Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made as of
August 8, 2003 by and among Diomed Holdings, Inc., a Delaware corporation (the
"COMPANY"), and the purchasers listed on Schedule 1 as "Scheduled Investors"
(the "SCHEDULED INVESTORS") and each other purchaser who becomes a party to this
Agreement pursuant to the provisions of Section 2(c) (the "ADDITIONAL
INVESTORS", and together with the Scheduled Investors, "Investors"). Capitalized
terms used in this Agreement without definition shall have the respective
meanings given them in Section 17.
WHEREAS, in order to provide capital to the Company until the
conditions to the completion of the transactions contemplated by this Agreement
are satisfied and further to provide capital to the Company for the enhancement
of its intellectual property, the Company desires to issue to certain of the
Investors, and certain of the Investors desire to purchase from the Company, the
Secured Bridge Notes on the terms and conditions set forth in this Agreement;
and
WHEREAS, the Company desires to issue to the Investors, and the
Investors desire to purchase from the Company, shares of Common Stock on the
terms and conditions set forth in this Agreement.
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 hereby
agree as follows:
1. PURCHASE AND SALE OF SECURED BRIDGE NOTES
(A) SECURED BRIDGE NOTES
(i) On or prior to the Tranche I Closing Date, the Company shall
have authorized the sale, issuance and delivery of $6,995,000 in aggregate
principal amount of the Secured Bridge Notes to the Investors listed on Schedule
1 as purchasers of the Secured Bridge Notes, including Secured Bridge Notes in
the principal amount of $495,000 to be issued to the Placement Agent (and/or its
designee(s)) at the Tranche I Closing in lieu of payment of certain fees payable
by the Company to the Placement Agent in connection with this financing.
(ii) The purchase price (the "NOTE PURCHASE PRICE") to be paid for
the Secured Bridge Notes is 100% of the principal amount thereof. The amounts
invested by the Investors shall be allocated as follows: (w) as to the Placement
Agent and the Persons designated by the Placement Agent for the issuance of
Secured Bridge Notes under the Placement Agent Agreement, in their respective
capacities as Investors, the entire amount to be paid to the Placement Agent in
the form of Secured Bridge Notes shall be allocated to the payment of the Note
Purchase Price for the issuance of the Secured Bridge Notes to be issued to the
Placement Agent or those Persons designated by the Placement Agent, as set forth
in the Placement Agent Agreement; (x) as to those Investors who are the holders
of Diomed's Class E Secured Notes due 2006 immediately prior to the Tranche I
Closing, their entire amount invested hereunder shall be allocated to the
payment of the Note Purchase Price for the purchase of the Secured Bridge Notes
to be purchased by them at the Tranche I Closing; (y) as to those Investors who
are Additional Investors, their entire amount invested shall be allocated to the
payment of the Share Purchase Price for the Investors' Shares to be purchased by
them at the Tranche II Closing and (z) as to all other Investors, their amounts
invested hereunder shall be allocated on a PRO RATA basis among all such
Investors to the payment of the Note Purchase Price to be paid by them for the
Secured Bridge Notes to be purchased by them at the Tranche I Closing and to the
payment of the Share Purchase Price to be paid by them for the purchase of
Investors' Shares to be purchased by them at the Tranche II Closing.
(iii) Upon payment of the Note Purchase Price to be paid by each
Investor for the Secured Bridge Notes being purchased by it, the Company will
issue, sell and deliver to such Investor one or more Secured Bridge Notes
substantially in the form of EXHIBIT A, in with original principal amount equal
to the Purchase Price paid therefor.
(B) ESCROW OF FUNDS. Not later than three (3) business days after
executing this Agreement, each Scheduled Investor (other than the Placement
Agent) that has agreed to purchase the Secured Bridge Notes will deposit 100% of
the Note Purchase Price payable by such Scheduled Investor under this Agreement
in escrow with the Escrow Agent under the terms of the Escrow Agreement. Funds
for the Note Purchase Price shall be wired to the Escrow Agent at the following
account (unless arrangements for payment by certified check are made by the
Investor and the Escrow Agent and such payment is tendered to the Escrow Agent
accordingly):
Bank Name: Fleet Bank
ABA No.: 000000000
Bank Address: Xxxxxx, XX 00000
Account Name: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. Client Group Account
Account No.: 00000000
Reference: Sunrise/Diomed 22379001
Funds so deposited shall be held by the Escrow Agent and released to the Company
or to the parties designated by the Company at the Tranche I Closing, in
accordance with the terms of the Escrow Agreement. If the Tranche I Closing does
not occur prior to the close of business on September 15, 2003, said funds shall
be returned to the Investor, as provided by the Escrow Agreement.
Notwithstanding the foregoing, the Placement Agent shall not be required to
deposit any funds with the Escrow Agent in connection with the Secured Bridge
Notes to be issued to it and/or its designee(s) under the Placement Agent
Agreement and, for the avoidance of doubt, the Placement Agent shall not be
entitled to receive any funds from the amounts deposited by the other Investors
with the Escrow Agent if the Tranche I Closing does not occur prior to the
prescribed time set forth in the foregoing sentence.
(C) TRANCHE I CLOSING.
(iv) GENERALLY. Subject to the terms and conditions of this
Agreement, each Investor listed on Schedule 1 agrees, severally and not jointly,
to purchase at the Tranche I Closing, and the Company agrees to sell and issue
to each Investor at the Tranche I Closing, that principal amount of Secured
Bridge Notes set forth opposite such Investor's name on Schedule 1 at the Note
Purchase Price.
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(v) TIME; PLACE. The purchase and sale of the Secured Bridge Notes
shall take place at a closing (the "TRANCHE I CLOSING") to be held at the
offices of McGuireWoods LLP, 0 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX at
10:00 a.m. New York City time on the second business day after all of the
conditions set forth in Sections 5 and 7 have been waived or satisfied (or such
earlier time after the conditions set forth in Section 5 have been waived or
satisfied as the Company may in its discretion determine), or such other time
and place as the Company and the Investors mutually agree in writing. At the
Tranche I Closing, the Company shall deliver to each Investor that is obligated
to purchase Secured Bridge Notes under this Agreement the Secured Bridge Notes
that such Investor is purchasing at the Tranche I Closing against payment of the
Note Purchase Price therefor by the Escrow Agent or otherwise if any Investors'
funds are not held by the Escrow Agent.
2. PURCHASE AND SALE OF STOCK
(A) INVESTORS' SHARES
(i) On or prior to the Tranche II Closing Date, the Company shall
have authorized the sale and issuance to the Investors of 450,000,000 shares
(the "INVESTORS' SHARES") of Common Stock.
(ii) The purchase price (the "SHARE PURCHASE PRICE") to be paid
for the Investors' Shares is $0.10 per share; PROVIDED, that the Share Purchase
Price to be paid by the holders of the Secured Bridge Notes by conversion or
tender of their Secured Bridge Notes shall be $0.08 per share. The amounts
invested by the Investors shall be allocated as follows: (x) as to those
Investors who are the holders of Diomed's Class E Secured Notes due 2006
immediately prior to the Tranche I Closing, their entire amount invested
hereunder shall be allocated to the payment of the Note Purchase Price for the
purchase of the Secured Bridge Notes to be purchased by them at the Tranche I
Closing; (y) as to those Investors who are Additional Investors, their entire
amount invested shall be allocated to the payment of the Share Purchase Price
for the Investors' Shares to be purchased by them at the Tranche II Closing and
(z) as to all other Investors, their amounts invested hereunder shall be
allocated on a PRO RATA basis among all such Investors to the payment of the
Note Purchase Price to be paid by them for the Secured Bridge Notes to be
purchased by them at the Tranche I Closing and to the payment of the Share
Purchase Price to be paid by them for the purchase of Investors' Shares to be
purchased by them at the Tranche II Closing.
(iii) Upon payment of the aggregate Share Purchase Price to be
paid by each Investor for the Investors' Shares being purchased by it, the
Company will issue, sell and deliver to such Investor that number of shares of
Common Stock set forth on Schedule 1 for purchase by such Investor at the
Tranche II Closing.
(B) ESCROW OF FUNDS. Not later than three (3) business days after
executing this Agreement, each Scheduled Investor that has agreed to purchase
Investors' Shares and each Additional Investor will deposit 100% of the Share
Purchase Price payable by such Scheduled Investor or Additional Investor, as the
case may be, under this Agreement in Escrow with the Escrow Agent under the
terms of the Escrow Agreement provided that the holders of the Class D Notes
shall submit such notes to be held by the Escrow Agent and that the holders of
the Secured
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Bridge Notes shall retain such notes until the Tranche II Closing. Funds for the
Share Purchase Price shall be wired to the Escrow Agent at the following account
(unless other arrangements for payment by certified check are made by the
Investor and the Escrow Agent and such payment is tendered to the Escrow Agent
accordingly):
Bank Name: Fleet Bank
ABA No.: 000000000
Bank Address: Xxxxxx, XX 00000
Account Name: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Client Group
Account
Account No.: 00000000
Reference: Sunrise/Diomed 22379001
Funds so deposited shall be held by the Escrow Agent and released to the Company
or to the parties designated by the Company at the Tranche II Closing, in
accordance with the terms of the Escrow Agreement. If the Tranche II Closing
does not occur prior to the close of business on the date which is ninety (90)
days from the Tranche I Closing Date (or, if such date is not a business day,
the following business day), then said funds shall be returned to the Investor,
as provided by the Escrow Agreement.
(C) CLOSING OF PURCHASE AND SALE.
(i) GENERALLY. Subject to the terms and conditions of this
Agreement, each Investor agrees, severally and not jointly, to purchase at the
Tranche II Closing, and the Company agrees to sell and issue to each Investor at
the Tranche II Closing, that number of Investors' Shares set forth opposite such
Investor's name on Schedule 1 at the Share Purchase Price.
(ii) TIME; PLACE. The purchase and sale of the Investors' Shares
shall take place at a closing (the "TRANCHE II CLOSING") to be held at the
offices of McGuireWoods LLP, 0 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX at
10:00 a.m. New York City time on the third business day after all of the
conditions set forth in Sections 6 and 8 have been waived or satisfied, or at
such other time and place not later than date which is ninety (90) days from the
Tranche I Closing Date (or, if such date is not a business day, the following
business day), as the Company and the Investors shall mutually agree in writing.
At the Tranche II Closing, the Company shall deliver to each Investor
certificates representing the Investors' Shares that such Investor is purchasing
at the Tranche II Closing against (A) in the case of the holders of the Class D
Notes, delivery to the Company of the Class D Notes, duly endorsed for transfer
to the Company, (B) in the case of the holders of the Secured Bridge Notes,
delivery to the Company of the Secured Bridge Notes, duly endorsed for transfer
to the Company and (C) in the case of each Investor that is to purchase
Investors' Shares at the Tranche II Closing other than by surrender of Class D
Notes or the Secured Bridge Notes, payment of the Share Purchase Price therefor
by the Escrow Agent or, if any Investor's funds are not held by the Escrow
Agent, by that Investor's certified check, official bank check, wire transfer or
any combination thereof.
(iii) ADDITIONAL INVESTORS. The Company may offer and sell at the
Tranche II Closing up to the balance of the authorized number of Investors'
Shares to additional investors proposed by the Placement Agent, each of whom
shall be reasonably acceptable to the Company
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(each, an "ADDITIONAL INVESTOR"); PROVIDED, that the aggregate amount of the
Share Purchase Price to be paid to the Company by the Investors shall not exceed
$23,200,000 (excluding the amounts deemed to have been paid by the Placement
Agent in connection with that part of its Placement Agent fee satisfied by the
Company by way of its issuance of Secured Bridge Notes in the aggregate
principal amount of $495,000 to the Placement Agent and/or its designee(s)). Any
such additional investor shall execute and deliver a counterpart signature page
to, and thereby, without further action by any Initial Investor, become a party
to, and be deemed an Additional Investor under, this Agreement, the Stockholders
Agreement and the Investors' Rights Agreement, and all schedules and exhibits
hereto and thereto shall automatically be updated to reflect such Additional
Investor as a party hereto and thereto.
3. INVESTORS' REPRESENTATIONS AND WARRANTIES.
Each Investor, severally and not jointly, with respect only to itself,
represents and warrants to, and covenants and agrees with, the Company as
follows:
(A) Without limiting any Investor's right to sell such Investors'
Shares pursuant to the Registration Statement, such Investor is purchasing the
Securities 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) Such Investor is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the Securities
Act by reason of Rule 501(a), (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.
(C) All subsequent offers and sales of the Securities by such
Investor shall be made only pursuant to registration of the Investors' Shares
under the Securities Act or pursuant to an exemption from registration and
compliance with applicable states' securities laws.
(D) Such Investor 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 Investors' compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Investors set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investors to acquire
the Securities.
(E) Such Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by such Investor. Such Investor 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, each Investor has also had the
opportunity to obtain and to review
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the Company's (1) Annual Reports on Form 10-KSB/A for the years ended December
31, 2001 and 2002, (2) Quarterly Reports on Form 10-QSB for the quarters ended
March 31, 2003 and June 30, 2003, (3) Registration Statement on Form SB-2 which
became effective on October 24, 2002, (4) Prospectus on Form 424B3 filed with
the SEC on October 30, 2002, (5) Registration Statement on Form SB-2 MEF filed
with the SEC on November 1, 2002, (6) Proxy Statement on Schedule 14A filed with
the SEC on July 2, 2003 and (7) Current Reports on Form 8-K filed with the SEC
on October 22, 2002, May 19, 2003, July 29, 2003 and August 6, 2003
(collectively, the "SEC DOCUMENTS").
(F) Such Investor understands that its investment in the
Securities involves a high degree of risk.
(G) Such Investor 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) Such Investor is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. This Agreement
and the Investment Documents have been duly and validly authorized, executed and
delivered on behalf of such Investor and create a valid and binding agreement of
such Investor enforceable in accordance with its 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.
(I) The jurisdiction in which any offer to purchase Securities was
made to or accepted by such Investor is the jurisdiction shown as such
Investor's address on Schedule 1 hereto.
(J) Such Investor was not formed solely for the purpose of
investing in the Securities.
(K) Such Investor is able to bear the complete loss of such
Investor's investment in the Securities.
(L) Such Investor acknowledges and agrees that the information
contained in the Documents, including the fact of such Investor's purchase of
the Securities and the information regarding the Investors that is contained in
this Agreement, may be disclosed by the Company in its discretion, including
without limitation by way of a press release, the filing with the SEC of a Form
8-K, proxy statement, registration statement or other public filing which may
contain counterparts of all or certain of the Investment Documents, and hereby
grants the Company permission to make any such public disclosure of said
information.
(M) If such Investor is (or, by virtue of its investment
hereunder, becomes) an "affiliate" of the Company (as defined in Section 16 of
the Exchange Act), then such Investor shall timely comply with all SEC filings
required of it under said Section 16, including without limitation the filing
with the SEC of a statement of change in beneficial ownership of Securities on
Form 4, reflecting the acquisition of beneficial ownership of the Investors'
Shares pursuant to such Investor's purchase of the Investors' Shares.
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(N) All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by such Investor directly
without the intervention of any person on behalf of such Investor in such manner
as to give rise to any valid claim by any person against such Investor or the
Company for a finder's fee, brokerage commission or similar payment, other than
the obligations of the Company to the Placement Agent under the Placement Agent
Agreement.
(O) If such Investor is an individual, such Investor certifies
that he or she is not, nor to his or her knowledge has been designated as, a
"suspected terrorist" as defined in Executive Order 13224. If such Investor is a
corporation, trust, partnership, limited liability company or other
organization, such Investor certifies that, to the best of its knowledge, such
Investor has not been designated as, and is not owned or controlled by, a
"suspected terrorist" as defined in Executive Order 13224. Such Investor hereby
acknowledges that the Company seeks to comply with all applicable laws covering
money laundering and related activities. In furtherance of those efforts, such
Investor hereby represents, warrants and agrees that: (i) none of the cash or
property that such Investor will pay or will contribute to the Company has been
or shall be derived from, or related to, any activity that is deemed criminal
under United States law; and (ii) no contribution or payment by such Investor to
the Company, to the extent that they are within such Investor's control, shall
cause the Company to be in violation of the Untied States Bank Secrecy Act, the
United States Money Laundering Control Act of 1986 or the Untied States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001. Such Investor shall promptly notify the Company if any of these
representations ceases to be true and accurate regarding such Investor. Such
Investor agrees to provide the Company with any additional information regarding
such Investor that the Company deems necessary or convenient to ensure
compliance with all applicable laws concerning money laundering and similar
activities. Such Investor understands and agrees that if at any time it is
discovered that any of the foregoing representations are incorrect, or if
otherwise required by applicable law or regulation related to money laundering
similar activities, the Company may undertake appropriate actions to ensure
compliance with applicable law or regulation, including but not limited to
segregation and/or redemption of such Investor's investment in the Company. Such
Investor further understands that the Company may release confidential
information about such Investor and, if applicable, any underlying beneficial
owners, to proper authorities if the Company, in its sole discretion, determines
that it is in the best interest of the Company in light of relevant rules and
regulations under the laws set forth in subsection (ii) above.
(P) Such Investor has completed and provided to the Company
herewith the AMEX Questionnaire attached hereto as Schedule 2, and all
information contained therein is complete and accurate in all material respects
with respect to such Investor.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Investors that, except as otherwise
disclosed in the Disclosure Schedules to this Agreement, with any exceptions set
forth therein to be cross-referenced to the clause of this Section 3 to which
such exception is made:
(A) COMPANY AND SUBSIDIARIES. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power to own its properties and to
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carry on its business as now being conducted. The Company and each of its
Subsidiaries are each duly qualified as foreign corporations to do business and
are 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.
(B) CAPITALIZATION OF THE COMPANY. The authorized capital stock of
the Company consists of 100,000,000 shares, of which 80,000,000 are shares of
Common Stock, of which 29,711,749 shares are issued and outstanding as of the
date of this Agreement and 20,000,000 are shares of Preferred Stock, par value
$0.001 per share (the "PREFERRED STOCK"), of which 44 shares are issued and
outstanding as of the date of this Agreement, consisting of 20 shares of
Preferred Stock that are Class E Stock, exchangeable pursuant to the Share
Exchange Agreement for an aggregate of 27,117,240 shares of Common Stock and 24
shares of Preferred Stock that are Class F Stock, exchangeable pursuant to the
Share Exchange Agreement for an aggregate of 3,021,552 shares of Common Stock.
Upon the approval by the Company's stockholders of the Certificate of Amendment
at the Annual Meeting, and the Company's filing of the Certificate of Amendment
with the Secretary, the authorized capital stock of the Company will consist of
520,000,000 shares of which 500,000,000 are shares of Common Stock and
20,000,000 are shares of Preferred Stock. The Disclosure Schedules set forth the
Company's complete equity capitalization on a fully diluted basis as of the date
of this Agreement, including all outstanding stock options, stock purchase
warrants and any other rights to acquire shares of its capital stock of any
class.
(C) SUBSIDIARIES. The Company owns 100% of the issued and
outstanding shares of Diomed. Diomed owns 100% of the issued and outstanding
shares of Diomed, Ltd., an English company, and Diomed PDT, Inc., a Delaware
corporation. All of the outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued, are fully paid and nonassessable,
and are owned, beneficially and of record, by the Company or Subsidiaries wholly
owned by the Company free and clear of all Liens.
(D) AUTHORIZED SHARES. All issued and outstanding shares of Common
Stock and Preferred Stock have been duly authorized and validly issued and are
fully paid and nonassessable. Upon the approval by the Company's stockholders of
the Certificate of Amendment at the Annual Meeting, and the Company's filing of
the Certificate of Amendment with the Secretary, the Company will have
sufficient authorized and unissued shares of Common Stock as may be necessary to
effect the issuance of the Investors' Shares. At all times after the filing of
the certificate of Amendment with the Secretary, the Company shall keep
available Common Stock duly authorized for issuance against the conversion of
the Secured Bridge Notes and the issuance of the Investors' Shares to be
purchased at the Tranche II Closing. When issued and paid for in accordance with
this Agreement, the Investors' Shares will be duly authorized, validly issued,
fully paid and non-assessable.
(E) AUTHORIZATION OF INVESTMENT DOCUMENTS, ETC. The Investment
Documents, and the transactions contemplated thereby, have been duly and validly
authorized by the Company and the Investment Documents will be executed and
delivered at the Tranche I Closing and the Tranche II Closing by the duly
authorized officer(s) of the Company. Each of the Investment Documents, when
executed and delivered by the Company, are and will be, valid,
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legal and binding agreements 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. The execution and delivery of the
Investment Documents by the Company, the issuance of the Secured Bridge Notes
and the Investors' Shares, and the consummation by the Company of the other
transactions contemplated by the Investment Documents do not and will not
conflict with or result in a breach by the Company or Diomed of any of the terms
or provisions of, or constitute a default under (i) the certificate of
incorporation or by-laws of the Company, as currently in effect, (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or any of
its properties or assets are bound, or an event which results in the creation of
any lien, charge or encumbrance upon any assets of the Company or of any of its
subsidiaries or the triggering of any preemptive or anti-dilution rights or
rights of first refusal or first offer on the part of holders of the Company's
debt or equity securities, (iii) any existing applicable law, rule, or
regulation, including without limitation the Xxxxxxxx-Xxxxx Act of 2002, 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 with the AMEX or the rules and
regulations of the AMEX, except in the case of clauses (i) through (iv) such
conflict, breach or default which would not have a Material Adverse Effect.
There are no preemptive rights of any stockholder of the Company to acquire the
Investors' Shares.
(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 or Diomed is required to
be obtained by the Company for the issuance and sale of the Secured Bridge Notes
and the Investors' Shares to the Investors as contemplated by this Agreement,
except (i) such authorizations, approvals and consents that have been obtained,
or such authorizations, approvals and consents, the failure of which to obtain
would not have a Material Adverse Affect and (ii) the listing of the Investors'
Shares on the AMEX requires the affirmative vote of the Company's stockholders.
(G) FINANCIAL STATEMENTS. The audited consolidated financial
statements of the Company as of and for the years ended December 31, 2001 and
2002 (collectively, the "ANNUAL FINANCIAL STATEMENTS") and the unaudited
consolidated financial statements of the Company as of and for the three months
ended March 31, 2003 and June 30, 2003 (collectively, the "INTERIM FINANCIAL
STATEMENTS"), which have been made available to the Investors, have been
prepared in accordance with US generally accepted accounting principles ("GAAP")
applied on a basis consistent throughout the periods indicated (except as may be
indicated in the notes thereto) and, present fairly in all material respects the
consolidated financial condition and consolidated operating results of the
Company as of the dates and during the periods indicated therein in conformance
with GAAP, subject, in the case of the Interim Financial Statements, to normal
year-end adjustments, consistent with past practices. The Annual Financial
Statements of the Company, including the notes thereto, were duly certified by
independent public accountants as required by the Securities Act and the
regulations promulgated under the Securities Act. Except as set forth in the
Annual Financial Statements, the Interim Financial Statements, the SEC
Documents, the Disclosure Schedule or arising in the ordinary course of business
since June 30, 2003, as of the date of this Agreement, none of the Company nor
any Subsidiary has (A)
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incurred any material liabilities of any nature (matured or unmatured, fixed or
contingent) or (B) made any material disposal of assets, suffered any loss or
material damage of any assets, waived any valuable rights, made any material
change in any material contract to which it is a party or declared or paid any
dividends.
(H) SEC FILINGS. None of the Company's filings with the SEC filed
with respect to periods ending on or after February 14, 2002 contained, and, to
the best of the Company's knowledge, none of the Company's SEC Documents filed
with respect to periods prior to February 14, 2002, 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 February 14, 2002 timely filed all requisite
forms, reports and exhibits thereto with the SEC, assuming that the SEC grants
the Company's request to consider its Form 10-QSB for the quarter ended June 30,
2003 to have been timely filed due to the power outage that occurred on August
14 and 15, 2003. The Company is not aware of any event occurring on or prior to,
as to the Tranche I Closing, the Tranche I Closing Date or, as to the Tranche II
Closing, the Tranche II Closing Date (other than the transactions effected
hereby) that would require the filing of, or with respect to which the Company
intends to file, a Form 8-K after such date. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents.
(I) ABSENCE OF CERTAIN CHANGES. Since February 14, 2002, except as
set forth in the SEC Documents, 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 or any of its
Subsidiaries. Since February 14, 2002, except as contemplated by the Investment
Documents, neither the Company nor any of its Subsidiaries has (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 material 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.
(J) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending or
threatened against or affecting the Company or any of its subsidiaries, wherein
an unfavorable decision, ruling or finding would have a Material Adverse Effect
or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company and its subsidiaries taken as a whole
10
to perform its obligations under, any of the Investment Documents. Neither the
Company nor any of its subsidiaries is a party to or subject to the provisions
of, any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality which could reasonably be expected to have a Material
Adverse Effect.
(K) ABSENCE OF EVENTS OF DEFAULT. No event of default (or its
equivalent term), as defined in the respective agreement to which the Company or
any of its subsidiaries 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.
(L) NO DEFAULT. Neither the Company nor Diomed or any of the
Company's other subsidiaries is in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust or other instrument or agreement to which it
is a party or by which it or its property is bound, including the Patent Rights
Acquisition Agreements, except to the extent that any such default would not
have a Material Adverse Effect.
(M) REGULATORY PERMITS. Each of the Company and its Subsidiaries
has all such permits, easements, consents, licenses, franchises and other
governmental and regulatory authorizations from all appropriate federal, state,
local or other public authorities ("PERMITS") as are necessary to own and lease
its respective properties and conduct its respective businesses in all material
respects in the manner described in the SEC Documents as currently being
conducted. All such Permits are in full force and effect and the Company and
Diomed have fulfilled and performed all of its material obligations with respect
to such Permits, and no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination thereof or will result in any
other material impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be disclosed in the SEC
Documents. Such Permits contain no restrictions that would materially impair the
ability of the Company or Diomed to conduct businesses in the manner consistent
with its past practices. Neither the Company nor Diomed has received notice or
otherwise has knowledge of any proceeding or action relating to the revocation
or modification of any such Permit.
(N) LISTED CLASS OF SHARES. The Company has registered its Common
Stock pursuant to Section 12 of the Exchange Act, and the Common Stock
(excluding the shares of Common Stock the issuance of which is to be voted upon
at the Annual Meeting) is duly listed for trading on the AMEX. The Company has
received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such listing.
(O) INTELLECTUAL PROPERTY. The Company and the Subsidiaries own or
have the right to use, under valid license agreements or otherwise, all material
patents (including but not limited to the EVLT Patent), licenses, franchises,
trademarks, trademark rights, trade names, trade name rights, trade secrets and
copyrights necessary to the conduct of its respective businesses as now
conducted, without known conflict with any patent, license, franchise,
trademark, trade secrets and confidential commercial or proprietary information,
trade name, copyright, rights to trade secrets or other proprietary rights of
any other person. The Patent Rights Acquisition Agreements are in full force and
effect and have not been amended. Upon
11
payment of the amounts due to be paid under the Patent Rights Acquisition
Agreements at the time of the Tranche I Closing, Diomed will own or be the
exclusive licensee of all outstanding interests in the EVLT Patent and currently
filed foreign counterparts of the EVLT Patent. The Disclosure Statement sets
forth all of the Company's material intellectual property.
(P) INTERNAL ACCOUNTING CONTROLS. Each of the Company and Diomed
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (1) transactions are executed in accordance with
management's general or specific authorization; (2) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (3) access to assets is permitted only in accordance with management's
general or specific authorization; and (4) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(Q) TAX LIABILITIES. The Company has filed all material federal,
state and local tax reports and returns required by any law or regulation to be
filed by it, except for extensions duly obtained, and has either duly paid all
taxes, duties and charges indicated due on the basis of such returns and
reports, or made adequate provision for the payment thereof. To the best
knowledge of the Company, there are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim. The Company has not executed
a waiver with respect to the statute of limitations relating to the assessment
or collection of any foreign, federal, state or local tax. None of the Company's
tax returns is presently being audited by any taxing authority.
(R) HAZARDOUS MATERIALS. Each of the Company, Diomed and their
respective subsidiaries is in compliance with all applicable Environmental Laws
in all respects except where the failure to comply does not have and could not
reasonably be expected to have a Material Adverse Effect. For purposes of the
foregoing:
"ENVIRONMENTAL LAWS" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other applicable federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, the environment or any
Hazardous Material.
"HAZARDOUS MATERIAL" means and includes any hazardous, toxic or
dangerous waste, substance or material, the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law.
(S) PENSION RELATED MATTERS. Each employee pension plan (other
than a multiemployer plan within the meaning of Section 3(37) of ERISA and to
which the Company or any ERISA Affiliate has or had any obligation to contribute
(a "MULTIEMPLOYER PLAN")) maintained by the Company or any of its ERISA
Affiliates to which Section 4021(a) of ERISA applies and (a) which is maintained
for employees of the Company or any of its ERISA Affiliates or (b) to which the
Company or any of its ERISA Affiliates made, or was required to
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make, contributions at any time within the preceding five (5) years (a "PLAN"),
complies in all material respects, and is administered in accordance, with its
terms and all material applicable requirements of ERISA and of the Internal
Revenue Code of 1986 as amended (the "TAX CODE") and with all material
applicable rulings and regulations issued under the provisions of ERISA and the
Tax Code setting forth those requirements. No "Reportable Event" or "Prohibited
Transaction" (as each is defined in ERISA) or withdrawal from a Multiemployer
Plan caused by the Company has occurred and no funding deficiency described in
Section 302 of ERISA caused by the Company exists with respect to any Plan or
Multiemployer Plan which could have a Material Adverse Effect. The Company and
each ERISA Affiliate has satisfied all of their respective funding standards
applicable to such Plans and Multiemployer Plans under Section 302 of ERISA and
Section 412 of the Tax Code and the Pension Benefit Guaranty Corporation
("PBGC") has not instituted any proceedings, and there exists no event or
condition caused by the Company which would constitute grounds for the
institution of proceedings by PBGC, to terminate any Plan or Multiemployer Plan
under Section 4042 of ERISA which could have a material adverse effect on the
assets, financial condition, results of operation or business of a Company or
any ERISA Affiliate. For purposes of the foregoing:
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, together with the regulations thereunder.
"ERISA AFFILIATE" means any corporation, trade or business, which
together with the Company would be treated as a single employer under Section
4001 of ERISA.
(T) TITLE TO PROPERTIES. Except as set forth in the SEC Documents,
each of the Company and Diomed has good and marketable title to all of its
respective personal property, subject to no transfer restrictions or Liens of
any kind.
(U) INSURANCE. The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company is engaged.
(V) NO CONFLICT OF INTEREST. Except as set forth in the Company's
Proxy Statement on Schedule 14A filed with the SEC on July 2, 2003, and except
for salary deferrals incurred during 2003, the Company or any Subsidiary is not
indebted, directly or indirectly, to any of its officers or directors or to
their respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business or relocation expenses of employees. None of the Company's officers,
directors or employees, or any members of their immediate families, are
directly, or indirectly, indebted to the Company or, to the best of the
Company's knowledge, have any direct or indirect ownership interest in any
entity with which the Company is affiliated or with which the Company has a
business relationship, or any entity which competes with the Company, except
that officers, directors, employees and/or stockholders of the Company may own
stock in (but not exceeding five percent (5%) of the outstanding capital stock
of) any publicly traded company that may compete with the Company. To the best
of the Company's knowledge, except as set forth in the SEC Documents, none of
the Company's officers, directors or employees or any members of their immediate
families are, directly or indirectly, interested in any material contract with
the Company. The Company is not a guarantor or indemnitor of any indebtedness of
any other person or entity other than a Subsidiary.
13
(W) BLUE SKY. The Company will timely file a Notice of Sale of
Securities on Form D with respect to the Securities, as required under
Regulation D. Based on the information provided by the Investors, the Company
will take such action as it reasonably determines to be necessary to qualify the
Securities for sale to the Investors under this Agreement under applicable
securities (or "blue sky") laws of the states of the United States (or to obtain
an exemption from such qualification).
(X) FULL DISCLOSURE. No representation or warranty by the Company
in this Agreement, nor in any Investment Document delivered or to be delivered
in connection with this Agreement contains or will contain any untrue statement
of material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading. To the knowledge
of the Company, there is no information concerning the Company and its
subsidiaries or their respective businesses which has not heretofore been
disclosed to the Investors which could reasonably be expected to have a Material
Adverse Effect.
(Y) BROKERS AND FINDERS FEES. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried out by the
Company directly without the intervention of any person on behalf of the Company
in such manner as to give rise to any valid claim by any person against the
Investors or the Company for a finder's fee, brokerage commission or similar
payment, except for the obligations of the Company to the Placement Agent under
the Placement Agent Agreement.
5. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT THE TRANCHE I CLOSING.
The obligations of each Investor at the Tranche I Closing are subject
to the fulfillment at or before the Tranche I Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent thereto:
(A) The representations and warranties of the Company contained in
Section 4 shall be true on and as of the Tranche I Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Tranche I Closing Date.
(B) The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it at or before the Tranche I
Closing, and shall have delivered any document, instrument or certificate by any
officer of the Company required to be furnished pursuant to this Section 5, each
of which shall have been duly authorized by the Company.
(C) The Chief Financial Officer of the Company shall deliver to
each Investor at the Tranche I Closing a certificate stating that the conditions
specified in Sections 5(a) and 5(b) have been fulfilled.
(D) Each other Investor that has agreed to purchase Secured Bridge
Notes has tendered the Note Purchase Price therefor at or prior to the Tranche I
Closing.
14
(E) This Agreement has been duly executed by Scheduled Investors
(exclusive of the holders of the Class D Notes and the holders of the Class E
Notes) that have agreed to pay the aggregate Share Purchase Price of at least
$12,000,000, subject to the terms and conditions of this Agreement.
(F) Simultaneously with the completion of the Tranche I Closing,
the Company has paid all principal of and accrued interest on the Class E Notes
and the holders of the Class E Notes have terminated their security interest in
the assets of the Company and the Subsidiaries.
(G) Simultaneously with the completion of the Tranche I Closing,
the Company has paid to Endolaser Associates, L.L.C. all amounts due under
Section 5.1(a) of the Patent License Agreement, including making all payments
due thereunder to Endolaser Associates, LLC, and the Patent License Agreement
has been made effective.
(H) Simultaneously with the completion of the Tranche I Closing,
the Company has performed all obligations to be performed at the closing to be
held pursuant to Article II of the Patent Purchase Agreement, including the
making of all payments due thereunder to Xx. Xxxxxx X. Min, and the Closing (as
defined in the Patent Purchase Agreement) shall have occurred.
(I) The Company has delivered to the Investors an opinion of legal
counsel of the Company substantially in the form of EXHIBIT H.
(J) The Company has delivered the Secured Bridge Notes to the
Investors that are purchasing the Secured Bridge Notes in accordance with this
Agreement.
(K) The Company has executed and delivered the Patent Security
Agreement.
(L) The Company has executed and delivered the Security Agreement.
(M) The Company has executed and delivered the Pledge Agreement.
(N) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
(O) All corporate and other proceedings in connection with the
transactions contemplated at the Tranche I Closing shall be reasonably
satisfactory in form and substance to the Investors purchasing Secured Bridge
Notes in the Tranche I closing and their special counsel, and such Investors and
their special counsel shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
6. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT THE TRANCHE II CLOSING.
The obligations of each Investor at the Tranche II Closing are subject
to the fulfillment at or before the Tranche II Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent thereto:
15
(A) The representations and warranties of the Company contained in
Section 4 shall be true on and as of the Tranche II Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Tranche II Closing Date.
(B) The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it at or before the Tranche II
Closing, and delivery of any document, instrument or certificate by any officer
of the Company required or furnished pursuant to this Section 6 shall have been
duly authorized by the Company.
(C) The stockholders of the Company have approved the issuance of
the Investors' Shares as contemplated by this Agreement.
(D) The Chief Financial Officer of the Company shall deliver to
each Investor at such Closing a certificate stating that the conditions
specified in Sections 6(a) through (d) have been fulfilled.
(E) The settlement of the Class Action has been finally approved
pursuant to its terms and is no longer subject to appeal.
(F) Each other Investor that has agreed to purchase Investors'
Shares has tendered the Share Purchase Price therefor at or prior to the Tranche
II Closing.
(G) Each holder of the Class D Notes has delivered the Class D
Notes owned by such holder to the Company as payment for the Investors' Shares
to be purchased under this Agreement.
(H) Each holder of the Secured Bridge Notes shall have delivered
the Secured Bridge Notes owned by such holder to the Company as payment for the
Investors' Shares to be purchased under this Agreement.
(I) All outstanding shares of the Company's Class E Preferred
Stock and Class F Preferred Stock shall have been exchanged for Common Stock by
the Company and the holders thereof, pursuant to the Share Exchange Agreement.
(J) The Company has filed the Certificate of Amendment with the
Secretary.
(K) The Company's stockholders have approved the certificate of
amendment to be proposed to them at the Annual Meeting that permits the Company
to effectuate the Reverse Stock Split.
(L) The Investors' Shares have been listed for trading with the
AMEX.
(M) The Company has executed and delivered the Investors' Rights
Agreement.
(N) The Company has executed and delivered the Stockholders'
Agreement.
16
(O) The Company has delivered to the Investors the certificates
representing the shares of Investors' Shares to be purchased in accordance with
this Agreement;
(P) No facts or circumstance first arising after the Tranche I
Closing and prior to the Tranche II Closing have caused or resulted in a
Material Adverse Effect, which Material Adverse Effect is continuing on the
Tranche II Closing Date.
(Q) The Company has delivered to the Investors an opinion of legal
counsel of the Company substantially in the form of EXHIBIT I.
(R) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
(S) All corporate and other proceedings in connection with the
transactions contemplated at the Tranche II Closing shall be reasonably
satisfactory in form and substance to the Investors and their special counsel,
and such Investors and their special counsel shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
7. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT THE TRANCHE I CLOSING.
The obligations of the Company to each Investor that is purchasing
Secured Bridge Notes at the Tranche I Closing are subject to the fulfillment at
or before such Closing of each of the following conditions by that Investor:
(A) The representations and warranties of the Investors contained
in Section 3 shall be true on and as of the Tranche I Closing Date, with the
same effect as though such representations and warranties had been made on and
as of the Tranche I Closing Date.
(B) Each Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Tranche I
Closing Date and delivery of any document, instrument or certificate by any
representative of any of the Investors required or furnished pursuant to this
Section 7 shall have been duly authorized by the respective Investor so
represented.
(C) The Designated Note Investor, as agent for the Investors that
are purchasing Secured Bridge Notes has executed and delivered the Patent
Security Agreement.
(D) The Designated Note Investor, as agent for the Investors that
are purchasing Secured Bridge Notes has executed and delivered the Security
Agreement.
(E) This Agreement has been duly executed by Investors (exclusive
of the holders of the Class D Notes and the Class E Notes) that have agreed to
pay the aggregate Share Purchase Price of at least $12,000,000, subject to the
terms and conditions of this Agreement.
17
(F) The Company has received not less than $6,500,000 as the
aggregate Note Purchase Price of the Secured Bridge Notes sold at the Tranche I
Closing, in addition to the satisfaction of $495,000 of the amount of the fees
payable by the Company to the Placement Agent under the Placement Agent
Agreement.
(G) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT THE TRANCHE II CLOSING.
The obligations of the Company to each Investor at the Tranche II
Closing are subject to the fulfillment at or before such Tranche II Closing of
each of the following conditions by that Investor:
(A) The representations and warranties of the Investors contained
in Section 3 shall be true on and as of the Tranche II Closing Date, with the
same effect as though such representations and warranties had been made on and
as of the Tranche II Closing Date.
(B) Each Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Tranche II
Closing Date and delivery of any document, instrument or certificate by any
representative of any of the Investors required or furnished pursuant to this
Section 8 shall have been duly authorized by the respective Investor so
represented.
(C) The settlement of the Class Action has been finally approved
pursuant to its terms and is no longer subject to appeal.
(D) If the Investor is not a holder of the Class D Notes or the
Secured Bridge Notes, that Investor has delivered to the Company good funds as
payment in full of an amount equal to the purchase price for the Investors'
Shares in accordance with this Agreement.
(E) If the Investor is a holder of the Class D Notes, that
Investor has delivered to the Company the Class D Notes owned by such Investor,
duly endorsed for transfer to the Company.
(F) If the Investor is a holder of the Secured Bridge Notes, that
Investor has delivered to the Company the Secured Bridge Notes owned by such
Investor, duly endorsed for transfer to the Company.
(G) The Company has received the full amount of the Share Purchase
Price to be paid to it at the Tranche II Closing.
(H) The stockholders of the Company have approved the Amendment
and the amendment necessary to effect the Reverse Stock Split at the Annual
Meeting.
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(I) The Investors have executed and delivered the Investors'
Rights Agreement.
(J) The Signatory Investors have executed and delivered the
Stockholders' Agreement.
(K) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
9. AMEX LISTING OF INVESTORS' SHARES. The Company shall seek
stockholder approval under the rules and regulations of the AMEX (including
without limitation Section 713 of the Listing Standards, Policies and
Requirements) at its Annual Meeting, as described in Section 14. The Secured
Bridge Notes shall not be convertible into Investors' Shares until the issuance
of the Investors' Shares upon such conversion has been approved by the Company's
stockholder, as contemplated by Section 14.
10. REVERSE STOCK SPLIT. The Company will consider a reverse stock
split (the "REVERSE STOCK SPLIT") of its issued and outstanding Common Stock to
be voted on by the Company's stockholders at the Annual Meeting, as set forth in
this Section 10. Not later than fifteen (15) days after the Tranche I Closing
Date, the Company shall send a notice (the "REVERSE STOCK SPLIT NOTICE") to each
Investor of its proposal regarding the Reverse Stock Split. Failure to send the
Reverse Stock Split Notice shall be deemed to be an election by the Company not
to effect the Reverse Stock Split. If the Company elects to complete the Reverse
Stock Split, the Reverse Stock Split Notice shall specify the exact ratio of the
Reverse Stock Split. If, within ten (10) days after the Company has provided the
Reverse Stock Split Notice or failed to timely provide the Reverse Stock Split
Notice, an Investor Majority disagrees with the Company's proposal as to the
Reverse Stock Split or the Company's proposal for the ratio of the Reverse Stock
Split, such Investors shall send a notice ( the "INVESTORS' REVERSE STOCK SPLIT
NOTICE") specifying the action that the Investors require the Company to take
with respect to the Reverse Stock Split and the Company shall use its best
reasonable efforts to cause the Board of Directors to take action consistent
with the Investors' Reverse Stock Split Notice so that the proposal shall be
voted on at the Annual Meeting. Any failure by the Investor Majority to send the
Investors' Reverse Stock Split Notice shall be deemed to be the consent by the
Investor Majority to the Company's proposal in the Reverse Stock Split Notice.
If the Reverse Stock Split is approved at the Annual Meeting it shall occur
simultaneously with (or within two business days after) the Tranche II Closing.
11. BOARD OF DIRECTORS. Within twelve (12) days after the Tranche II
Closing Date, the Company will use its best efforts to cause the Board of
Directors to increase the size of the Board of Directors from eight to nine
directors, and, in accordance with the Stockholders' Agreement, to appoint up to
three directors that have been selected by the Signatory Investor Majority (as
defined in the Stockholders' Agreement) shall be appointed as members of the
Board of Directors. Subject to applicable law and the applicable requirements of
the AMEX, the Company will use its best efforts to cause the Board of Directors
to appoint a member of the Board of Directors designated by the Investors to be
a member of any nominating, compensation, stock option or audit committee of the
Board of Directors.
19
12. RIGHTS OFFERING. Within ten (10) days after the Tranche II Closing,
the Company may elect to commence a rights offering (as described in this
Section 12, the "RIGHTS OFFERING") to the holders of the Common Stock by filing
with the SEC a registration statement for the rights and the resale of the
shares of Common Stock acquired upon exercise of the rights distributed in the
Rights Offering. In the Rights Offering, the Company will distribute to each
stockholder of record as of the business day immediately prior to the Tranche I
Closing Date a right to acquire shares of Common Stock at a purchase price equal
to the Share Purchase Price paid by the Investors (other than the holders of the
Secured Bridge Notes), exercisable for a 45-day period, in the ratio of one such
right for each share of Common Stock held by the stockholder. The rights shall
not be transferable. If the Reverse Stock Split occurs prior to the commencement
of the rights offering, the exercise price in the Rights Offer will be adjusted
accordingly.
13. CERTAIN COVENANTS. From and after the Tranche I Closing, the
Company covenants to each Investor that:
(A) FILINGS. The Company will make all required filings in
connection with the sale of the Investors' Shares to the Investors required
under any United States laws and regulations applicable to the Company, or by
the AMEX, and to provide a copy thereof to the Investors promptly after such
filing if so requested by the Investors.
(B) REPORTING STATUS. So long as the any of the Investors
beneficially own any of the Investors' Shares, 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. Except as otherwise set
forth in this Agreement and the other Investment Documents, the Company will
take all reasonable action under its control to obtain and to continue the
listing and trading of its Common Stock on the AMEX and will comply in all
material respects with the Company's reporting, filing and other obligations
under the by-laws or rules of the AMEX.
(C) USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Secured Bridge Notes for the payments of the amounts due under the
Patent Rights Acquisition Agreements, and for general working capital purposes
including the economic exploitation of Diomed's rights in the EVLT Patent and
commercialization of Diomed's EVLT(R) product line. The Company will use the
proceeds from the sale of the Investors' Shares for the enforcement of the
Patent Rights and for general working capital purposes.
(D) EVLT PATENT MAINTENANCE. While any Secured Bridge Notes are
outstanding and for so long as the Investors shall continue to beneficially own
at least fifty percent (50%) of the Investors' Shares, the Company shall cause
Diomed to use its commercially reasonable best efforts, including in any
proceeding before the United States Patent and Trademark Office, to maintain the
registration of the EVLT Patent and to defend the EVLT Patent from any third
party proceedings seeking to invalidate the EVLT Patent.
14. ANNUAL MEETING OF STOCKHOLDERS. The Company will call the Annual
Meeting after the Tranche I Closing to obtain stockholder approval of the
issuance of each of (i)
20
the Investors' Shares and (ii) the shares of Common Stock exchangeable for the
outstanding shares of the Company's Class E Preferred Stock, par value $0.001
per share, and Class F Preferred Stock, par value $0.001 per share. At the
Annual Meeting the Company will also seek approval of its stockholders of (i) an
increase in the number of authorized shares of Common Stock from 80,000,000 to
500,000,000, (ii) a reverse stock split in a ratio of between 35:1 and 10:1,
(iii) the Company's 2003 Omnibus Incentive Plan, (iv) the election of directors,
and (v) the appointment of independent auditors. For this purpose, within 15
days after the Tranche I Closing Date, the Company will file a preliminary proxy
statement with the SEC for the Annual Meeting and will use its best efforts to
have the SEC clear the preliminary proxy statement prior to September 30, 2003.
Promptly after receiving clearance from the SEC of the preliminary proxy
statement, the Company will file a definitive proxy statement with the SEC, call
the Annual Meeting and distribute the definitive proxy statement and other
necessary proxy soliciting materials to the Company's stockholders.
15. INDEMNIFICATION.
(A) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor against any losses, claims, damages or liabilities
(joint or several) to which they may become subject, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any material breach of or inaccuracy in any representation,
warranty or covenant by the Company in Section 4 or Section 13 of this Agreement
as of the date such representation or warranty was made (a "VIOLATION");
PROVIDED, that the indemnity contained in this Section shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected by the Investor without the consent of the
Company.
(B) Promptly after receipt by an indemnified party under this
Section of actual knowledge of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against the Company, deliver to the Company a written notice of
the commencement thereof (the "INDEMNIFICATION NOTICE") and the Company shall
have the right to participate in, and, to the extent the Company so desires, to
assume the defense thereof with counsel mutually satisfactory to the parties;
PROVIDED, that an indemnified party (together with all other indemnified parties
that may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and expenses to be paid by the
Company, if representation of such indemnified party by the counsel retained by
the Company would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. In addition to the restrictions contained in Section
15(d), the failure to deliver an Indemnification Notice to the Company within a
reasonable time of the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve the Company of any liability to the
indemnified party under this Section to the extent of such prejudice.
(C) Notwithstanding the foregoing, in no event shall any indemnity
payable by the Company under this Section exceed the aggregate purchase price
for the Investors' Shares acquired by the Investor being indemnified pursuant to
this Agreement. Further, the Company shall have no obligations under this
Section to indemnify any Investor unless and until the actual aggregate losses
incurred by all Investors arising out of or based upon one or more Violations as
provided for in Section from the Tranche I Closing Date on a cumulative basis,
are at least U.S.$25,000.
21
(D) The Company shall not be required to indemnify any Investor
under this Section in respect of any Violation as to which the Company has not
received, within eighteen (18) months of the Tranche II Closing Date, an
Indemnification Notice.
16. FURTHER ASSURANCES. Each Investor and the Company shall from time
to time and at all times hereafter make, do, execute, or cause or procure to be
made, done and executed such further acts, deeds, conveyances, consents and
assurances without further consideration, which may reasonably be required to
effect the transactions contemplated by this Agreement.
17. DEFINTIONS.
DEFINITIONS. As used herein, unless the context otherwise
requires, each of the following terms has the meaning set forth below, unless
the context otherwise requires:
(i) "ADDITIONAL INVESTOR" has the meaning given it in Section
2(b)(ii).
(ii) "AFFILIATE" means, with respect to a specific Person referred
to in the relevant provision, another Person who or which Controls or is
Controlled by or is under common Control with such specified Person.
(iii) "AMEX" means the American Stock Exchange.
(iv) "ANNUAL MEETING" means the Company's 2003 Annual Meeting of
Stockholders.
(v) "BOARD OF DIRECTORS" means the Company's board of directors as
constituted from time to time.
(vi) "CERTIFICATE OF AMENDMENT" means the proposed amendment to
the Company's Certificate of Incorporation that would increase the number of
shares of authorized Common Stock to 500,000,000.
(vii) "CLASS ACTION" means AUGENBAUM VS. DIOMED HOLDINGS, INC.,
Case No. 20454, filed in Delaware Chancery Court on July 28, 2003.
(viii) "CLASS D NOTES" means the Company's Class D Notes, dated
May 6, 2003, and outstanding in the aggregate principal amount of $1,200,000.
(ix) "CLASS E NOTES" means the Company's Class E Notes, dated May
6, 2003, and outstanding in the aggregate principal amount of $2,000,000.
(x) "COMMON STOCK" means the Company's Common Stock, par value
$0.001 per share.
22
(xi) "CONTROL" has the meaning given to such term in Rule 405
promulgated under the Securities Act.
(xii) "DESIGNATED NOTE PURCHASER" means the Investor purchasing
Secured Bridge Notes or the trust company, bank or other fiduciary agent
appointed by the Secured Parties and agreed to by the Company and the Placement
Agent, as the case may be, and any successor thereto, in its capacity as agent
for the Secured Parties.
(xiii) "DIOMED" means Diomed, Inc., a wholly owned subsidiary of
the Company.
(xiv) "DISCLOSURE SCHEDULE" means the Disclosure Schedule setting
forth certain information regarding the Company and its Subsidiaries,
substantially in the form attached hereto.
(xv) "ESCROW AGENT" means Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
(xvi) "ESCROW AGREEMENT" means the Escrow Agreement, dated August
__, 2003, among the Company, the Placement Agent and the Escrow Agent,
substantially in the form of EXHIBIT B.
(xvii) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(xviii) "EVLT PATENT" means U.S. Patent No. 6,398,777.
(xix) "GUARANTEES" means, collectively, each Guaranty by Diomed of
each Secured Bridge Note, substantially in the form included on the Form of
Secured Bridge Notes attached hereto as EXHIBIT A.
(xx) "INVESTMENT DOCUMENTS" means this Agreement, the Secured
Bridge Notes, the Guarantees, the Security Agreement, the Patent Security
Agreement, the Investors' Rights Agreement and the Stockholders' Agreement.
(xxi) "INVESTOR MAJORITY" means the Investors that hold a majority
of the issued and outstanding shares of the Investors' Shares.
(xxii) "INVESTORS' RIGHTS AGREEMENT" means the Investors' Rights
Agreement, dated as of the date of the Tranche II Closing Date, by and among the
Company and the Investors, substantially in the form attached hereto as EXHIBIT
C.
(xxiii) "LIEN" means any interest in property securing any
obligation owed to, or a claim by, a person other than the owner of the
property, whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes.
23
(xxiv) "MATERIAL ADVERSE EFFECT" means a material adverse effect
on the business, operations or condition (financial or otherwise) or results of
operation of the Company and the Subsidiaries taken as a whole.
(xxv) "PERSON" means any living person or any entity, such as, but
not necessarily limited to, a corporation, partnership, limited liability
company or trust.
(xxvi) "PATENT LICENSE AGREEMENT" means the License Agreement,
dated as of June 16, 2003, between Diomed and Endolaser Associates, L.L.C.,
under which the Diomed becomes the exclusive licensee of the EVLT Patent.
(xxvii) "PATENT PURCHASE AGREEMENT" means the Purchase Agreement,
dated as of July 23, 2003 between Diomed and Dr. Xxxxxx Min, under which Diomed
acquires an undivided interest in the EVLT Patent.
(xxviii) "PATENT RIGHTS ACQUISITION AGREEMENTS" mean the Patent
Purchase Agreement and the Patent License Agreement.
(xxix) "PATENT SECURITY AGREEMENT" means the Patent Security
Agreement, dated the Tranche I Closing Date, by Diomed in favor of the
Designated Note Investor, as agent for the Secured Parties named therein,
substantially in the form of EXHIBIT D.
(xxx) "PLACEMENT AGENT" means Sunrise Securities Corporation.
(xxxi) "PLACEMENT AGENT AGREEMENT" means the Agreement, dated
April 11, 2003, between the Company and the Placement Agent, as amended.
(xxxii) "PLEDGE AGREEMENT" means the Second Amended and Restated
Pledge Agreement, dated as of the Tranche I Closing Date, by Diomed in favor of
the Designated Pledgeholder, as agent for the Secured Parties named therein,
substantially in the form of EXHIBIT G.
(xxxiii) "REVERSE STOCK SPLIT" has the meaning set forth in
Section 10.
(xxxiv) "RIGHTS OFFERING" has the meaning set forth in Section 12.
(xxxv) "SEC" means the U.S. Securities and Exchange Commission.
(xxxvi) "SECRETARY" means the Secretary of State of the State of
Delaware.
(xxxvii) "SECURED BRIDGE NOTES" means the Company's Secured
Convertible Bridge Notes, substantially in the form attached hereto as EXHIBIT A
due on the first anniversary of the Tranche I Closing Date, issued in the
original aggregate principal amount of $6,995,000.
(xxxviii) "SECURITIES" means the Secured Bridge Notes and the
Investors' Shares.
24
(xxxix) "SECURITY AGREEMENT" means the Security Agreement, dated
the Tranche I Closing Date, by Diomed in favor of the Designated Note Investor,
as agent for the Secured Parties named therein, substantially in the form of
EXHIBIT E.
(xl) "SECURITIES ACT" means the Securities Act of 1934, as
amended.
(xli) "SHARE EXCHANGE AGREEMENT" means the Share Exchange
Agreement, dated as of August 6, 2003, between the Company, the holders of the
Company's Class C Convertible Preferred Stock and the holders of the Company's
Class D Convertible Preferred Stock.
(xlii) "SHARE PURCHASE PRICE" has the meaning set forth in Section
2(a)(ii).
(xliii) "SIGNATORY INVESTOR" means each Investor that elects to
execute and deliver at the Tranche II Closing a counterpart of the Stockholders'
Agreement and to thereby become a party to the Stockholders' Agreement.
(xliv) "STOCKHOLDERS' AGREEMENT" means the Stockholders'
Agreement, dated as of the Tranche II Closing Date, by and among the Company and
the Signatory Investors, substantially in the form attached hereto as EXHIBIT F.
(xlv) "SUBSIDIARIES" means Diomed, Inc., Diomed, Ltd. and Diomed
PDT, Inc.
(xlvi) "TRANCHE I CLOSING" has the meaning set forth in Section
1(b)(ii). (xlvii) "TRANCHE I CLOSING DATE" means the date on which the Tranche I
Closing is held.
(xlviii) "TRANCHE II CLOSING" has the meaning set forth in Section
2(b)(ii).
(xlix) "TRANCHE II CLOSING DATE" means the date on which the
Tranche II Closing is held.
18. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of:
(A) the date delivered, if delivered by personal delivery as
against written receipt therefor or by confirmed facsimile transmission,
(B) the seventh business day after deposit, postage prepaid, in
the United States Postal Service by registered or certified mail, or
(C) the third business day after mailing by next-day express
courier, with delivery costs and fees prepaid, in each case, addressed to each
of the other parties thereunto entitled at the following addresses (or at such
other addresses as such party may designate by ten (10) days' advance written
notice similarly given to each of the other parties hereto):
25
COMPANY: Diomed Holdings, Inc.
Xxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
ATTN: President and Chief Executive Officer
Telecopier No. 000-000-0000
With a copy to:
McGuireWoods LLP
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxxx, Esq.
(000) 000-0000 (Telephone)
(000) 000-0000 (Facsimile)
INVESTORS: To the respective Investors at their addresses set forth in
Schedule 1
Mintz Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
(000) 000-0000 (Telephone)
(000) 000-0000 (Facsimile)
19. FEES; EXPENSES. At the Tranche II Closing or within thirty (30)
days thereafter, upon presentation by the Investors of documentation reasonably
satisfactory to the Company, the Company shall pay the reasonable legal fees and
expenses of counsel incurred by the Investors in connection with their review
and approval of the transactions contemplated hereby, up to a maximum aggregate
amount of $100,000.00. At the Tranche I Closing and at the Tranche II Closing,
the Company shall pay the fees of the Placement Agent pursuant to the Placement
Agent Agreement that have become due and payable at such Closing.
20. GOVERNING LAW: MISCELLANEOUS.
(A) With respect to governing law, jurisdiction and waiver of jury
trial, the parties agree as follows:
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
(ii) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX SITTING IN NEW YORK COUNTY
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE. EACH OF THE
COMPANY AND THE INVESTORS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR OTHER DOCUMENT
RELATED THERETO. EACH OF THE COMPANY AND THE INVESTORS WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.
26
(iii) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER ANY INVESTMENT DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
ANY TRANSACTION DOCUMENT OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(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.
(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 the written consent of
the Investor Majority and an instrument in writing signed by the Company.
27
(J) This Agreement and the other Investment Documents represent
the final agreement among the parties and may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of the parties or by prior
or contemporaneous written agreements. There are no unwritten agreements among
the parties.
[Signature page follows.]
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Investors and the Company as of the date set forth above.
COMPANY:
DIOMED HOLDINGS, INC.
By: /s/ XXXXX X. XXXXX, XX.
-----------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: President and Chief Executive Officer
INVESTOR
Name:
----------------------------------------
By:
-----------------------------------------
(Signature of Authorized Person)
Name: ____________________________________
Title: ____________________________________
Total Amount of Investment: $_________________
SCHEDULES AND EXHIBITS
Exhibit A FORM OF SECURED BRIDGE NOTE
Exhibit B ESCROW AGREEMENT
Exhibit C INVESTORS' RIGHTS AGREEMENT
Exhibit D PATENT SECURITY AGREEMENT
Exhibit E SECURITY AGREEMENT
Exhibit F STOCKHOLDERS' AGREEMENT
Exhibit G FORM OF PLEDGE AGREEMENT
Exhibit H FORM OF LEGAL OPINION OF COMPANY COUNSEL (TRANCHE I CLOSING)*
Exhibit I FORM OF LEGAL OPINION OF COMPANY COUNSEL (TRANCHE II CLOSING)*
Schedule 1 Schedule of Investors
Schedule 2 AMEX Questionnaire*
Disclosure Schedule*
* Omitted from this filing on Form 8-K
SCHEDULE 1 TO SECURITIES PURCHASE AGREEMENT
NEW INVESTORS*
NAME OF INVESTOR TOTAL INVESTED (1)
---------------- ------------------
Xxxxxxx Xxxxxxxx 10,000
BPW Israel Ventures LLC 250,000
Xxxxxx Xxxxxxx 100,000
HUG Funding LLC 400,000
West End Convertible Fund, L.P. 100,000
F Xxxxxx Defined Benefit Plan 40,000
Xxxxx Xxxxx 25,000
Smithfield Fiduciary, LLC 500,000
Xxxxxxxx X. Xxxxxx 50,000
Xxxx X. Xxxxxx 50,000
Incap Company Limited 250,000
Bel-Cal Holdings, Ltd. 200,000
SDS Merchant Fund, LP 500,000
BayStar Capital II, LP 500,000
Xxxxx Drill Capital 450,000
Xxxxxxx, Xxxxxx 25,000
Bear Xxxxxxx Securities Corp., Custodian for J. Xxxxxx
Xxxxxxx XXX XX 600,000
Xxxxxxx X. Xxxxxx 75,000
The Riverview Group, LLC 1,410,000
Xxxxxx Xxxxxxxx 30,000
Xxxxxx X. Xxxxxxx 15,000
Platinum Partners Global Macro Fund LP 250,000
Platinum Partners Value Arbitrage Fund, LP 750,000
Xxxxxx Management Ltd. 100,000
Xxxxx Xxxxxxxxx 10,000
Xxxxx X. Xxxxxxxxx 60,000
Xxxxxx Xxxxxx 200,000
Xxxxx Xxxxx and Xxxx Xxxxx 25,000
X.X.Xxxx Associates, LP 100,000
Xxxxxxxx X. Xxxxxxxxx 8/21/74 Trust 150,000
Xxxxxxx X. Xxxxxxxxx 4/8/71 Trust 150,000
Xxx Xxxx 150,000
Xxxxxx Xxxxx III 50,000
Xxxxxxx Xxxx 5,000
ProMed Offshore Fund, Ltd. 73,000
ProMed Partners, LP 427,000
Xxxxxx X. Xxx 30,000
Xxxxxxxx Xxxxxx 50,000
Xxxxx Xxxxxx 25,000
Xxxx Low 100,000
Avi Xxxxx 10,000
Xxxxx Xxxxx 5,000
Xxxxx X. May 50,000
Xxxxxxxx Capital Partners, LP 200,000
Monmouth Consulting Inc. 25,000
MTD Holdings LLC 250,000
Xxxxxx Xxxxxxx 5,000
Xxxxx Xxxxxx 10,000
Pequot Navigator Offshore Fund, Inc. 600,000
Pequot Navigator Onshore Fund, LP 350,000
Pequot Scout Fund, LP 1,050,000
Xxxxx Xxxxxxxx 25,000
Xxxxxxx X. Xxxxxx 100,000
Orion Biomedical Fund, LP (Paramount) 410,750
Orion Biomedical Offshore Fund, LP (Paramount) 89,250
Xxxxxx X. Xxxxxxxxx 250,000
Xxxx Xxxxxxxx 25,000
Rock Associates 25,000
Xxxxxxxxx Xxxxxx 25,000
Xxxxx Xxxxxx 30,000
Xxxxxxx Xxxxxxxx 15,000
Xxxxx Xxxxxxxx 25,000
Xxxxxx Xxxxxxxxxxxx XXX 100,000
Sherleigh Associates Inc. Profit Sharing Plan 500,000
Terrapin Partners 500,000
Xxxxxxx X. Xxxxx 10,000
Xxxxx Xxxxx 250,000
Xxxxxxx X. Xxxxx 10,000
Xxxxx Xxxxxxxx 200,000
Xxxxxxx Partners, L.P. 200,000
Xxxxx International Ltd. 250,000
Xxxx Xxxxx & Xxxxx Xxxxx JT Ten 20,000
Xxxxxx Xxxxxxxxxx 100,000
Congregation Mishkan Xxxxxx 150,000
North Sound Legacy Fund LLC 45,000
North Sound Legacy Institutional Fund LLC 455,000
North Sound Legacy International Ltd. 500,000
East Xxxxxx Inc. (BVI) 59,000
The Conus Fund (QP), LP 49,000
The Conus Fund Offshore Ltd. 43,000
The Conus Fund, LP 349,000
Bull & Co. 65,000
Xxxxxx X. Xxxxxxx 50,000
Xxxx & Co. 74,000
Xxxxxx Xxxxxx Xxxxxxx 50,000
City of Milford Pension & Retirement Fund 690,000
City of Stamford Firemen's Pension Fund 330,000
Xxxxxxx X. Xxxxx 100,000
Xxxxxxxx xxXxxxx 70,000
HBL Charitable Unitrust 65,000
Xxxx & Co. 80,000
Xxxxx X. Xxxxxx 10,000
Xxxxxx X. Xxxxxxx 50,000
Xxxx X. & Xxxxxxxxx X. Xxxxxx 8,000
Hare & Co. 70,000
Xxxxxx Foundation 65,000
Xxxxxx Trust Co. of the Bahamas Ltd. As Trustee U/A/D
11/30/93 215,000
Xxxxxx Capital, LLC 80,000
Huland & Co. 190,000
Huland & Co. 35,000
Huland & Co. 150,000
Xxxxx Xxxxxx 30,000
Psychology Associates 20,000
Mellon Bank NA custodian for XXXXX-Xxxxxxx Capital 1,200,000
Xxxxxx X. Xxxxxxx 3,000
Xxxxx Xxxx Xxxxxxx 135,000
Theeuwes Family Trust, Xxxxx Xxxxxxxx Trustee 65,000
Xxxxxxx X. Xxxxx 50,000
Xxxxxxx Investment Partners, LP 50,000
Zinc Partners II, LP 2,248
Zinc Partners Offshore, Ltd. 166,760
Zinc Partners, LP 180,992
TOTAL: $20,000,000
===========
INVESTORS HOLDING CLASS E NOTES: **
NAME OF INVESTORS TOTAL INVESTED
----------------- --------------
Gibralt US, Inc. $1,500,000
Xxxxxxxx, Xxxxxx 300,000
Xxxxxxx, Xxxxxxx 100,000
Schraiberg, Xxxxxx 100,000
TOTAL $2,000,000
==========
INVESTORS HOLDING CLASS D NOTES: ***
NAME OF INVESTORS TOTAL INVESTED (1)
----------------- ------------------
Gibralt US, Inc. $1,100,000
Xxxxxx, Xxxxx 50,000
Xxxxx, Jr., Xxxxx X. 50,000
TOTAL $1,200,000
==========
PLACEMENT AGENT ****
TOTAL DEEMED
AGENT NAME INVESTED (1)
Sunrise Securities Corp. $495,000
TOTAL $495,000
========
(1) Total Invested excludes amounts invested by way of accrued interest on
Secured Bridge Notes and Class D Notes.
* All amounts invested allocated pro rata to purchase of Secured Bridge
Notes purchased by such Investors and Investors' Shares.
** All amounts invested allocated to purchase of Secured Bridge Notes.
*** All amounts invested allocated to purchase of Investors' Shares.
**** Amounts deemed invested allocated to purchase of Secured Bridge Notes.
