "Additional Closing
Date") shall be a business day which is (x) at least twenty-one (21) days after
the Effective Date and (y) at least ten (10) business days after the Additional
Closing Date Notice is received by the Buyer.
(ii) It shall be a condition to the Company's right to issue an
Additional Closing Date Notice that, as of the date of delivery of the
Additional Closing Date Notice, (A) the Registration Statement for all
Registrable Securities, included the Converted Shares attributable to the
Additional Preferred Stock (the "Additional Converted Shares"), shall have been
declared effective and shall continue to be effective, (B) each of the
Transaction Agreements shall continue to be in full force and effect and be
applicable, to the extent relevant, to the Additional Preferred Stock and the
Additional Converted Shares (and the Company's issuance of the Additional
Closing Date Notice shall constitute the Company's making each such
representation and warranty as of such date), and (C) the representations and
warranties of the Company contained in Section 3 hereof shall be true and
correct in all material respects and there shall have been no material adverse
change to the business, operations or financial condition or results of
operation of the Company and its subsidiaries taken as a whole from the Initial
Closing Date through and including the date the Company gives the Additional
Closing Date Notice to the Buyer (and the Company's issuance of the Additional
Closing Date Notice shall constitute the Company's making each such
representation and warranty as of such date).
(iii) The Buyer's obligations to purchase the Additional Preferred
Stock shall terminate (w) if the Additional Closing Date does not occur within
forty-five (45) days after the Additional Closing Date Notice is given to the
Buyer, (x) if the Company's available shares do not satisfy the provisions of
Section 4(h) hereof at any time, (y) if the Effective Date has not yet occurred
as of the date which is four (4) months after the Required Effective Date (as
defined in the Registration Rights Agreement), or (z) on the date which is
eighteen months after the Initial Closing Date.
5. TRANSFER AGENT INSTRUCTIONS.
A. The Company warrants that, with respect to the Securities, other
than the stop transfer instructions to give effect to Section 4(a) hereof, it
will give its transfer agent no instructions inconsistent with instructions to
issue Common Stock from time to time upon conversion of the Preferred Stock in
such amounts as specified from time to time by the Company to the transfer
agent,
17
bearing the restrictive legend specified in Section 4(b) of this Agreement prior
to registration of the Shares under the 1933 Act, registered in the name of the
Buyer or its nominee and in such denominations to be specified by the Buyer in
connection with each conversion of the Preferred Stock. Except as so provided,
the Shares shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement, the Registration
Rights Agreement, and applicable law. Nothing in this Section shall affect in
any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If the Buyer provides the Company
with an opinion of counsel reasonably satisfactory to the Company that
registration of a resale by the Buyer of any of the Securities in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not required under the
1933 Act, the Company shall (except as provided in clause (2) of Section 4(a) of
this Agreement) permit the transfer of the Securities and, in the case of the
Converted Shares or the Warrant Shares, as the case may be, promptly instruct
the Company's transfer agent to issue one or more certificates for Common Stock
without legend in such name and in such denominations as specified by the Buyer.
B. Subject to the provisions of this Agreement, the Company will
permit the Buyer to exercise its right to convert the Preferred Stock in the
manner contemplated by the Certificate of Designations.
C. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date (as defined in the Certificate
of Designations) could result in economic loss to the Buyer. As compensation to
the Buyer for such loss, the Company agrees to pay late payments to the Buyer
for late issuance of Shares upon conversion in accordance with the following
schedule (where "No. Business Days Late" is defined as the number of business
days beyond two (2) business days from the Delivery Date):
LATE PAYMENT FOR EACH $10,000
OF STATED VALUE OR DIVIDEND
NO. BUSINESS DAYS LATE AMOUNT BEING CONVERTED
---------------------- -----------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each Business
Day Late beyond 10 days
18
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. For purposes of this Section 5(c), in connection
with a Mandatory Conversion (as defined in the Certificate of Designations), the
term "Delivery Date" shall refer to the earlier of (i) the Delivery Date
determined in relation to a Notice of Conversion actually submitted by the Buyer
to the Company or (ii) the third or fifth business date, as the case may be,
after written notice (which shall include facsimile transmission) from the Buyer
that the delivery of shares to the Buyer in connection with the Mandatory
Conversion has not been accomplished. The Company shall pay any payments
incurred under this Section in immediately available funds upon demand. Nothing
herein shall limit the Buyer's right to pursue actual damages for the Company's
failure to issue and deliver the Common Stock to the Buyer. Furthermore, in
addition to any other remedies which may be available to the Buyer, in the event
that the Company fails for any reason to effect delivery of such shares of
Common Stock within two (2) business days after the Delivery Date, the Buyer
will be entitled to revoke the relevant Notice of Conversion by delivering a
notice to such effect to the Company whereupon the Company and the Buyer shall
each be restored to their respective positions immediately prior to delivery of
such Notice of Conversion.
D. If, by the relevant Delivery Date, the Company fails for any
reason to deliver the Shares to be issued upon conversion of Preferred Stock and
after such Delivery Date, the holder of the Preferred Stock being converted (a
"Converting Holder") purchases, in an arm's-length open market transaction or
otherwise, shares of Common Stock (the "Covering Shares") in order to make
delivery in satisfaction of a sale of Common Stock by the Converting Holder (the
"Sold Shares"), which delivery such Converting Holder anticipated to make using
the Shares to be issued upon such conversion (a "Buy-In"), the Converting Holder
shall have the right, to require the Company to pay to the Converting Holder, in
lieu and instead of the amounts due under Section 5(c) hereof (but in addition
to all other amounts contemplated in other provisions of the Transaction
Agreements, and not in lieu of any such other amounts), the Buy-In Adjustment
Amount (as defined below). The "Buy-In Adjustment Amount" is the amount equal to
the excess, if any, of (x) the Converting Holder's total purchase price
(including brokerage commissions, if any) for the Covering Shares over (y) the
net proceeds (after brokerage commissions, if any) received by the Converting
Holder from the sale of the Sold Shares. The Company shall pay the Buy-In
Adjustment Amount to the Company in immediately available funds immediately upon
demand by the Converting Holder. By way of illustration and not in limitation of
the foregoing, if the Converting Holder purchases shares of Common Stock having
a total purchase price (including brokerage commissions) of $11,000 to cover a
Buy-In with respect to shares of Common Stock it sold for net proceeds of
$10,000, the Buy- In Adjustment Amount which Company will be required to pay to
the Converting Holder will be $1,000.
E. In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Buyer and its compliance with the
provisions contained in this paragraph, so long as the certificates therefor do
not bear a legend and the Buyer thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to
19
electronically transmit the Common Stock issuable upon conversion to the Buyer
by crediting the account of Buyer's Prime Broker with DTC through its Deposit
Withdrawal Agent Commission system.
F. If, at any time (i) the Company challenges, disputes or denies
the right of a holder of Preferred Stock to effect a conversion of the Preferred
Stock into Common Stock or otherwise dishonors or rejects any Conversion Notice
delivered in accordance with the terms of this Agreement or the Certificate of
Designations or any exercise of any Warrant in accordance with its terms
("Warrant Exercise"), or (ii) any third party who is not and has never been an
Affiliate of such holder commences any lawsuit or proceeding or otherwise
asserts any claim before any court or public or governmental authority, which
lawsuit, proceeding or claim seeks to challenge, deny, enjoin, limit, modify,
delay or dispute the right of such holder to effect the conversion of the
Preferred Stock into Common Stock, and the Company refuses to honor any such
Conversion Notice or Warrant Exercise, then such holder shall have the right, by
written notice to the Company, to require the Company to promptly redeem the
Preferred Stock for cash at a redemption price (the "Mandatory Purchase Amount")
equal to the Cap Redemption Amount of the unconverted Preferred Stock held by
such holder; provided, however, that the Company shall have a period of thirty
(30) days within which to (i) have the lawsuit or proceeding dismissed and honor
the Conversion Notice and/or the Warrant Exercise, or (ii) raise the capital
required to redeem the Mandatory Purchase Amount, as the case may be. Under any
of the circumstances set forth above, the Company shall be responsible for the
payment of all costs and expenses of such holder, including, but not necessarily
limited to, reasonable legal fees and expenses, as and when incurred in
connection with such holder's disputing any such action or pursuing such
holder's rights hereunder (in addition to any other rights such holder may have
hereunder or otherwise). The Mandatory Purchase Amount will be payable to such
holder in cash within five (5) business days from the date such holder gives the
Company written notice that it is exercising its rights under this paragraph.
G. The holder of any Preferred Stock shall be entitled to exercise
its conversion privilege with respect to the Preferred Stock notwithstanding the
commencement of any case under 11 U.S.C. ss.101 ET SEQ. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C. ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C. ss.362 in respect of the conversion of the Preferred
Stock. The Company agrees, without cost or expense to such holder, to take or to
consent to any and all action necessary to effectuate relief under 11 U.S.C.
ss.362.
H. The Company will authorize its transfer agent to give information
relating to the Company directly to the Buyer or the Buyer's representatives
upon the request of the Buyer or any such representative , to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Buyer in connection with a Notice of Conversion, or
(ii) the number of outstanding shares of Common Stock of all stockholders as of
a current or other
20
specified date. The Company will provide the Buyer with a copy of the
authorization so given to the transfer agent.
I. Nothing contained in this Section 5 shall be construed to require
the Company to pay to the Buyer any of the amounts contemplated by this Section
5 for late delivery of any certificates or refusal to honor a Notice of
Conversion or Warrant Exercise to the extent that such delay or refusal is
caused by the Buyer (but exclusion of the delay or refusal of the Company shall
be limited only to the period of such delay or refusal which was directly caused
by an uncured action or omission of the Buyer and not to periods beyond the cure
of such action or omission by or on behalf of the Buyer).
6. CLOSING DATES.
A. The Initial Closing Date shall occur on the date which is the
first Nasdaq SmallCap Market trading day after each of the conditions
contemplated by Sections 7 and 8 hereof shall have either been satisfied or been
waived by the party in whose favor such conditions run.
B. (i) The Additional Closing Date shall be the date determined in
accordance with the provisions of Section 4(n) hereof.
(ii) The closing for the Additional Preferred Stock shall be
conducted upon the same terms and conditions as those applicable to the Initial
Preferred Stock.
C. Each closing of the purchase and issuance of Preferred Stock
shall occur on the relevant Closing Date at the offices of the Escrow Agent and
shall take place no later than 3:00 P.M., New York time, on such day or such
other time as is mutually agreed upon by the Company and the Buyer.
D. Notwithstanding anything to the contrary contained herein, the
Escrow Agent will be authorized to release the Escrow Funds to the Company and
to others and to release the other Escrow Property on the relevant Closing Date
upon satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the
Preferred Stock to the Buyer pursuant to this Agreement on the relevant Closing
Date is conditioned upon:
A. The Buyer's execution and delivery of this Agreement and the
other Transaction Agreements contemplated to be signed by the Buyer;
21
B. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the Preferred Stock
in accordance with this Agreement;
C. The accuracy on such Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the Buyer on or before such date of all covenants
and agreements of the Buyer required to be performed on or before such date;
D. Except to the extent contemplated by specific provisions of the
Transaction Agreements, there shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby to an extent
materially greater than contemplated herein, or requiring any consent or
approval which shall not have been obtained; and
E. From and after the date hereof to and including such Closing
Date, the trading of the Common Stock shall not have been suspended by the SEC
or the NASD and trading in securities generally on the NYSE or The Nasdaq/Small
Cap Market shall not have been suspended or limited, nor shall minimum prices
been established for securities traded on The Nasdaq/Small Cap Market, nor shall
there be any outbreak or escalation of hostilities involving the United States
or any material adverse change in any financial market that in either case in
the reasonable judgment of the Company makes it impracticable or inadvisable to
sell the Preferred Stock.
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Preferred Stock on the relevant Closing Date is conditioned upon:
A. The adoption of the Certificate of Designations by all necessary
corporate action of the Company and the filing of all filings necessary to
effectuate the Certificate of Designations as a part of the charter documents of
the Company;
B. The execution and delivery of this Agreement and the Registration
Rights Agreement by the Company;
C. Delivery by the Company to the Escrow Agent of the relevant
Certificates in accordance with this Agreement;
D. The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;
00
X. Xx such Closing Date, the Registration Rights Agreement shall be
in full force and effect and the Company shall not be in default thereunder;
F. On such Closing Date, the Buyer shall have received an opinion of
counsel for the Company, dated such Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, substantially to the effect set forth in
ANNEX VIII attached hereto;
G. Except to the extent contemplated by specific provisions of the
Transaction Agreements, there shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby to an extent
materially greater than contemplated herein, or requiring any consent or
approval which shall not have been obtained;
H. From and after the date hereof to and including such Closing
Date, the trading of the Common Stock shall not have been suspended by the SEC
or the NASD and trading in securities generally on The Nasdaq/Small Cap Market
shall not have been suspended or limited, nor shall minimum prices been
established for securities traded on The Nasdaq/Small Cap Market, nor shall
there be any outbreak or escalation of hostilities involving the United States
or any material adverse change in any financial market that in either case in
the reasonable judgment of the Buyer makes it impracticable or inadvisable to
purchase the Preferred Stock; and
I. With respect to the Additional Closing Date,
(i) an Additional Closing Date Notice shall have been duly given in
accordance with the provisions of Section 4(m);
(ii) all other conditions of Section 4(m) shall have been satisfied;
(iii) the Registration Statement shall have been declared effective
with respect to all of the Registrable Securities, including the Additional
Converted Shares, and shall continue to be effective as of such date;
(iii) each of the Transaction Agreements shall continue to be in
full force and effect and be applicable, to the extent relevant, to the
Additional Preferred Stock and the Additional Converted Shares (and the
Company's issuance of the Additional Preferred Stock shall constitute the
Company's making a representation and warranty to such effect as of such date);
(iv) the representations and warranties of the Company contained in
Section 3 hereof shall be true and correct in all material respects (and the
Company's issuance of the Additional Preferred Stock shall constitute the
Company's making each such representation and warranty as of such date) and
there shall have been no material adverse change to the business, operations or
financial condition or results of operation of the Company and its subsidiaries
taken as a whole from the Initial Closing Date through and including the
Additional Closing Date (and the Company's
23
issuance of the Additional Preferred Stock shall constitute the Company's making
such representation and warranty as of such date);
(v) the Company shall have timely issued all shares issuable upon
conversion of the Preferred Stock or upon exercise of the Warrants prior to the
date of such Additional Closing Date; and
(vi) the Company shall have available and shall reserve for issuance
to Buyer at least two hundred percent (200%) of the number of Shares which would
be issued on (x) conversion of all unconverted Initial Preferred Stock and all
Additional Preferred Stock and (y) exercise of all unexercised Warrants.
9. GOVERNING LAW: MISCELLANEOUS.
A. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on FORUM NON CONVENIENS, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Buyer for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
B. 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,
shall not operate as a waiver thereof.
C. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
D. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
E. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto.
F. This Agreement may be signed in one or more counterparts, each of
which shall be deemed an original.
G. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
24
H. 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.
I. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement thereof.
J. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
10. NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (a) personally served,(b)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable courier service which provides
evidence of delivery with charges prepaid, (d) transmitted by hand delivery, or
(e) by facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice given in accordance
herewith. Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (i) upon hand delivery or delivery at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) (ii) on the third business
day following the date of mailing by express courier service or on the seventh
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur or (iii) if by facsimile, upon confirmation of receipt by the recipient or
confirmation of transmission in another manner provided in this SECTION 10. The
addresses for such communications shall be:
IF TO THE COMPANY:
Xxxxxx Healthcare, Inc.
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxx 00000
ATTENTION: Xxxxx X. Xxxxxxxx, Chief Operating Officer.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
25
Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
IF TO BUYER:
At the address set forth on the signature page of this
Agreement.
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Xxxxxxx & Xxxxxx, LLP
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxx X. Xxxxxxx, Esq.
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 10 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto. Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein).
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and
the Buyer's representations and warranties herein shall survive the execution
and delivery of this Agreement and the delivery of the Certificates and the
Warrants and the payment of the Purchase Price for a period of three (3) years
from the Closing Date and shall inure to the benefit of the Buyer and the
Company and their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
26
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer by one of its officers thereunto duly authorized as of the date set forth
below.
STATED VALUE OF PREFERRED STOCK: $ 1,110,000
PURCHASE PRICE OF PREFERRED STOCK: $ 1,110,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 20th day November, 2000.
Address: Cumberland House THE ENDEAVOR CAPITAL INVESTMENT
Xx. 00 Xxxxxxxxxx Xxxxxx FUND S.A.
X.X. Xxx X-00000 (Printed Name of Subscriber)
Nassau, The Bahamas
By:/s/ XXXXXX XXXXXXXXX
Telecopier No. 000 000 0000 Name: Xxxxxx Xxxxxxxxx
Title: Director
Jurisdiction of Incorporation
or Organization: The Bahamas
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
XXXXXX HEALTHCARE, INC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
Date: November 20, 2000
27
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer by one of its officers thereunto duly authorized as of the date set forth
below.
STATED VALUE OF PREFERRED STOCK: $ 240,000
PURCHASE PRICE OF PREFERRED STOCK: $ 240,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 20th day November, 2000.
Address: x/x Xxxxxxx Xxxxxxxx XXXXXXX TRADE & FINANCE INC.
X.X. Xxx 0000 (Printed Name of Subscriber)
6342 Baar, Switzerland
By:/s/ XXXXXXX KINDLE
Telecopier No.(000 0000) 000-0000 Name: Xxxxxxx Kindle
Title: Director
Jurisdiction of Incorporation
or Organization:
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
XXXXXX HEALTHCARE, INC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
Date: November 20, 2000
28
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer by one of its officers thereunto duly authorized as of the date set forth
below.
STATED VALUE OF PREFERRED STOCK: $ 150,000
PURCHASE PRICE OF PREFERRED STOCK: $ 150,000
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 20th day November, 2000.
Address: c/o Trevisa-Trevland-Anstalt XXXXXXX TRUST REG
Xxxxxxxxxxx 0 (Printed Name of Subscriber)
Furstentums 9496
Balzers, Liechtenstein
By:/s/ XXXXXX XXXXX
Telecopier No.(011 431534) 532-895 Name: Xxxxxx Xxxxx
Title:
Jurisdiction of Incorporation
or Organization:
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
XXXXXX HEALTHCARE, INC
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
Date: November 20, 2000
29
