EXHIBIT 10.1
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SECURITIES PURCHASE AGREEMENT
Among
BOSTON LIFE SCIENCES, INC.,
XXXXX XXXXXXX STRATEGIC GROWTH FUND, LTD.
and
XXXXX XXXXXXX STRATEGIC GROWTH FUND, L.P.
Dated as of September 22, 1999
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
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September 22, 1999, among Boston Life Sciences, Inc., a Delaware corporation
(the "Company"), Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. and Xxxxx Xxxxxxx
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Strategic Growth Fund, L.P. (each referred to herein as a "Purchaser" and,
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collectively, the "Purchasers.")
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WHEREAS, the Company and the Purchasers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D as promulgated by the United States
Securities and Exchange Commission (the "Commission") under Section 4(2) of the
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Securities Act of 1933, as amended (the "Securities Act");
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WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, an aggregate of $8,000,000
principal amount of 8% Convertible Debentures due September 22, 2003 (the
"Debentures"), in the form of Exhibit A annexed hereto, and the Class A and
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Class B warrants (collectively, the "Warrants"), in the forms of Exhibit B and
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Exhibit C annexed hereto, respectively, to purchase the Company's common stock,
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par value $0.01 per share (the "Common Stock"); and
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WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form of Exhibit D attached hereto (the
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"Registration Rights Agreement") pursuant to which the Company has agreed to
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provide certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter, the Company and the Purchasers hereby agree as
follows:
ARTICLE I.
PURCHASE AND SALE OF THE DEBENTURES AND WARRANTS
1.1 Purchase and Sale. Subject to the terms and conditions set forth
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herein, the Company shall issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, shall purchase from the Company on the Closing Date
(as defined below), the principal amount of Debentures as set forth for such
Purchaser on Schedule I.
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1.2 Closings.
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a. The Closing. The closing of the purchase and sale of the Debentures
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and the issuance of the Warrants (the "Closing") shall take place at the offices
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of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or by transmission by facsimile and overnight courier, immediately
following the execution hereof or such later date or different location as the
parties shall agree, but not prior to the date that the conditions set forth in
Section 4.1 have been satisfied or waived by the appropriate party (the "Closing
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Date"). At the Closing:
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(i) Each Purchaser shall deliver, as directed by the Company, its
portion of the purchase price as set forth next to its name on Schedule I in
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United States dollars in immediately available funds to an account or accounts
designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser a Debenture, in the
form of Exhibit A hereto, representing the principal amount purchased by such
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Purchaser as set forth on Schedule I hereto;
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(iii) The Company shall deliver to each Purchaser Warrants, in the
forms of Exhibit B and Exhibit C hereto, representing the right to acquire the
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number of shares of Common Stock purchased by such Purchaser as set forth on
Schedule I hereto; and
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(iv) The parties shall execute and deliver each of the documents
referred to in Section 4.1 hereof.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
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Company hereby makes the following representations and warranties to each of the
Purchasers:
a. Organization and Qualification. The Company is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Except as set forth on Schedule 2.1(a), the Company has no subsidiaries
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(collectively, the "Subsidiaries"). Each of the Subsidiaries (which for
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purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns the majority of such entity's capital stock or holds an
equivalent equity or similar interest) is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the full corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Each of the Company and the Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of any of this Agreement or the Transaction Documents
(as defined in Section 2.1(b)) or any of the transactions contemplated hereby or
thereby or (y) have or result in a material adverse effect on the results of
operations, assets, or financial condition of the Company and its Subsidiaries,
taken as a whole or (z) adversely affect the Company's ability to perform its
obligations under any Transaction Document (any of (x), (y) or (z), being a
"Material Adverse Effect"). The Company has furnished to each of the Purchasers
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true and correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof (the "Certificate of
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Incorporation"), and the Company's Bylaws, as in effect on the date hereof (the
"Bylaws"), and the true, complete and accurate copies of documents evidencing
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all classes of securities convertible into or exercisable for Common Stock and
the material rights of the holders thereof in respect thereto.
b. Authorization; Enforcement. The Company has the requisite corporate
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power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Debenture, the Warrants and the
Registration Rights Agreement (collectively, the "Transaction Documents"), and
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otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of each of this Agreement and the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further action is required by the Company, its Board of Directors or its
stockholders. Each of this Agreement and the Transaction Documents has been duly
executed by the Company and when delivered in accordance with the terms hereof
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
c. Capitalization. As of the date hereof, the authorized capital stock
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of the Company is as set forth in Schedule 2.1(c). All of such outstanding
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shares of capital stock have been, or upon issuance will be, validly authorized
and issued, fully paid and nonassessable and were issued in accordance with the
registration or qualification provisions of the Securities Act, or pursuant to
valid exemptions therefrom. Except as disclosed in Schedule 2.1(c), (i) no
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shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances granted by the Company, nor
is any holder of the Common Stock entitled to preemptive or similar rights
arising out of any agreement or understanding with the Company by virtue of any
Transaction Document, (ii) there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for, or
giving any Person (as defined below) any right to subscribe for or acquire, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iii) there are no outstanding debt
securities of the Company or any of its Subsidiaries, (iv) there are no
outstanding securities of the Company or any of its Subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (v) there are no securities or instruments containing anti-
dilution or similar provisions that will be triggered by the sale of the
Debentures or issuance of the Warrants or upon the conversion of the Debentures
or upon the exercise of the Warrants, (vi) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement and (vii) except as specifically disclosed in the SEC Documents (as
defined in Section 2.1(k) hereof), no Person (as defined below) or group of
related Persons (a) has the right to acquire by agreement with or by obligation
binding upon the Company beneficial ownership of in excess of 5% of the Common
Stock or (b) to the best knowledge of the Company, beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) in excess of 5% of the Common Stock.
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"Person" means an individual or corporation, partnership, trust, incorporated or
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unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
d. Authorization and Validity; Issuance of Shares. The shares of
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Common Stock issuable upon conversion of the Debentures (the "Debenture Shares")
and exercise of the Warrants (the "Warrant Shares") (collectively, the
"Underlying Shares") are and will at all times hereafter continue to be duly
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authorized and reserved for issuance and will be validly issued, fully paid and
non-assessable, free and clear of all liens, encumbrances and Company rights of
first refusal, other than liens and encumbrances created by the Purchasers
(collectively, "Liens") and will not be subject to any preemptive or similar
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rights. Subject to the accuracy and completeness of each of the Purchasers'
representations and warranties in Section 2.2, the issuance by the Company of
the Debentures, the Warrants and the Underlying Shares is exempt from
registration under the Securities Act.
e. No Conflicts. The execution, delivery and performance of this
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Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including the issuance of the Underlying Shares) do not and will not (i)
conflict with or violate any provision of the Certificate of Incorporation,
Bylaws or other organizational documents of the Company or any of the
Subsidiaries, (ii) subject to obtaining the consents referred to in Section
2.1(f), conflict with, or constitute a breach or a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture, patent, patent license or instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected which, individually or in the aggregate,
would be reasonably expected to have a Material Adverse Effect, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
or any Subsidiary is subject (including Federal and state securities laws and
regulations and the rules and regulations of the principal market or exchange on
which the Common Stock is traded or listed) applicable to the Company or any of
its Subsidiaries, or by which any material property or asset of the Company or
any Subsidiary is bound or affected which, individually or in the aggregate,
would be reasonably expected to have a Material Adverse Effect.
f. Consents and Approvals. Except as specifically set forth on
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Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
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any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, regulatory or self regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement or the Transaction Documents, other than (i) the filing of a
registration statement with the Commission, which shall be filed in accordance
with and in the time periods set forth in the Registration Rights Agreement,
(ii) the application(s) or any letter(s) acceptable to the National Market
System of Nasdaq Stock Market ("Nasdaq") for the listing of the Underlying
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Shares with Nasdaq (and with any other national securities exchange or market on
which the Common Stock is then listed) and (iii) any filings, notices or
registrations under applicable state securities laws (together with the
consents, waivers, authorizations, orders, notices and filings referred to on
Schedule 2.1(f), the "Required Approvals").
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g. Litigation; Proceedings. Except as specifically set forth on
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Schedule 2.1(g), there is no action, suit, notice of violation, proceeding or
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investigation pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of its
Subsidiaries, to the Company's knowledge, or any of their respective properties
or assets before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of this Agreement or the Transaction Documents or (ii) could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
h. No Default or Violation. Neither the Company nor any Subsidiary (i)
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is in default under or in violation of any indenture, loan or other credit
agreement or instrument to which it is a party or by which it or any of its
properties or assets is bound, (ii) is in default under or in violation of any
other agreement to which it is a party or by which its properties or assets are
bound, the default or violation of which, individually or in the aggregate,
would be reasonably expected to have a Material Adverse Effect, (iii) is in
violation of any order of any court, arbitrator or governmental body applicable
to it, (iv) is in violation of any statute, rule or regulation of any
governmental authority to which it is subject, which, individually or in the
aggregate, would be reasonably expected to have a Material Adverse Effect, (v)
is in default under or in violation of its Certificate of Incorporation, Bylaws
or other organizational documents, respectively, or (vi) is in default under or
in violation of any of the listing requirements of Nasdaq as in effect on the
date hereof and is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by Nasdaq in the foreseeable future.
The business of the Company and its Subsidiaries is not being conducted, and
shall not be conducted, in violation of any law, ordinance, rule or regulation
of any governmental entity, except where such violations have not resulted or
would not reasonably result, individually or in the aggregate, in a Material
Adverse Effect.
i. Disclosure; Absence of Certain Changes. None of this Agreement, the
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Schedules to this Agreement, the Transaction Documents or the SEC Documents or
the documents set forth on Schedule 2.1(i) contain any untrue statement of a
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material fact or omits to state any material fact necessary in order to make the
statements made herein and therein, in light of the circumstances under which
they were made, not misleading. Except as disclosed on Schedule 2.1(i) or in
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SEC Documents
filed on XXXXX at least five business days prior to the date hereof, since
December 31, 1998, there has been no material adverse change and no material
adverse development in the business, properties, operations, financial
condition, liabilities or results of operations of the Company or the
Subsidiaries or, insofar as can reasonably be foreseen, the future operating or
financial condition of the Company and the Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
j. Private Offering; Solicitation. The Company and all Persons acting
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on its behalf have not (i) made, directly or indirectly, and will not make,
offers or sales of any securities or solicited any offers to buy any security
under circumstances that would require registration of the Debentures, the
Warrants, the Debenture Shares, the Warrant Shares or the Underlying Shares
under the Securities Act, (ii) distributed any offering materials in connection
with the offering and sale of the Debentures or the Warrants, other than the SEC
Documents, the Schedules to this Agreement, any amendments and any supplements
thereto, or (iii) solicited any offer to buy or sell the Debentures or the
Warrants by means of any form of general solicitation or advertising. The
offer, sale and issuance of the Debentures, the Warrants, the Debenture Shares
and the Warrant Shares to the Purchasers will not be integrated with any other
offer, sale and issuance of the Company's securities (past, current, or future)
under the Securities Act or any regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated. Subject to the accuracy and completeness of the representations and
warranties of the respective Purchasers contained in Section 2.2 hereof, the
offer, sale and issuance by the Company to the Purchasers of the Debentures, the
Warrants and the Underlying Shares is exempt from the registration requirements
of the Securities Act.
k. SEC Documents; Financial Statements; Nonpublic Information. The
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Common Stock of the Company is registered pursuant to Section 12(g) of the
Exchange Act. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the Commission pursuant to
the reporting requirements of the Exchange Act, including pursuant to Section
13, 14 or 15(d) thereof, (the foregoing materials and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being collectively referred to herein as the
"SEC Documents"), on a timely basis or has received a valid extension of such
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time of filing and has filed any such SEC Documents prior to the expiration of
any such extension. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. To the best of the
Company's knowledge, as of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be otherwise specified in such
financial statements or the notes thereto or, 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 and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial year-end audit adjustments.
l. Investment Company. The Company is not, and is not controlled by or
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under common control with an affiliate (an "Affiliate") of an "investment
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company" within the meaning of the Investment Company Act of 1940, as amended.
m. Broker's Fees. No fees or commissions or similar payments with
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respect to the transactions contemplated by this Agreement or the Transaction
Documents have been paid or will be
payable by the Company to any broker, financial advisor, finder, investment
banker, or bank, other than as set forth in Schedule 2.1(m). The Purchasers
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shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
Section 2.1(m) that may be due in connection with the transactions contemplated
by this Agreement and the Transaction Documents.
n. Form S-3 Eligibility. The Company is, and at the Closing Date will
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be, eligible to register securities (including the Underlying Shares) for resale
with the Commission under Form S-3 (or any successor form) promulgated under the
Securities Act.
o. Listing and Maintenance Requirements Compliance. The principal
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market on which the Common Stock is currently traded is Nasdaq. Except as
disclosed on Schedule 2.1(o), the Company has not in the three years preceding
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the date hereof received notice (written or oral) from Nasdaq (or any stock
exchange, market or trading facility on which the Common Stock is or has been
listed (or on which it has been quoted)) to the effect that the Company is not
in compliance with the listing or maintenance requirements of such market or
exchange. The Company is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by Nasdaq. After giving effect to
the transactions contemplated by this Agreement and the Transaction Documents,
the Company is and will be in compliance with all such maintenance requirements.
p. Intellectual Property Rights. To the Company's knowledge, and
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except for sponsored research and license agreements between the Company and
Harvard Medical School and its affiliated institutions, the Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trademark applications, trade names and service marks, whether or not
registered, and all patents, patent applications, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and intellectual
property rights (collectively, "Intellectual Property Rights") which are
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necessary for use in connection with their respective businesses as now
conducted and as described in the SEC Documents. To the Company's knowledge,
neither the Company nor any of its Subsidiaries has infringed or is infringing
on any of the Intellectual Property Rights of any Person and, except as set
forth on Schedule 2.1(p), there is no claim, action or proceeding which has been
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made or brought or alleged against, or to the Company's knowledge, is being
made, brought or threatened against, the Company or its Subsidiaries regarding
the infringement of any of the Intellectual Property Rights, and the Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise
to any of the foregoing, except where any of the foregoing would not be
reasonably likely to have a Material Adverse Effect.
q. Employee Relations. Neither the Company nor any of its Subsidiaries
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is involved in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. Neither the Company
nor any of its Subsidiaries is a party to a collective bargaining agreement, and
the Company and its Subsidiaries believe that relations with their employees are
good. Except as set forth on Schedule 2.1(q), since January 1, 1999 no
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executive officer (as defined in Rule 501(f) under the Securities Act) has
notified the Company that such officer intends to leave the Company or otherwise
terminate such officer's employment with the Company.
r. Registration Rights; Rights of Participation. Except as described
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on Schedule 2.1(r) hereto, (i) the Company has not granted or agreed to grant to
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any Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction Document.
s. Title. Except as disclosed on Schedule 2.1(s), the Company and the
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Subsidiaries have good and marketable title in fee simple to all real property
and personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all
Liens, except for Liens that do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and, to the Company's best knowledge, enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries.
t. Permits. The Company and each of its Subsidiaries possess all
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certificates, authorizations, licenses, easements, consents, approvals, orders
and permits necessary to own, lease and operate their respective properties and
to conduct their respective businesses as currently conducted, free and clear of
any conflicts, and without any defaults or violations thereunder, except where
the failure to possess such permits, or the existence of any conflict, default
or violation would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect ("Material Permits"), and there is no
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proceeding pending, or, to the knowledge of the Company, threatened relating to
the revocation, modification, suspension or cancellation of any Material Permit.
u. Insurance. The Company and each of its Subsidiaries are insured by
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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 and its Subsidiaries are
engaged.
v. Tax Status; Firpta. Except as set forth on Schedule 2.1(v), the
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Company and each of the Subsidiaries has made or filed all federal and state
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 and each of its Subsidiaries 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 (which are set forth on
Schedule 2.1(v) hereof), and has set aside on it books provisions reasonably
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adequate in all material respects for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
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 is not a "United States real property holding
corporation" within the meaning of Section 847(c)(2) of the Internal Revenue
Code of 1986, as amended.
w. Transactions With Affiliates. Except as set forth on Schedule
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2.1(c) or Schedule 2.1(w), none of the officers, directors, or employees of the
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Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner other than transactions that would not require disclosure under Section
404 of Regulation S-K of the Securities Act and the Exchange Act.
x. Application to Takeover Protection. The Company and its Board of
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Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or the laws of the state of incorporation which is or could become applicable to
the Purchasers or the Transaction Documents in connection with the issuance of
the Underlying Shares. The issuance of the Underlying Shares will not trigger
any poison pill provisions of any of the Company's stockholders' rights or
similar agreements.
y. Environmental Laws. Except as set forth on Schedule 2.1(y), the
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Company and its Subsidiaries (i) are in compliance with any and 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)
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have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permits, licenses or
other approvals except where the failure of any of the foregoing would not
result in a Material Adverse Effect.
z. Foreign Corrupt Practices. Neither the Company, nor any of its
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Subsidiaries, nor to the best of the Company's knowledge, any director, officer,
agent, employee or other person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee form corporate funds; violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
2.2 Representations and Warranties of the Purchasers. Each of the
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Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
a. Organization; Authority. Such Purchaser is a corporation or a
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limited duration company or a limited liability company or limited partnership
duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with the requisite power and
authority, corporate or otherwise, to enter into and to consummate the
transactions contemplated hereby and by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The purchase by such
Purchaser of the Debentures and the Warrants hereunder has been duly authorized
by all necessary action on the part of such Purchaser. Each of this Agreement
and the Registration Rights Agreement has been duly executed and delivered by
such Purchaser and constitutes the valid and legally binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
b. Investment Intent. Such Purchaser is acquiring the Debentures and
-----------------
the Warrants for its own account and not with a present view to or for
distributing or reselling the Debentures, the Warrants, the Debenture Shares or
the Warrant Shares or any part thereof or interest therein in violation of the
Securities Act; provided, however, that by making the representations herein,
-------- -------
such Purchaser does not agree to hold any of the Debentures, the Warrants, the
Debenture Shares or the Warrant Shares for any minimum or other specific term
and reserves the right, subject to the provisions of Section 5.5, to dispose of
the Debentures at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
c. Purchaser Status. At the time such Purchaser was offered the
----------------
Debentures and the Warrants, and at the Closing Date, (i) it was and will be an
"accredited investor" as defined in Rule 501 under the Securities Act and (ii)
such Purchaser, either alone or together with its representatives, had and will
have such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Debentures and the Warrants.
d. Reliance. Such Purchaser understands and acknowledges that (i)
--------
the Debentures and the Warrants are being offered and sold to such Purchaser
without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under Section 4(2)
of the Securities Act or Regulation D promulgated thereunder and (ii) the
availability of such
exemption depends in part on, and the Company will rely upon the accuracy and
truthfulness of, the representations set forth in this Section 2.2 and such
Purchaser hereby consents to such reliance.
e. Information. Such Purchaser 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 Debentures
and Warrants which have been requested by such Purchaser or its advisors. Such
Purchaser 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 Purchaser or any of its advisors or representatives
shall modify, amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Section 2.1 above or representations
and warranties of the Company contained in any other transaction document. Such
Purchaser understands that its investment in the Debentures and Warrants
involves a significant degree of risk.
f. Governmental Review. Such Purchaser 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 Debentures or
Warrants.
g. Residency. Such Purchaser is a resident of the jurisdiction set
---------
forth immediately below such Purchaser's name on Schedule II hereto.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III.
OTHER AGREEMENTS
3.1 Transfer Restrictions.
---------------------
a. If any Purchaser should decide to dispose of the Debentures, the
Warrants, the Debenture Shares or the Warrant Shares held by it, such Purchaser
understands and agrees that it may do so only pursuant to the provisions of
Section 5.5, if applicable, and pursuant to an effective registration statement
under the Securities Act or pursuant to an available exemption from the
registration requirements of the Securities Act, such as Rule 144 promulgated
under the Securities Act ("Rule 144"). In connection with any permitted transfer
--------
of any Debentures, Warrants, Debenture Shares or Warrant Shares other than
pursuant to an effective registration statement or to the Company, the Company
may require the transferor thereof to provide to the Company a written opinion
of counsel experienced in the area of United States securities laws selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred securities under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register any transfer by any Purchaser to an Affiliate of such Purchaser,
provided that the transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Transaction
Documents.
b. Each Purchaser agrees to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Debentures, the Warrants,
the Debenture Shares and the Warrant Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
IN ADDITION, THE DEBENTURES AND WARRANTS REPRESENTED HEREBY ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CONVERSION SET FORTH
IN THE SECURITIES PURCHASE AGREEMENT DATED AS OF SEPTEMBER 22, 1999
AMONG THE COMPANY AND THE PURCHASERS PARTY THERETO, A COPY OF WHICH IS
ON FILE IN THE OFFICE OF THE COMPANY.
The Underlying Shares shall not contain the legend set forth above (or
any other legend) if (i) the sale of Underlying Shares is pursuant to an
effective Registration Statement (as defined in the Registration Rights
Agreement) under the Securities Act, or if (ii) in the written opinion of
counsel to the Company experienced in the area of United States securities laws
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company agrees that it will provide each Purchaser, upon
request, with a certificate or certificates representing Underlying Shares, free
from such legend at such time as such legend is no longer required hereunder.
3.2 Stop Transfer Instruction. The Company may not make any notation on
-------------------------
its records or give instructions to any transfer agent of the Company which
enlarge the restrictions on transfer set forth in Section 3.1.
3.3 Furnishing of Information. As long as any Purchaser owns the
-------------------------
Debentures, the Warrants, the Debenture Shares or the Warrant Shares, the
Company will cause the Common Stock to continue at all times to be registered
under Section 12(g) of the Exchange Act, will timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13, 14 or 15(d) of the Exchange Act, will promptly, but in no event later than
five (5) Business Days, notify the Purchasers of such filings and will not take
any action or file any document (whether or not permitted by the Exchange Act or
the rules thereunder) to terminate or suspend such reporting and filing
obligations. The Company further covenants that it will take such further
action as any holder of the Debentures, the Warrants, the Debenture Shares or
the Warrant Shares may reasonably request, all to the extent required from time
to time, to enable such Person to sell, subject to the provisions of Section
5.5, the Debentures, the Warrants, the Debenture Shares, or the Warrant Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act.
3.4 Blue Sky Laws. In accordance with the Registration Rights Agreement,
-------------
the Company shall (i) qualify the Debenture Shares and the Warrant Shares under
the securities or "blue sky" laws of such jurisdictions as the Purchasers may
request (or to obtain an exemption from such qualification), and (ii) shall
continue such qualification at all times through the resale of all Debenture
Shares or Warrant Shares, but in any event not past the third anniversary of the
Closing Date.
3.5 Integration. The Company shall not sell, offer for sale or solicit
-----------
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Debentures, the Warrants, the Debenture Shares or the Warrant Shares in a
manner that would require the registration under the Securities Act of the sale
of the Debentures, the Warrants, the Debenture Shares or the Warrant Shares to
any Purchaser.
3.6 Listing and Reservation of Debenture Shares and Warrant Shares.
--------------------------------------------------------------
a. The Company shall (i) not later than ten (10) business days after
the Closing Date prepare and file with Nasdaq (as well as any other national
securities exchange or market on which the Common Stock is then listed) an
additional shares listing application or a letter acceptable to Nasdaq covering
and listing a number of shares of Common Stock which is at least equal to 1.2
times the maximum number of Underlying Shares then issuable, assuming that the
payment of all future dividends on such shares then outstanding were made in
shares of Common Stock, (ii) take all steps necessary to cause the Underlying
Shares to be approved for listing on Nasdaq (as well as on any other national
securities exchange or market on which the Common Stock is then listed) as soon
as possible thereafter, (iii) maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all such Underlying Shares and not
take any action which results in the delisting or suspension of such Underlying
Shares and (iv) provide to the Purchasers evidence of such listing.
b. The Company at all times shall reserve a sufficient number of
shares of its authorized but unissued Common Stock to provide for 1.2 times the
full conversion of the outstanding Debentures (including the payment of all
dividends thereon) and exercise of the outstanding Warrants. Shares of Common
Stock reserved for issuance upon conversion of the Debentures and the exercise
of the Warrants shall be allocated pro rata to each of the Purchasers in
accordance with the amount of Debentures and Warrants issued and delivered to
such Purchaser at the Closing. If at any time the number of shares of Common
Stock authorized and reserved for issuance is insufficient to cover 120% of the
number of Debenture Shares and Warrant Shares issued and issuable upon
conversion of the Debentures and exercise of the Warrants (based on the
Conversion Price (as defined in the Debenture) of the Debentures in effect from
time to time and the Exercise Price (as defined in the Warrants) of the Warrants
in effect from time to time) without regard to any limitation on conversions or
exercises, the Company will promptly take all corporate action necessary to
authorize and reserve 120% of such shares pursuant to Section 3(b) of the
Registration Statement, including, without limitation, calling a special meeting
of stockholders to authorize additional shares to meet the Company's obligations
under this Section 3.6(b), in the case of an insufficient number of authorized
shares, and using its best efforts to obtain stockholder approval of an increase
in such authorized number of shares. In addition, upon the occurrence of a Reset
Event (as defined in the Debenture) pursuant to Section 4.2(b) of the Debenture
or Section 3(b) of the Warrant, the Company shall be required to file, within
fifteen (15) business days of such Reset Event, a registration statement
covering the product of 1.2 and the number Underlying Shares, less the number of
Underlying Shares for which a registration statement is then effective. The
Company shall use its best efforts to cause such registration statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event on or prior to that date the 100th day
following the Filing Date; provided, however, that the Effectiveness Date shall
-------- -------
be extended to up to the 130th day following the Filing Date if the Initial
Registration Statement is not declared effective by the Commission prior to the
130th day following the Filing Date due to delays which are solely attributable
to the Commission, so long as the Company responds to any comments received from
the Commission in a commercially reasonable manner and as promptly as
practicable, but in no event later than ten (10) Business Days.. All
calculations of the above amount shall be made without regard to any limitation
on conversions of Securities or exercises of Warrants.
3.7 Notice of Breaches.
------------------
a. The Company and each Purchaser shall give prompt written notice
to the other of any breach by it of any representation, warranty or other
agreement contained in this Agreement or in the Transaction Documents, as well
as any events or occurrences arising after the date hereof and prior to the
Closing Date, which would reasonably be likely to cause any representation or
warranty or other agreement of such party, as the case may be, contained herein
to be incorrect or breached as of the Closing Date; provided such notice will
not constitute material non-public information. However, no disclosure by either
party pursuant to this Section 3.7 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Transaction Documents unless the Purchasers consummate the Closing after
receiving such disclosure.
b. Notwithstanding the generality of Section 3.7(a), the Company
shall promptly notify, provided such notification will not constitute material
non-public information, each Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company or any Subsidiary to the effect
that the consummation of the transactions contemplated hereby and by the
Registration Rights Agreement violates or would violate any written agreement or
understanding between such lender and the Company or any Subsidiary, and the
Company shall promptly furnish by facsimile to the Purchasers a copy of any
written statement in support of or relating to such claim or notice.
c. The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the Transaction Documents
shall not be imputed to, and shall have no effect upon, any other Purchaser or
affect the Company's obligations under this Agreement or any Transaction
Document to any non-defaulting Purchaser.
3.8 Form D. The Company agrees to file a Form D with respect to the
------
Debenture and Warrants as required by Rule 506 under Regulation D and to provide
a copy thereof to each Purchaser promptly after such filing.
3.9 Future Financings.
-----------------
a. As long as any Debentures are outstanding, except for (i)
issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have
been issued by the Company in connection with any plan which has been approved
by the Board of Directors of the Company, pursuant to which the Company's
securities may be issued to any employee, officer, director or consultant of the
Company; (iii) shares of Common Stock issuable upon the exercise of any options
or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto;
(iv) the securities to be issued in the transactions set forth on such Schedule
2.1(c); (v) shares issued in a transaction registered under the Securities Act;
or (vi) shares of Common Stock issued or deemed to have been issued as
consideration for an acquisition by the Company of a division, assets or
business (or stock constituting any portion thereof) from another Person, if the
Company agrees to issue shares of Common Stock or other securities convertible
into or exchangeable or exercisable for Common Stock (the "New Security") at (a)
------------
an effective price per share which is less or may be less (including, without
limitation, any security which is convertible into or exchangeable or
exercisable for Common Stock at a price which may change with the market price
of the Common Stock) than the Conversion Price (as defined in the Debenture) of
the Debentures as of the date thereof or (b) an effective price per share
greater than the Conversion Price but less than the Average Price (as defined in
the Debenture) on the date of such issuance or sale (either of (a) or (b) a
"Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m.
----------------
(New York time) on or before the third (3/rd/) Trading Day (as defined below)
after the decision to issue the New Security has been made, written notice of
the Future Financing containing in reasonable detail (i) the proposed terms of
the Future Financing, (ii) the amount of the proceeds that will be raised and
(iii) the Person with whom such Future Financing shall be effected, and attached
to which shall be a term sheet or similar document relating thereto (the "Future
------
Financing Notice"). Upon receiving the Future Financing Notice, each Purchaser
----------------
shall have the pro rata right (based on the principal amount of the Debentures
held by such Purchaser relative to the aggregate principal amount of Debentures
outstanding) to purchase, on the same terms as the Future Financing, an amount
of New Securities for an aggregate purchase price which shall not exceed the sum
of fifty percent (50%) of the amount of proceeds that will be raised in such
Future Financing, not to exceed the lesser of (i) $8,000,000 or (ii) the
outstanding principal amount of, and interest owing on, such Purchaser's
Debenture. In the event a Purchaser desires to exercise the right granted under
this Section 3.9, such Purchaser must notify the Company on or prior to the
fifth (5/th/)Trading Day after such Purchaser has received the Future Financing
Notice. In the event the terms and conditions of a proposed Future Financing are
amended in any respect after delivery of the Future Financing Notice but prior
to the closing of the proposed Future Financing to which such Future Financing
Notice relates, the Company shall deliver a new notice to each Purchaser
describing the amended terms and conditions of the proposed Future Financing and
each Purchaser thereafter shall have an option during the five (5) Trading Days
period following delivery of such new notice to purchase its
pro rata share (based on the Purchaser's percentage of the principal amount of
the outstanding Debentures such Purchaser owns) of the New Securities being
offered on the same terms as contemplated by such proposed Future Financing, as
amended. The foregoing sentence shall apply to successive amendments to the
terms and conditions of any proposed Future Financing. At the closing for such
Future Financing, the transactions contemplated by this Section 3.9 shall close,
subject to the completion of mutually satisfactory documentation, and the
Company shall tender to each Purchaser certificates representing the New
Securities that it agreed to purchase and the Purchasers shall make payment for
the entire purchase price in immediately available funds at the closing of such
sale; provided, however, that each Purchaser, in lieu of providing cash as
-------- -------
consideration for the purchase price, may retire all or a portion of the
outstanding principal amount of Debenture as payment of the purchase price for
the shares of Common Stock that it desires to purchase pursuant to this Section
3.8. "Trading Day" shall mean a day on which the Nasdaq (or in the event the
-----------
Common Stock is not traded on Nasdaq, such other securities market on which the
Common Stock is listed) is open for trading.
b. If the Company shall enter into a transaction to issue any New
Securities prior to March 22, 2000 (a "Subsequent Transaction"), each Purchaser
----------------------
shall have the right to have such Purchaser's Transaction Documents amended to
reflect the terms of such Subsequent Transaction and the Company shall, if
requested, issue new Debentures and Warrants to such Purchaser reflecting the
terms of the Subsequent Transaction.
3.10 Use of Proceeds. The Company agrees to set aside and keep on hand
---------------
$4,000,000 of the proceeds from the sale of the Debentures to be applied to the
redemption of or concession of, all of the Company's Class C floating preferred
stock until such time as the guaranteed return obligation thereunder becomes
cancelled and/or non-operative. The Purchasers agree that if and to the extent
that the amount required to guarantee such redemption of or concession of all of
the Company's Class C floating preferred stock falls below $4,000,000, the
Company may use the balance of such amount for general corporate purposes.
3.11 Reimbursement. In the event that any Purchaser, other than by reason
-------------
of its gross negligence or willful misconduct, becomes involved in any capacity
in any action, proceeding or investigation brought by or against any Person
(other than any action, proceeding or investigation brought by the Company
against any Purchaser), including shareholders of the Company, in connection
with or as a result of (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the Transaction Documents,
(b) any breach of any covenant, agreement or obligation of the Company contained
in this Agreement or the Transaction Documents, or (c) any cause of action, suit
or claim brought or made against such Purchaser and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement or
the Transaction Documents, the Company will reimburse such Purchaser for its
reasonable legal and other actual out-of-pocket expenses (including the
reasonable cost of any investigation and preparation) incurred in connection
therewith. The reimbursement obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Affiliate of the
Purchasers and partners, directors, agents, employees and controlling persons
(if any), as the case may be, of the Purchasers 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 Purchasers and any such
Affiliate and any such Person. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of its obligations
hereunder which is permissible under applicable law.
3.12 Transfer Agent Instructions. At the Closing the Company shall issue
---------------------------
irrevocable instructions to its transfer agent (and shall issue to any
subsequent transfer agent as required), to issue certificates, registered in the
name of each such Purchaser or its respective nominee(s), for the Debenture
Shares and/or the Warrant Shares in such amounts as specified from time to time
by each Purchaser to the Company in a form acceptable to such Purchasers (the
"Irrevocable Transfer Agent Instructions"). So long as required pursuant to
---------------------------------------
Section 3.1(b), all such certificates shall bear the restrictive legend
specified
in Section 3.1(b) of this Agreement. The Company warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this
Section 3.12, and stop transfer instructions to give effect to Section 3.1
hereof (in the case of the Debenture Shares and the Warrant Shares, prior to
registration of the Debenture Shares under the Securities Act) will be given by
the Company to its transfer agent and that the Debentures, the Warrants, the
Debenture Shares and the Warrant Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement and the Transaction Documents. If a Purchaser provides the Company
with an opinion of counsel, the form and substance of which opinion shall be
customary for opinions of counsel in comparable transactions, to the effect that
a public sale, assignment or transfer of the Debentures, the Debenture Shares,
the Warrants and the Warrant Shares may be made without registration under the
Securities Act or the Purchaser provides the Company with reasonable assurances
that the Warrants, the Debenture Shares and the Warrant Shares can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold, the Company
shall permit the transfer, and, in the case of the Debenture Shares and the
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Purchasers by violating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.12 will be inadequate and agrees,
in the event of a beach or threatened breach by the Company of the provisions of
this Section 3.12, that the Purchasers, shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
3.13 Press Release; Filing of Form 8-K. Subject to the provisions of
---------------------------------
Section 6.10 hereof, prior to the opening of Nasdaq on September 23, 1999, the
Company shall file a press release in form and substance reasonably acceptable
to the Purchasers. On or before the 10/th/ business day following the Closing
Date, the Company shall file a Form 8-K with the Commission describing the terms
of the transaction contemplated by this Agreement and the Transaction Documents
in the form required by the Exchange Act.
3.14 Trading Restrictions. Each Purchaser agrees that it shall not,
--------------------
directly or indirectly through one or more intermediaries, engage in any short
sales of the Company's Common Stock, unless within seven (7) Trading Days after
the initiation of such short sale the Purchaser shall have delivered to the
Company a Notice of Conversion, in accordance with Section 4.2 of the Debenture,
pursuant to which the Purchaser shall convert such principal amount of
Debentures held by such Purchaser into the number of shares of Common Stock as
shall be sufficient to cover, and shall use such shares to so cover in full, the
shares required to be delivered by such Purchaser in satisfaction of and in
connection with such short sale. The parties agree that the provisions of this
Section 3.14 shall be specifically enforceable.
3.15 Best Efforts. Each of the parties hereto shall use its best efforts
------------
to satisfy each of the conditions to be satisfied by it as provided in Article
IV of this Agreement.
3.16 Subsequent Registrations. Other than Underlying Shares and other
------------------------
Registrable Securities (as defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement, the Company
shall not, for a period of not less than 90 Trading Days after the date that the
Registration Statement (as defined in the Registration Rights Agreement) is
declared effective by the Commission, without the prior written consent of two-
thirds of the Purchasers, (i) issue or sell any of its or any of its Affiliates'
equity or equity-equivalent securities unless such issuance or sale is equal to
or greater than $10.00 per share of Common Stock on the date such issuance or
sale or (ii) (a) register for resale any securities of the Company or (b) have
a registration statement declared effective covering an issuance by the Company
of any of its securities, unless the purchasers of such securities agree to not
to offer or sell such securities for a period of 120 following the date the
Registration Statement is declared effective by the Commission. Any days that
any Purchaser is unable to sell Underlying Shares under an
Registration Statement shall be added to such 90 Trading Day and 120 Trading Day
period for the purposes of (i) and (ii), respectively, above.
3.17 Material Information. The Company covenants that any information
--------------------
provided by the Company to the Purchasers, their agents or their counsel which
could be deemed to constitute material non-public information will cease to be
material non-public information (either through disclosure by the Company or
otherwise) by December 21, 1999.
ARTICLE IV.
CONDITIONS
4.1 Closing Conditions.
------------------
a. Conditions Precedent to the Obligation of the Company to Sell. The
-------------------------------------------------------------
obligation of the Company to sell the Debentures and the Warrants hereunder is
subject to the satisfaction or waiver (with prior written notice to each
Purchaser) by the Company, at or before the Closing, of each of the following
conditions:
(i) Accuracy of the Purchasers' Representations and Warranties.
----------------------------------------------------------
The representations and warranties of each Purchaser in this Agreement shall be
true and correct in all material respects as of the date when made (except for
representations and warranties that speak as of a specific date) and as of the
Closing Date;
(ii) Performance by the Purchasers. Each Purchaser shall have
-----------------------------
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Purchaser at or prior to the Closing; and
(iii) No Injunction. No statute, rule, regulation, executive
-------------
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Transaction Documents.
b. Conditions Precedent to the Obligation of the Purchasers to
-----------------------------------------------------------
Purchase. The obligation of each Purchaser hereunder to acquire and pay for the
Debentures and Warrants is subject to the satisfaction or waiver (with prior
written notice to the Company and each other Purchaser) by such Purchaser, at or
before the Closing, of each of the following conditions:
(i) Accuracy of the Company's Representations and Warranties.
--------------------------------------------------------
The representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date);
(ii) Performance by the Company. The Company shall have
--------------------------
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing;
(iii) No Injunction. No statute, rule, regulation, executive
-------------
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(iv) No Suspensions of Trading in Common Stock. The trading in
-----------------------------------------
the Common Stock shall not have been suspended by the Commission or on Nasdaq
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
(v) Listing of Common Stock. The Common Stock shall be listed
-----------------------
for trading on Nasdaq;
(vi) Required Approvals. All Required Approvals shall have been
------------------
obtained and copies thereof delivered to such Purchaser;
(vii) Shares of Common Stock. The Company shall have duly
----------------------
reserved the number of Underlying Shares required by this Agreement and the
Transaction Documents to be reserved for issuance upon conversion of the
Debentures and the exercise of the Warrants;
(viii) Change of Control. No Change of Control shall have occurred
-----------------
between August 15, 1999 and the Closing Date. "Change of Control" means the
-----------------
occurrence of any of (i) an acquisition after the date hereof by any Person or
"group" (as described in Section 13(d)(3) of the Exchange Act) of in excess of
51% of the voting securities of the Company, (ii) a replacement of more than
one-half of the members of the Company's Board of Directors which is not
approved by a majority of those individuals who are members of the Board of
Directors on the date hereof, or their duly elected successors who are directors
immediately prior to such transaction, in one or a series of related
transactions, (iii) the merger of the Company with or into another entity,
unless following such transaction, the Holders of the Company's securities
continue to hold at least 50% of the securities of the resulting company
following such transaction, (iv) the consolidation or sale of all or
substantially all of the assets of the Company in one or a series of related
transactions, (v) the removal of Xxxxx Xxxxxxx as CEO of the Company or (vi) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i), (ii),
(iii), (iv) or (v).
(ix) Resolutions. The Board of Directors of the Company shall
-----------
have adopted resolutions consistent with Section 2.1(b) and in a form reasonably
acceptable to each Purchaser (the "Resolutions");
-----------
c. Documents and Certificates. At the Closing, the Company shall have
--------------------------
delivered to the Purchasers the following in form and substance reasonably
satisfactory to the Purchasers:
(i) Opinion. An opinion of the Company's legal counsel in the
-------
form attached hereto as Exhibit E dated as of the Closing Date;
---------
(ii) Debenture. Debentures representing the principal amount of
---------
Debentures purchased by such Purchaser as set forth next to such Purchaser's
name on Schedule I, registered in the name of such Purchaser, each in form
----------
satisfactory to the Purchaser;
(iii) Warrant. Warrants representing the Warrants purchased by
-------
such Purchaser as set forth next to such Purchaser's name on Schedule I,
----------
registered in the name of such Purchaser;
(iv) Registration Rights. The Company shall have executed and
-------------------
delivered the Registration Rights Agreement;
(v) Officer's Certificate. An Officer's Certificate dated the
---------------------
Closing Date and signed by an executive officer of the Company confirming the
accuracy of the Company's representations, warranties and covenants as of the
Closing Date and confirming the compliance by the Company with the conditions
precedent set forth in this Section 4.1 as of the Closing Date;
(vi) Secretary's Certificate. A Secretary's Certificate dated the
-----------------------
Closing Date and signed by the Secretary or Assistant Secretary of the Company
certifying (A) that attached thereto is a true and complete copy of the
Certificate of Incorporation of the Company, as in effect on the Closing Date,
(B) that attached thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Closing Date and (C) that attached thereto is a
true and complete copy of the Resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and of the Transaction Documents, and that such Resolutions have not
been modified, rescinded or revoked;
(vii) Certificates of Incorporation. The Company shall have
-----------------------------
delivered to each of the Purchasers a copy of a certificate evidencing the
incorporation and good standing of the Company and each Subsidiary whose
individual operations are material to the consolidated operations, earnings,
assets or financial condition of the Company, in such corporation's state of
incorporation issued by the Secretary of State of such state of incorporation as
of a date within ten days of the Closing Date. The Company shall have delivered
to each of the Purchasers a copy of its Certificate of Incorporation as
certified by the Secretary of State of the State of Delaware within ten days of
the Closing Date;
(viii) Lockup Letters. The officers and directors of the Company
--------------
shall have delivered to the Purchasers a letter in the form of Exhibit E hereto
---------
pursuant to which they agree not to offer or sell, for a purchase price of less
than $8.00 per share, shares of Common Stock such officer or director
beneficially owns during any time period when any Purchaser is unable to freely
offer for sale or to sell any Underlying shares pursuant to an effective
registration statement.
ARTICLE V.
MISCELLANEOUS
5.1 Entire Agreement. This Agreement, together with the Exhibits and
----------------
Schedules hereto and the Transaction Documents contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
5.2 Notices. Any notices, consents, waivers or other communications
-------
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by 7:00 p.m. EST where such
notice is received) or the first business day following such delivery (if
received after 7:00 p.m. EST where such notice is received); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
Boston Life Sciences, Inc.
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
With a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
If to the Transfer Agent:
If to Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. to:
152 West 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
If to Xxxxx Xxxxxxx Strategic Growth Fund, L.P. to:
152 West 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
With a copy, in the case of Notice to Xxxxx Xxxxxxx Strategic Growth
Fund, Ltd., Xxxxx Xxxxxxx Strategic Growth Fund, L.P. to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxx
Each party shall provide written notice to the other party of any change in
address or facsimile number in accordance with the provisions hereof.
5.3 Amendments; Waivers. No provision of this Agreement may be waived or
-------------------
amended except in a written instrument signed, by both the Company and the
Purchasers holding at least sixty percent (60%) of the then outstanding
principal balance of Debentures (the "Majority Holders"). No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter. Any amendment or
waiver effected in accordance with this Section shall be binding upon each
holder of any Debentures purchased under this Agreement at the time outstanding
(including securities into which such Debentures have been converted), each
future holder of all such Debentures and securities and the Company. Upon
effectuation of each such amendment or waiver, the Company shall promptly give
written notice thereof to the record holders of the Debentures and Underlying
Shares (if applicable) who have not previously consented thereto in writing.
5.4 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Majority Holders. No Purchaser shall
assign, transfer, sell or otherwise dispose of this Agreement or the Debentures
or any rights or obligations hereunder or thereunder without the prior written
consent of the Company, except that a Purchaser may assign some or all of its
rights hereunder or thereunder (i) to an "affiliate" of such Purchaser (as such
term is defined in the 1934 Act (subject to such affiliate demonstrating to the
reasonable satisfaction of the Company its satisfaction of the representations
and warranties of the Purchaser set forth in Section 2.2 hereof)) or (ii) to any
other Purchaser, without the consent of the Company; provided that each
permitted assignee agrees to be bound by and to comply with the provisions of
this Agreement.
5.6 No Third-Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
5.7 Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
5.8 Survival. The representations and warranties of the Company and the
--------
Purchasers contained in Sections 2.1 and 2.2 and the agreements and covenants
set forth in Section 3 shall survive the Closing and any conversion of the
Debentures or exercise of the Warrants regardless of any investigation made by
or on behalf of the such Purchaser or by or on behalf of the Company, except
that, in the case of representations and warranties such survival shall be
limited to the period of six (6) years following the Closing Date on which they
were made or deemed to have been made. This section shall have no effect on the
survival of the indemnification provisions of the Registration Rights Agreement.
5.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
5.10 Publicity. The Company and the Purchasers shall consult with each
---------
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such public
statement. The Company will not publicly or otherwise disclose the names of the
Purchasers without each such Purchaser's prior written consent. The Purchasers
and their affiliated companies shall, without further cost, have the right to
use in its advertising, marketing or other similar materials, the Company's logo
and trademarks and all or parts of the Company's press releases that focus on
the Transaction forming the subject matter of this Agreement or which make
reference to the Transaction. The Purchasers understand that this grant by the
Company only waives objections that the Company might have to the use of such
materials by the Purchasers and in no way constitutes a representation by the
Company that references in such materials to the activities of third-parties
have been cleared or constitute a fair use.
5.11 Severability. In case any one or more of the provisions of this
------------
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
5.12 Remedies. In addition to being entitled to exercise all rights
--------
provided herein or granted by law, including recovery of damages, the Purchasers
will be entitled to specific performance of the obligations of the Company under
this Agreement or the Transaction Documents without the showing of economic loss
and without any bond or other security being required. Each of the Company and
the Purchasers (severally and not jointly) agree that monetary damages would not
be adequate compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
5.13 Independent Nature of Purchasers' Obligations and Rights. The
--------------------------------------------------------
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity.
5.14 Payment Set Aside. To the extent that the Company makes a payment or
-----------------
payments to the Purchasers hereunder or pursuant to the Transaction Documents or
the Purchasers enforce or exercise their rights hereunder or thereunder, and
such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company a trustee, receiver or any other Person
under applicable bankruptcy or fraudulent conveyance laws, then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
5.15 Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
5.16 Fees and Expenses. Except as set forth in the Registration Rights
-----------------
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement; provided, however, that the Company shall pay the
-------- -------
Purchasers an aggregate fee of $20,000 at the Closing. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance of the
Debenture Shares and the Warrant Shares pursuant hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
BOSTON LIFE SCIENCES, INC.
By:______________________________
Name:
Title:
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By: Xxxxx Xxxxxxx Asset Management, LLC
By: ____________________________________
Name:
Title:
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By: Xxxxx Xxxxxxx Capital,LLC
its general partner
By:___________________________
Name:
Title:
Schedule I
Principal Amount Number of Shares of Number of Shares of
Name of Purchaser of Debentures Class A Warrants Class B Warrants
----------------- ------------- ---------------- ----------------
Xxxxx Xxxxxxx Strategic $6,400,000 776,000 576,000
Growth Fund, Ltd.
Xxxxx Xxxxxxx Strategic $1,600,000 194,000 144,000
Growth Fund, L.P.
Schedule II
Name of Purchaser Address
----------------- -------
Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. 000 Xxxx 00/xx/ Xxxxxx,
00/xx/ Xxxxx Xxx Xxxx, Xxx
Xxxx 00000 Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Residence: Grand Cayman,
Cayman Islands
Xxxxx Xxxxxxx Strategic Growth Fund, L.P. 152 West 00/xx/ Xxxxxx,
00/xx/ Xxxxx Xxx Xxxx, Xxx
Xxxx 00000 Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Residence: New York, New
York
Exhibit A
[Form of Convertible Debenture]
Exhibit B
[Form of Class A Warrant]
Exhibit C
[Form of Class B Warrant]
Exhibit D
[Registration Rights Agreement]
Exhibit E
[Company's Legal Opinion]
