EXHIBIT 10.1
FORM OF NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT, dated as of May 30, 1997 (this
"Agreement"), by and between NAPRO BIOTHERAPEUTICS, INC., a Delaware
corporation, with headquarters located at 0000 Xxxxx Xxxx, Xxxx X, Xxxxxxx,
Xxxxxxxx 00000 (the "Company"), and _______________________________, a
________________________ corporation (the "Buyer").
W I T N E S S E T H:
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WHEREAS, the Buyer wishes to purchase from the Company and the Company
wishes to sell to the Buyer, upon the terms and subject to the conditions of
this Agreement, a promissory note of the Company having the aggregate principal
amount set forth on the signature page of this Agreement and which will be
convertible into shares of Common Stock (such term and all other capitalized
terms used in this Agreement having the meanings provided in Section 1) and in
connection therewith the Company is to issue to the Buyer warrants to purchase
shares of Common Stock; and
WHEREAS, on the Closing Date, the Company and the Collateral Agent (as
defined herein), shall execute and deliver, one to the other, a Security
Agreement (as defined herein), in the form referred to herein which provides for
the grant to the Collateral Agent of a first priority perfected security
interest in certain collateral upon the terms and with the effect provided as
described therein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. DEFINITIONS
(a) As used in this Agreement, the terms "Agreement", "Buyer" and
"Company" shall have the respective meanings assigned to such terms in the
introductory paragraph of this Agreement.
(b) All the agreements or instruments herein defined shall mean such
agreements or instruments as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of this Agreement.
(c) The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
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"Claims" means any losses, claims, damages, liabilities or expenses
(joint or several), incurred by a person or entity.
"Closing Date" means 12:00 noon, New York City time, on June 4, 1997
or such other mutually agreed to time.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder and published interpretations thereof.
"Collateral" shall have the meaning provided in the Security
Agreement.
"Collateral Agent" means First Trust National Association.
"Common Stock" means the Common Stock, par value $.0075 per share, of
the Company.
"Conversion Notice" means a Notice of Conversion substantially in the
form of Exhibit A to the Note.
"Conversion Shares" means the shares of Common Stock and the related
Preferred Stock Purchase Rights issuable upon conversion of the Note.
"Disclosure Statement" means the Disclosure Statement prepared by the
Company and attached hereto as EXHIBIT A.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder and published interpretations thereof.
"Escrow Agent" means the escrow agent identified in the Joint Escrow
Instructions.
"Event of Default" shall have the meaning provided in the Note.
"Final Maturity Note" means the note of the Company issuable on the
maturity date of the Note in the form attached as Exhibit K to ANNEX I hereto.
"Indemnified Party" means the Company, each of its directors, each of
its officers who signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act, any
underwriter and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person
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who controls such stockholder or underwriter within the meaning of the 1933 Act
or the 1934 Act.
"Indemnified Person" means each Investor who holds Registrable
Securities and each Investor who sells such Registrable Securities in the manner
permitted under this Agreement, the directors, if any, of such Investor, the
officers, if any, of such Investor, each person, if any, who controls any
Investor within the meaning of the 1933 Act or the 1934 Act, any underwriter (as
defined in the 0000 Xxx) acting on behalf of an Investor who participates in the
offering of Registrable Securities of such Investor in accordance with the plan
of distribution contained in any prospectus included in the Registration
Statement, the directors, if any, of such underwriter and the officers, if any,
of such underwriter, and each person, if any, who controls any such underwriter
within the meaning of the 1933 Act or the 1934 Act .
"Inspectors" means any attorney, accountant or other agent retained by
an Investor for the purposes provided in Section 8(b)(9).
"Interest Shares" means the shares of Common Stock and the related
Preferred Stock Purchase Rights issuable in payment of interest on the Note.
"Investor" means the Buyer and any permitted transferee or assignee
who agrees to become bound by the provisions of Section 8 of this Agreement .
"Joint Escrow Instructions" means the Joint Escrow Instructions
attached hereto as ANNEX II.
"Maturity Date" shall have the meaning provided in the Note.
"Nasdaq" means the Nasdaq National Market.
"NASD" means the National Association of Securities Dealers, Inc.
"1996 10-K" means the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Non-Responsive Investor" means an Investor who does not provide the
Requested Information to the Company at least one (1) Business Day prior to the
filing of the Registration Statement.
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"Note" means the Senior Convertible Note of the Company in the form of
ANNEX I to this Agreement.
"Other Notes" shall have the meaning provided in the Note.
"Preferred Stock Purchase Rights" means the Preferred Stock Purchase
Rights issued or issuable pursuant to the Rights Agreement (or any similar
rights hereafter issued by the Company with respect to the Common Stock).
"Prospectus" shall mean the prospectus, including any preliminary
prospectus, forming part of the Registration Statement and any amendment or
supplement thereto.
"Purchase Price" means the purchase price for the Note set forth on
the signature page of this Agreement.
"Questionnaire" means the Prospective Purchaser Questionnaire
completed by the Buyer.
"Record" shall mean all pertinent financial and other records,
pertinent corporate documents and properties of the Company subject to
inspection for the purposes provided in Section 8(b)(9).
"register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415, and the declaration or
ordering of effectiveness of such Registration Statement by the SEC.
"Registrable Securities" means the Shares and any stock or other
securities into which or for which the Common Stock may hereafter be changed,
converted or exchanged by the Company or its successor, as the case may be, and
any other securities issued to holders of such Common Stock (or such shares into
which or for which such shares are so changed, converted or exchanged) upon any
reclassification, share combination, share subdivision, share dividend, merger,
consolidation or similar transaction or event.
"Registration Period" means the period from the SEC Effective Date to
the earlier of (i) the date which is three years after the Closing Date and (ii)
the date on which the Investors no longer own any Registrable Securities.
"Registration Statement" means a registration statement on Form S-3 of
the
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Company under the 1933 Act which names the Investors as selling stockholders.
"Regulation D" means Regulation D under the 1933 Act.
"Repurchase Event" shall have the meaning provided in the Note.
"Requested Information" means the information the Company requires
from each Investor in connection with the preparation of the Registration
Statement.
"Rights Agreement" means the Rights Agreement, dated as of November 8,
1996, by and between the Company and American Stock Transfer & Trust Company, as
Rights Agent.
"Rule 415" means Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a delayed or continuous basis.
"Rule 144" means Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit a holder of
any securities to sell securities of the Company to the public without
registration under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"SEC Effective Date" means the date the Registration Statement is
declared effective by the SEC.
"SEC Reports" means the 1996 10-K, the Company's definitive Proxy
Statement for its 1997 Annual Meeting of Stockholders, and all other periodic
and other reports filed by the Company with the SEC pursuant to the 1934 Act
subsequent to December 31, 1996 and prior to the date hereof, in each case as
filed with the SEC and including the documents incorporated therein by
reference.
"Securities" means, collectively, the Note, the Final Maturity Note,
the Shares and the Warrants.
"Security Agreement" means the Pledge and Security Agreement between
the Company and the Collateral Agent in the form attached hereto as ANNEX III.
"Series A Preferred Stock" means the Series A Convertible Preferred A
Stock, $.001 par value, of the Company.
"Shares" means the Conversion Shares, the Interest Shares and the
Warrant Shares.
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"Subsidiary" means any corporation or other entity of which a majority
of the capital stock or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the Company.
"Trading Price" shall have the meaning provided in the Note.
"Transaction Documents" means, collectively, this Agreement, the
Security Agreement, the Securities and the other agreements, instruments and
documents contemplated hereby and thereby.
"Transfer Agent" means American Stock Transfer & Trust Company, or any
successor thereof, serving as transfer agent and registrar for the Common Stock,
conversion agent for the Note and exercise agent for the Warrants.
"Transfer Agent Instruction" means the instruction from the Company to
the Transfer Agent for the benefit of the Buyer, and the purchasers of the Other
Notes, in substantially the form attached hereto as ANNEX IV.
"Violations" shall mean the matters described in clauses (i), (ii),
(iii) and (iv) of Section 9(a)(1).
"Warrants" means Common Stock Purchase Warrants in the form attached
hereto as ANNEX V in the amount specified in Section 2(a).
"Warrant Shares" means the shares of Common Stock and the related
Preferred Stock Purchase Rights issuable upon exercise of the Warrants.
2. PURCHASE AND SALE; PURCHASE PRICE.
(A) PURCHASE. The Buyer hereby agrees to purchase, and the Company
hereby agrees to sell to the Buyer, on the Closing Date, the Note in the
principal amount set forth on the signature page of this Agreement and having
the terms and conditions as set forth in the form of the Note attached hereto as
ANNEX I for the Purchase Price. In connection with the purchase of the Note by
the Buyer, the Company shall issue to the Buyer at the closing on the Closing
Date a number of Warrants equal to 2.9 Warrants for each $100 principal amount
of the Note.
(B) FORM OF PAYMENT. Within three Business Days after the date the
Company and the Buyer execute and deliver this Agreement, one to the other, the
Buyer shall deposit an
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amount equal to the Purchase Price in escrow by delivering funds in United
States Dollars in the amount of the Purchase Price to the Escrow Agent
identified in the Joint Escrow Instructions against delivery by the Company of
the Note and the Warrants, each duly executed on behalf of the Company, to the
Escrow Agent. By signing this Agreement, the Buyer and the Company agree to all
of the terms and conditions of, and become parties to, the Joint Escrow
Instructions, all of the provisions of which are incorporated herein by this
reference as if set forth in full.
(C) The issuance and sale of the Note and the issuance of the Warrants
shall occur on the Closing Date at the Law Offices of Xxxxx X Xxxxx, Penthouse
Suite, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE BUYER
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(A) PURCHASE FOR INVESTMENT. The Buyer is purchasing the Note and
acquiring the Warrants for its own account for investment and not with a view
towards the public sale or distribution thereof;
(B) ACCREDITED INVESTOR. The Buyer is an "accredited investor" as
that term is defined in Rule 501 of Regulation D by reason of Rule 501(a)(3)
thereof;
(C) REOFFERS AND RESALES. The Buyer will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Securities
except if registered under the 1933 Act, pursuant to an exemption from
registration under the 1933 Act or in a transaction not requiring registration
under the 1933 Act;
(D) COMPANY RELIANCE. The Buyer understands that (1) the Note is
being offered and sold and the Warrants are being issued to the Buyer, (2) the
Shares and the Final Maturity Note are being offered to the Buyer, (3) upon
conversion of the Note, the Conversion Shares will be issued to the Buyer, (4)
the Interest Shares will be issued to the Buyer and (5) upon exercise of the
Warrants, the Warrant Shares will be sold to the Buyer, in each such case in
reliance on one or more exemptions from the registration requirements of the
1933 Act, including, without limitation, Regulation D, and exemptions from state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein and
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in the Questionnaire, a true and accurate copy of which has been delivered by
the Buyer to the Company, in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities; and the
information with respect to the Buyer set forth in the Questionnaire is accurate
and complete in all material respects;
(E) INFORMATION PROVIDED. The Buyer and its advisors have requested,
received and considered all information relating to the business, properties,
operations, condition (financial or other), results of operations or prospects
of the Company and information relating to the offer and sale of the Note and
the offer and, upon exercise of the Note, sale of the Shares deemed relevant by
them; the Buyer and its advisors have been afforded the opportunity to ask
questions of the Company concerning the terms of the Securities and the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and have received satisfactory answers to
any such inquiries; without limiting the generality of the foregoing, the Buyer
has had the opportunity to obtain and to review the SEC Reports and the
Disclosure Statement; the Buyer has, in connection with its decision to purchase
the Note and to acquire the Warrants, relied solely upon the SEC Reports, the
Disclosure Statement, the representations, warranties, covenants and agreements
of the Company set forth in this Agreement and to be contained in the Note, the
Warrants, the Security Agreement and the Transfer Agent Instructions, as well as
any investigation of the Company completed by the Buyer or its advisors; the
Buyer understands that its investment in the Securities involves a high degree
of risk; and the Buyer understands that the offering of the Note is being made
to the Buyer as part of an offering without any minimum or maximum amount of the
offering (subject, however, to the right of the Company at any time prior to
execution and delivery of this Agreement by the Company, in its sole discretion,
to accept or reject an offer by the Buyer to purchase the Note and to acquire
the Warrants);
(F) ABSENCE OF APPROVALS. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities; and
(G) NOTE PURCHASE AGREEMENT. The Buyer has all requisite power and
authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the other agreements executed by the Buyer
in connection herewith and to consummate the transactions contemplated hereby
and thereby; and this Agreement has been duly and validly authorized, duly
executed and delivered by the Buyer and, assuming due execution and delivery by
the Company, is a valid and binding agreement of the Buyer enforceable in
accordance with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and general principles of equity, regardless of
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whether enforcement is considered in a proceeding in equity or at law.
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE COMPANY.
The Company represents and warrants to, and covenants and agrees with,
the Buyer that:
(A) ORGANIZATION AND AUTHORITY. 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 all
requisite corporate power and authority to (i) own, lease and operate its
properties and to carry on its business as described in the SEC Reports and as
currently conducted, and (ii) to execute, deliver and perform its obligations
under this Agreement, the Note, the Warrants and the other agreements executed
and delivered by the Company in connection herewith, and to consummate the
transactions contemplated hereby and thereby. The Company has no equity
investment in any other person other than the Subsidiaries listed in Exhibit
21.1 to the 1996 10-K.
(B) QUALIFICATIONS. The Company and each of its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions where failure so to qualify could have a material adverse effect
on the business, properties, operations, condition (financial or other), results
of operations or, to the best of the Company's knowledge, after due inquiry,
prospects of the Company and its Subsidiaries taken as a whole.
(C) CAPITALIZATION. The authorized capital of the Company consists of
(a) 19,000,000 shares of Common Stock, of which 11,973,985 shares were
outstanding on May 15, 1997, (b) 1,000,000 shares of Nonvoting Common Stock,
$.0075 par value, of which 395,000 shares were outstanding on May 15, 1997, and
(c) 2,000,000 shares of Preferred Stock, $.001 par value, of which 125,000
shares have been designated Convertible Preferred Stock, Series A, of which
125,000 shares were outstanding on May 15, 1997, and 190,000 shares have been
designated Series B Junior Participating Preferred Stock, none of which is
outstanding; from May 15, 1997 to the Closing Date there will be (x) no material
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increase in the number of shares of Common Stock outstanding (except for shares
issued upon exercise of options and warrants outstanding on the date hereof or
options or similar rights granted subsequent to the date of this Agreement
pursuant to the Company's stock option plans in effect on the date of this
Agreement) and (y) no increase in the number of shares of preferred stock
outstanding. The 1996 10-K discloses as of December 31, 1996 all outstanding
options or warrants for the purchase of, or other rights to purchase or
subscribe for, or securities convertible into or exchangeable for, Common Stock
or other capital stock of the Company, or any contracts or commitments to issue
or sell
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Common Stock or other capital stock of the Company or any such options,
warrants, rights or other securities; and from such date to the date hereof
there has been, and to the Closing Date there will be, no material change in the
amount or terms of any of the foregoing except for the grant of options to
purchase shares of Common Stock pursuant to the Company's stock option plans in
effect on the date of this Agreement. The Company has duly reserved from its
authorized and unissued shares of Common Stock the full number of shares
required for (a) all options, warrants, convertible securities and other rights
to acquire shares of Common Stock which are outstanding, (b) the shares of
Exchangeable Preferred Stock, Series A of NaPro BioTherapeutics (Canada), Inc.
which were outstanding and exchangeable for Common Stock on May 15, 1997 and (c)
all shares of Common Stock and options and other rights to acquire shares of
Common Stock which may be issued or granted under the stock option and similar
plans which have been adopted by the Company or any of its Subsidiaries; and,
immediately following the Closing, after giving effect to any antidilution or
similar adjustment arising by reason of issuance of the Note and the Other Notes
(all of which are disclosed on the Disclosure Statement), the total number of
shares of Common Stock reserved and required to be reserved from the authorized
and unissued shares of Common Stock for purposes of all such options, warrants,
convertible securities, other rights and stock option and similar plans
(excluding the Note and the Other Notes) will be 2,876,136. The outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and all of such options, warrants
and other rights have been duly authorized by the Company. None of the holders
of such outstanding shares of capital stock is subject to personal liability
solely by reason of being such a holder. None of the outstanding shares of
capital stock and options, warrants and other rights to acquire Common Stock has
been issued in violation of the preemptive rights of any security holder of the
Company. The offers and sales of the outstanding shares of capital stock of the
Company and options, warrants and other rights to acquire Common Stock were at
all relevant times either registered under the 1933 Act and applicable state
securities laws or exempt from such requirements. Except as set forth in the
Disclosure Statement, no holder of any of the Company's securities has any
rights, "demand," "piggy-back" or otherwise, to have such securities registered
by reason of the intention to file, filing or effectiveness of the Registration
Statement; and prior to the Closing the Company shall obtain written waivers of
such rights from such persons.
(D) MATERIAL LOSSES. Since December 31, 1996, neither the Company nor
any of its Subsidiaries has sustained any loss or interference with its business
or properties from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, which loss or interference would be material to the
business, properties, operations, condition (financial or other), results of
operations or, to the best of the Company's knowledge after due inquiry,
prospects of the Company and its Subsidiaries taken as a whole.
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(E) CONCERNING THE SHARES AND THE COMMON STOCK. The Shares have been
duly authorized and the Conversion Shares, when issued upon conversion of the
Note, the Interest Shares, when issued in payment of interest on the Note, and
the Warrant Shares, when issued upon exercise of the Warrants, will be duly and
validly issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder. Except as set
forth in the Disclosure Statement, no holders of outstanding shares of capital
stock of the Company are entitled to preemptive or other rights to subscribe for
the Shares, the Note or the Warrants, and prior to the Closing the Company shall
obtain written waivers of such rights from such persons. The Company has duly
reserved 334,000 shares of Common Stock as the Warrant Shares and 1,133,000
shares of Common Stock as the Conversion Shares, and such shares shall remain so
reserved, and the Company shall from time to time reserve such additional shares
of Common Stock as shall be required to be reserved pursuant to the Note, as
long as the Note may be converted. The Common Stock is listed for trading on
Nasdaq and (1) the Company and the Common Stock meet the criteria for continued
listing and trading on Nasdaq; (2) the Company has not been notified since
January 1, 1995 by the NASD of any failure or potential failure to meet the
criteria for continued listing and trading on Nasdaq and (3) no suspension of
trading in the Common Stock is in effect. The Company knows of no reason why
the Shares will not be eligible for listing on Nasdaq.
(F) CORPORATE AUTHORIZATION. This Agreement, the Security Agreement,
the Transfer Agent Instructions, the Note, the Final Maturity Notes and the
Warrants have been duly and validly authorized by the Company; this Agreement
has been duly executed and delivered by the Company and, assuming due execution
and delivery by the Buyer, this Agreement is, the Security Agreement will be,
when executed and delivered by the Company and the Collateral Agent, and the
Transfer Agent Instructions will be, when duly executed and delivered by the
Company, and the Note, the Final Maturity Note and the Warrants will be, when
executed and delivered by the Company, valid and binding obligations of the
Company enforceable in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and general
principles of equity, regardless of whether enforcement is considered in a
proceeding in equity or at law.
(G) NON-CONTRAVENTION. The execution and delivery of this Agreement,
the Security Agreement, the Transfer Agent Instructions, the Note, the Final
Maturity Note and the Warrants by the Company and the consummation by the
Company of the issuance of the Securities and the other transactions
contemplated by this Agreement, the Security Agreement, the Transfer Agent
Instructions, the Note, the Final Maturity Note and the Warrants do not and will
not, with or without the giving of notice or the lapse of time, or both, (i)
result in any violation of any term of the certificate of incorporation or by-
laws of the Company or any of its Subsidiaries, (ii)
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conflict with or result in a breach by the Company or any of its Subsidiaries of
any of the terms or provisions of, or constitute a default under, or result in
the modification of, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries pursuant to, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties or assets are bound or affected or (iii)
violate or contravene any applicable law, rule or regulation or any applicable
decree, judgment or order of any court, United States federal or state
regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its Subsidiaries or any of their
respective properties or assets or (iv) have any material adverse effect on any
permit, certification, registration, approval, consent, license or franchise
necessary for the Company or any of its Subsidiaries to own or lease and operate
any of their respective properties and to conduct any of their respective
businesses or the ability of the Company or any of the Subsidiaries to make use
thereof.
(H) APPROVALS. No authorization, approval or consent of, or filing
with, any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders of the Company is
required to be obtained or made by the Company or any of its Subsidiaries in
connection with the execution, delivery and performance of this Agreement, the
Security Agreement, the Transfer Agent Instructions, the Note, the Final
Maturity Note and the Warrants and the issuance and sale of the Securities as
contemplated by this Agreement and the terms of the Note and the Warrants, other
than (1) listing of the Shares on Nasdaq, (2) registration of the resale of the
Shares under the 1933 Act as contemplated by Section 8, (3) as may be required
under applicable state securities or "blue sky" laws, (4) the filing of
appropriate financing statements under the Uniform Commercial Code relating to
the Collateral and (5) filing of one or more Forms D with respect to the
Securities as required under Regulation D.
(I) INFORMATION PROVIDED. The information provided by or on behalf of
the Company to the Buyer and referred to in Section 3(e) of this Agreement does
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading, it being understood
that for purposes of this Section 4(i), any statement contained in such
information shall be deemed to be modified or superseded for purposes of this
Section 4(i) to the extent that a statement in any document included in such
information which was prepared or filed with the SEC on a later date modifies or
replaces such statement, whether or not such later prepared or filed statement
so states.
(J) CONDUCT OF BUSINESS. Except as set forth in the SEC Reports,
since
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December 31, 1996, neither the Company nor any of its Subsidiaries has (i)
incurred any material obligation or liability (absolute or contingent) other
than in the ordinary course of business; (ii) canceled, without payment in full,
any material notes, loans or other obligations receivable or other debts or
claims held by it other than in the ordinary course of business; (iii) sold,
assigned, transferred, abandoned, mortgaged, pledged or subjected to lien any of
its material properties, tangible or intangible, or rights under any material
contract, permit, license, franchise or other agreement; (iv) conducted its
business in a manner materially different from its business as conducted on such
date; (v) declared, made or paid or set aside for payment any cash or non-cash
distribution on any shares of its capital stock; or (vi) consummated, or entered
into any agreement with respect to, any transaction or event which would
constitute a Repurchase Event. Except as disclosed in the SEC Reports, the
Company and its Subsidiaries own, possess or have obtained all governmental,
administrative and third party licenses, permits, certificates, registrations,
approvals, consents and other authorizations necessary to own or lease (as the
case may be) and operate its properties, whether tangible or intangible, and to
conduct its business or operations as currently conducted, except such licenses,
permits, certificates, registrations, approvals, consents and authorizations the
failure of which to obtain would not have a material adverse effect on the
business, properties, operations, condition (financial or other), results of
operations or, to the best of the Company's knowledge after due inquiry,
prospects of the Company and its Subsidiaries taken as a whole.
(K) SEC FILINGS. The Company has timely filed all reports required to
be filed under the 1934 Act and any other material reports or documents required
to be filed with the SEC since January 1, 1994. All of such reports and
documents complied, when filed, in all material respects, with all applicable
requirements of the 1933 Act and the 1934 Act. The Company meets the
requirements for the use of Form S-3 for the registration of the resale of the
Shares by the Buyer and any other Investor.
(L) ABSENCE OF CERTAIN PROCEEDINGS. Except as described in the SEC
Reports, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries wherein an unfavorable decision, ruling or finding
could have a material adverse effect on the business, properties, operations,
condition (financial or other), results of operations or, to the best of the
Company's knowledge after due inquiry, prospects of the Company and its
Subsidiaries taken as a whole or the transactions contemplated by this
Agreement, the Security Agreement, the Note, the Final Maturity Note, the
Warrants or any of the documents contemplated thereby or which could adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement, the Security
Agreement, the Note, the Final Maturity Note, the Warrants or any of such other
documents; the Company does not have pending before the SEC any request
-13-
for confidential treatment of information and to the best of the Company's
knowledge no such request will be made by the Company prior to the SEC Effective
Date; and to the best of the Company's knowledge there is not pending or
contemplated, and there has been no, investigation by the SEC involving the
Company or any director or officer of the Company.
(M) LIABILITIES. Except as and to the extent disclosed, reflected or
reserved against in the financial statements of the Company and the notes
thereto included in the 1996 10-K, neither the Company nor any of its
Subsidiaries has any material (individually or in the aggregate) liabilities,
debts or obligations whether accrued, absolute, contingent or otherwise, and
whether due or to become due. Subsequent to December 31, 1996, neither the
Company nor any of its Subsidiaries has incurred any liabilities, debts or
obligations of any nature whatsoever which are individually or in the aggregate
material to the Company and its Subsidiaries taken as a whole, other than those
incurred in the ordinary course of its business.
(N) ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, there has
been no material adverse change and no material adverse development in the
business, properties, operations, condition (financial or other), results of
operations or, to the best of the Company's knowledge after due inquiry,
prospects of the Company or any of its Subsidiaries, except as disclosed in the
SEC Reports.
(O) INTELLECTUAL PROPERTY. Except as disclosed in the SEC Reports or
the Disclosure Statement, the Company and its Subsidiaries own, or possess
adequate rights to use, all patents, patent rights, inventions, trade secrets,
know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names and copyrights described or referred to
in the SEC Reports or owned or used by them or which are necessary for the
conduct of their respective businesses as presently conducted, or as proposed by
the Company to be conducted, and neither the Company nor any of its Subsidiaries
is aware of any claim to the contrary or any challenge by any person to the
rights of the Company or any of its Subsidiaries with respect to the foregoing.
(P) INTERNAL ACCOUNTING CONTROLS. The Company and its Subsidiaries
maintain a system of internal accounting controls meeting the requirements of
Section 13(b)(2) of the 1934 Act in all material respects.
(Q) COMPLIANCE WITH LAW. The Company is not in violation of any
statute, law, rule, regulation, ordinance, decision or order of any governmental
agency or body or any court, domestic or foreign, including, without limitation,
those relating to the use, operation, handling, transportation, disposal or
release of hazardous or toxic substances or wastes or relating to the protection
or restoration of the environment or human exposure to hazardous or toxic
-14-
substances or wastes, except where such violation would not individually or in
the aggregate have a material adverse effect on the business, properties,
operations, condition (financial or other), results of operations or, to the
best of the Company's knowledge after due inquiry, prospects of the Company and
its Subsidiaries taken as a whole; and neither the Company nor any of its
Subsidiaries is aware of any pending investigation which would reasonably be
expected to lead to such a claim.
(R) PROPERTIES. Except as disclosed in the Disclosure Statement, the
Company and its Subsidiaries have good title to all property real and personal
(tangible and intangible) and other assets owned by them, free and clear of all
security interests, charges, mortgages, liens or other encumbrances, except such
as are described in the SEC Reports or such as do not materially interfere with
the use of such property made, or proposed to be made, by the Company and its
Subsidiaries. The leases, licenses or other contracts or instruments under
which the Company and its Subsidiaries lease, hold or are entitled to use any
property, real or personal, are valid, subsisting and enforceable with only such
exceptions as do not materially interfere with the use of such property made, or
proposed to be made by the Company and its Subsidiaries. Neither the Company
nor any of its Subsidiaries has received notice of any material violation of any
applicable law, ordinance, regulation, order or requirement relating to its
owned or leased properties.
(S) LABOR RELATIONS. No material labor problem exists or, to the
knowledge of the Company or any of its Subsidiaries, is imminent with respect to
any of the employees of the Company or any of its Subsidiaries.
(T) INSURANCE. The Company and its Subsidiaries maintain insurance
against loss or damage by fire or other casualty and such other insurance,
including but not limited to, product liability insurance, in such amounts and
covering such risks is customarily maintained by companies of comparable size
engaged in the same or a similar business and in the same geographic region as
the Company and its Subsidiaries.
(U) ERISA COMPLIANCE. The Company and each of its Subsidiaries is in
compliance in all material respects with all presently applicable provisions of
ERISA; no "reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company or any of its
Subsidiaries would have any liability; neither the Company nor any of its
Subsidiaries has incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Code; and each "pension plan" for
which the Company or any of its Subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
-15-
(V) TAX MATTERS. The Company and each of its Subsidiaries has filed
all federal, state and local income and franchise tax returns required to be
filed and has paid all taxes shown by such returns to be due, and no tax
deficiency has been determined adversely to the Company or any of its
Subsidiaries which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
Subsidiaries, might have) a material adverse effect on the business, properties,
operations, conditions (financial or other), results of operations, or, to the
best of the Company's knowledge after due inquiry, prospects of the Company and
its Subsidiaries taken as a whole.
(W) INVESTMENT COMPANY. Neither the Company nor any of its
Subsidiaries is an "investment company" within the meaning of such term under
the Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
(X) ABSENCE OF BROKERS, FINDERS, ETC. No broker, finder, or similar
person is entitled to any commission, fee, or other compensation by reason of
the transactions contemplated by this Agreement other than Xxxx & Xxxxxxxx
Capital, LLC, and the Company shall pay, and indemnify and hold harmless the
Buyer from, any claim made against the Buyer by such entity or any other person
for any such commission, fee or other compensation.
(Y) NO SOLICITATION. No form of general solicitation or general
advertising was used by the Company or, to the best of its knowledge, any other
person acting on behalf of the Company, in respect of the Securities or in
connection with the offer and sale of the Securities. Neither the Company nor,
to its knowledge, any person acting on behalf of the Company has, either
directly or indirectly, sold or offered for sale to any person any of the Notes
(other than Xxxx & Altschul Capital, LLC with respect to the Notes) or, within
the six months prior to the date hereof, any other similar security of the
Company except as contemplated by this Agreement, and the Company represents
that neither the Company nor any person authorized to act on its behalf will
sell or offer for sale any such security to, or solicit any offers to buy any
such security from, or otherwise approach or negotiate in respect thereof with,
any person or persons so as thereby to cause the issuance or sale of any of the
Securities to be in violation of any of the provisions of Section 5 of the 1933
Act.
(Z) CERTAIN ISSUANCES OF SECURITIES. The Company has not issued any
shares of Common Stock or shares of any series of preferred stock or other
securities convertible into, exchangeable for or otherwise entitling the holder
to acquire shares of Common Stock which are subject to Section 4460(i)(1)(D) of
the rules of the NASD and which would be integrated with the sale of the Note to
the Buyer or the issuance of Conversion Shares upon conversion thereof or the
issuance of the Interest Shares in payment of interest thereon for purposes of
such Section
-16-
4460(i)(1)(D).
5. CERTAIN COVENANTS.
(A) TRANSFER RESTRICTIONS. The Buyer acknowledges and agrees that (1)
the Note and the Warrants to be issued to it hereunder and the Final Maturity
Note which may be issued pursuant to the Note have not been and are not being
registered under the provisions of the 1933 Act or any state securities laws
and, except as provided in Section 8, the Shares have not been and are not being
registered under the 1933 Act or any state securities laws, and that the Note,
the Warrants and the Final Maturity Note may not be transferred unless the Buyer
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Note, the Warrants or the Final Maturity Note to be transferred may be
transferred without such registration; (2) no sale, assignment or other transfer
of the Note, the Warrants or the Final Maturity Note or any interest therein may
be made except in accordance with the terms thereof; (3) the Shares may not be
resold by the Buyer unless the resale has been registered under the 1933 Act or
is made pursuant to an exemption from such registration; (4) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if the exemption provided by Rule 144 is not
available, any resale of the Securities under circumstances in which the seller,
or the person through whom the sale is made, may be deemed to be an underwriter,
as that term is used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (5) the Company is under no obligation to register the Securities (other
than registration of the resale of the Shares in accordance with Section 8)
under the 1933 Act or, except as provided in Section 8, to comply with the terms
and conditions of any exemption thereunder. The Buyer may not transfer the
Shares in a transaction which does not constitute a transfer thereof pursuant to
the Registration Statement in accordance with the plan of distribution set forth
therein or in any supplement to the Prospectus forming part of the Registration
Statement unless the Buyer shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to the Company,
that such Shares may be transferred without registration under the 1933 Act.
(B) RESTRICTIVE LEGEND. (1) The Buyer acknowledges and agrees that
the Note shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the Note):
This Note has not been registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws. The sale to the holder of
this Note of the shares of Common Stock issuable upon conversion of this Note
and in payment of interest on this Note are not covered by a registration
statement under the Act or registration under state
-17-
securities laws. This Note has been acquired, and such shares must be
acquired, for investment only and may not be sold, transferred or assigned in
the absence of registration of the resale thereof or an opinion of counsel
reasonably satisfactory in form, scope and substance to the Company that such
registration is not required.
(2) The Buyer further acknowledges and agrees that the Warrants shall
bear a restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of the Warrants):
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities have been acquired for
investment and may not be resold, transferred or assigned in the absence of
an effective registration statement for the securities under the Securities
Act of 1933, as amended, or an opinion of counsel that registration is not
required under said Act.
(3) The Buyer further acknowledges and agrees that until such time as
the Shares have been registered for resale under the 1933 Act as contemplated by
Section 8, the certificates for the Shares, may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for the Shares):
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities have been acquired for
investment and may not be resold, transferred or assigned in the absence of
an effective registration statement for the securities under the Securities
Act of 1933, as amended, or an opinion of counsel that registration is not
required under said Act.
(4) Once the Registration Statement required to be filed by the
Company pursuant to Section 8 has been declared effective, thereafter (1) upon
request of the Buyer the Company will substitute certificates without
restrictive legend for certificates for any Shares issued prior to the SEC
Effective Date which bear such restrictive legend and remove any stop-transfer
restriction relating thereto promptly, but in no event later than three days
after surrender of such certificates by the Buyer and (2) the Company shall not
place any restrictive legend on certificates for Conversion Shares issued on
conversion of the Note or Interest Shares issued in payment of interest on the
Note or on any Warrant Shares issued upon exercise of the Warrants or impose any
stop-transfer restriction thereon.
(C) TRANSFER AGENT INSTRUCTIONS. Promptly following the delivery by
the Buyer of the Purchase Price in accordance with Section 2(b) hereof, and in
any event prior to the Closing Date, the Company will (1) irrevocably instruct
the Transfer Agent, pursuant to the
-18-
Transfer Agent Instructions substantially in the form attached hereto as ANNEX
IV, to issue certificates for the Shares from time to time upon conversion of
the Note and exercise of the Warrants in such amounts as specified from time to
time to the Transfer Agent in the Conversion Notice surrendered in connection
with each such conversion and the Form of Subscription in the form attached to
the Warrants and (2) appoint the Transfer Agent the conversion agent for the
Note and the warrant agent for the Warrants. The certificates for the Shares may
bear the restrictive legend specified in Section 5(b) prior to registration of
the resale of the Shares under the 1933 Act, registered in the name of the Buyer
or its nominee and in such denominations to be specified by the Buyer in
connection with each conversion of the Note or exercise of the Warrants, as the
case may be. The Company warrants that no instruction other than (x) such
instructions referred to in this Section 5(c), (y) stop transfer instructions to
give effect to Section 5(a) hereof prior to registration of the resale of the
Shares under the 1933 Act and (z) the instructions required by Section 8(b)(12)
will be given by the Company to the Transfer Agent and that the Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement, the Note and the Warrants. If the
Buyer provides the Company with an opinion of counsel reasonably satisfactory in
form, scope and substance to the Company that registration of a resale by the
Buyer of any of the Shares in accordance with the last sentence of Section 5(a)
is not required under the 1933 Act, the Company shall permit the transfer of
such shares and promptly, but in no event later than three days after receipt of
such opinion, instruct the Transfer Agent to issue upon transfer one or more
share certificates in such names and in such denominations as specified by the
Buyer. Nothing in this Section 5(c) shall limit the obligations of the Company
under Section 8(b)(12).
(D) NASDAQ LISTING; REPORTING STATUS. On or before the Closing Date,
the Company will file with Nasdaq an application or other document required by
Nasdaq for the listing of the Shares with Nasdaq and shall provide evidence of
such filing to the Buyer. So long as the Buyer beneficially owns any portion of
the Note or the Warrants or any Shares, the Company will use its best efforts to
maintain the listing of the Common Stock on Nasdaq or another national
securities exchange. So long as the Company is required to maintain
effectiveness of the Registration Statement in accordance with Section 8 and its
shares of Common Stock are publicly traded, the Company shall timely file all
reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the
1934 Act, and the Company shall not, during the period the Company is required
to keep the Registration Statement effective pursuant to Section 8(b), 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.
(E) FORM D. The Company agrees to file one or more Forms D with
respect to the Securities as required under Regulation D to claim the exemption
provided by Rule 506 of Regulation D and to provide a copy thereof to the Buyer
promptly after such filing.
-19-
(F) SECURITY AGREEMENT; FINANCING STATEMENTS. The Company agrees to
execute and deliver to the Collateral Agent the Security Agreement in the form
attached hereto as ANNEX III on or before the Closing Date. The Company shall
prepare, and on or before the Closing Date, file with the appropriate officials,
Uniform Commercial Code financing statements on Form UCC-1 relating to the
Collateral in which the Company is granting a security interest to the
Collateral Agent for the benefit of the Buyer pursuant to the Security Agreement
if such financing statements are, in the reasonable judgment of the Buyer,
advisable to perfect such security interest. The Company shall provide evidence
of such filings and customary search reports of the records of the relevant
Uniform Commercial Code filing offices on or prior to the Closing Date.
(G) STATE SECURITIES LAWS. On or before the Closing Date, the Company
shall take such action as shall be necessary to qualify, or to obtain an
exemption for, the Note for sale to the Buyer pursuant to this Agreement, the
Warrants for issuance to the Buyer pursuant to this Agreement and the Shares for
sale upon conversion of the Note or exercise of the Warrants, as the case may
be, under such of the securities laws of jurisdictions in the United States as
shall be applicable to the sale of the Note to the Buyer pursuant to this
Agreement and issuance of the Shares upon conversion of the Note or exercise of
the Warrants, as the case may be. Prior to the issuance of the Final Maturity
Note, the Company shall take such actions under applicable state securities laws
as shall be necessary to qualify, or to obtain an exemption for, the Final
Maturity Note under such laws. In connection with the foregoing obligations of
the Company in this Section 5(g), the Company shall not be required (1) to
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 5(g), (2) to subject itself to general
taxation in any such jurisdiction, (3) to file a general consent to service of
process in any such jurisdiction, (4) to provide any undertakings that cause
more than nominal expense or burden to the Company or (5) to make any change in
its charter or by-laws which the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders. The
Company shall furnish the Buyer with copies of all filings, applications, orders
and grants or confirmations of exemptions relating to such securities laws on or
before the Closing Date.
(H) CERTAIN FUTURE FINANCINGS AND RELATED ACTIONS. (1) The Company
shall not issue any equity securities or securities convertible into,
exchangeable for or otherwise entitling the holder to acquire, any equity
securities of the Company which would, for purposes of Section 4460(i)(1)(D) of
the rules of the NASD (or any successor or replacement provision thereof), be
integrated with the sale of the Note and the issuance of Shares upon conversion
of, or in payment of interest on, the Note.
-20-
(2) The Company shall not offer, sell, contract to sell or issue (or
engage any person to assist the Company in taking any such action) any equity
securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any Common Stock at a price below the market
price of the Common Stock during the period from the date of this Agreement to
the date on which the Registration Statement shall have been effective with the
SEC and available for use by the selling stockholders named therein for 90
consecutive days; provided, however, that nothing in this Section 5(h)(2) shall
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prohibit the Company from issuing securities (x) pursuant to compensation plans
for employees, directors, officers, advisers or consultants of the Company and
in accordance with the terms of such plans as in effect as of the date of this
Agreement, (y) upon exercise of conversion, exchange, purchase or similar rights
issued, granted or given by the Company and outstanding as of the date of this
Agreement or (z) pursuant to a public offering underwritten on a firm commitment
basis registered under the 1933 Act.
(I) LIMITATION ON CERTAIN ACTIONS. From the date of execution and
delivery of this Agreement by the parties hereto to the date of issuance of the
Note, the Company (1) shall comply with Article III of the Note as if the Note
was outstanding, (2) shall not take any action which, if the Note was
outstanding, (A) would constitute an Event of Default or, with the giving of
notice or the passage of time or both, would constitute an Event of Default or
(B) would constitute a Repurchase Event or, with the giving of notice or the
passage of time or both, would constitute a Repurchase Event.
(J) USE OF PROCEEDS. The Company represents, warrants, covenants and
agrees that: (1) it does not own or have any present intention of acquiring any
"margin stock" as defined in Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System ("margin stock"); (2) the proceeds of
sale of the Note will be used for general working capital purposes and in the
operation of the Company's business; (3) none of such proceeds will be used,
directly or indirectly (A) to make any loan to or investment in any other person
or (B) for the purpose, whether immediate, incidental or ultimate, of purchasing
or carrying any margin stock or for the purpose of maintaining, reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
stock that is currently a margin stock or for any other purpose which might
constitute the transactions contemplated by this Agreement a "purpose credit"
within the meaning of such Regulation G; and (4) neither the Company nor any
agent acting on its behalf has taken or will take any action which might cause
this Agreement or the transactions contemplated hereby to violate Regulation G,
Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the 1934 Act, in each case as in effect now or as
the same may hereafter be in effect.
(K) BEST EFFORTS. Each of the parties shall use its best efforts
timely to satisfy each of the conditions to the other party's obligations to
sell and purchase the Note set forth in
-21-
Section 6 or 7, as the case may be, of this Agreement on or before the Closing
Date.
(L) DEBT OBLIGATION. So long as any portion of the Note is
outstanding, the Company shall cause its books, records and financial statements
to reflect the Note as a debt of the Company in its unpaid principal amount and,
whenever appropriate, as a valid senior debt obligation of the Company for money
borrowed.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the Note
and issue the Warrants to the Buyer pursuant to this Agreement is conditioned
upon the following (any or all of which may be waived by the Company in its sole
discretion):
(a) The delivery by the Buyer to the Escrow Agent of an amount equal
to the Purchase Price;
(b) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement; and
(c) The representations and warranties of the Buyer contained in this
Agreement and in the Questionnaire shall have been true and correct on the date
of this Agreement and on or before the Closing Date the Buyer shall have
performed all covenants and agreements of the Buyer required to be performed by
the Buyer on or before the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Note and acquire the Warrants is conditioned upon the following (any or all of
which may be waived by the Buyer in its sole discretion):
(a) Delivery by the Company to the Escrow Agent of the Note and the
Warrants in accordance with this Agreement;
(b) The Collateral Agent shall have executed and delivered to the
Company the Security Agreement in the form attached hereto as ANNEX III;
(c) The Transfer Agent shall have acknowledged in writing the Transfer
Agent Instructions;
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(d) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
(e) The representations and warranties of the Company contained in
this Agreement shall have been true and correct on the date of this Agreement,
and on or before the Closing Date the Company shall have performed all covenants
and agreements of the Company contained herein required to be performed by the
Company on or before the Closing Date;
(f) No event which, if the Note were outstanding, (1) would constitute
an Event of Default or, with the giving of notice or the passage of time or
both, would constitute an Event of Default shall have occurred and be continuing
or (2) would constitute a Repurchase Event or, with the giving of notice or the
lapse of time, or both, would constitute a Repurchase Event shall have occurred
and be continuing;
(g) The Company shall have delivered to the Buyer its certificate,
dated the Closing Date, duly executed by its Chief Financial Officer to the
effect set forth in subparagraphs (d), (e), and (f) of this Section 7;
(h) The receipt by the Buyer of a certificate, dated the Closing Date,
of the Secretary of the Company certifying (1) the Certificate of Incorporation
and By-Laws of the Company as in effect on the Closing Date, (2) all resolutions
of the Board of Directors (and committees thereof) of the Company relating to
this Agreement and the transactions contemplated hereby and (3) such other
matters as reasonably requested by the Buyer;
(i) On the Closing Date, the Buyer shall have received opinions of
Xxxxxxxx & Xxxxx, LLP, special counsel for the Company, and Xxx Xxxxxx, Esq.,
General Counsel to the Company, each dated the Closing Date, addressed to the
Buyer, in form, scope and substance reasonably satisfactory to the Buyer,
substantially in the form of ANNEX VI and ANNEX VII attached hereto,
respectively;
(j) On the Closing Date, (i) trading in securities on the New York
Stock Exchange, the American Stock Exchange or Nasdaq shall not have been
suspended or materially limited and (ii) a general moratorium on commercial
banking activities in the State of Colorado or the State of New York shall not
have been declared by either federal or state authorities; and
(k) The Company shall have obtained written waivers, in form and
substance reasonably satisfactory to the Buyer, (1) by D&N Holding Company
("D&N") of the rights under the Subscription Agreement, dated as of June 7,
1993, between the Company and D&N, with
-23-
respect to the purchase of certain securities by D&N, and shall have furnished a
copy of such waiver to the Buyer and (2) by all persons listed on the Disclosure
Statement by reason of the last sentence of Section 4(c).
8. REGISTRATION RIGHTS.
(A) MANDATORY REGISTRATION. (1) The Company shall prepare and, on or
prior to the date which is 10 days after the Closing Date, file with the SEC a
Registration Statement on Form S-3 by the Buyer which at the time such
Registration Statement is declared effective by the SEC covers the resale of a
number of shares of Common Stock equal to (A) at least 110% of the number of
Conversion Shares issuable to Buyer under the Note, determined as if the Note,
together with accrued and unpaid interest, was converted in full on the trading
day prior to the SEC Effective Date at a conversion price equal to 90% of the
lowest per share Trading Price on such trading day, (B) at least 100% of the
Warrant Shares issuable to the Buyer and (C) such additional number of shares of
Common Stock as the Company shall in its discretion determine to register in
connection with the issuance of the Interest Shares, as Registrable Securities,
and which Registration Statement shall state that, in accordance with Rule 416
under the 1933 Act, such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable upon
conversion of the Note to prevent dilution resulting from stock splits, stock
dividends or similar transactions. If, notwithstanding Rule 416 under the 1933
Act, the Registration Statement is not deemed to cover such indeterminate number
of shares of Common Stock as shall be issuable upon conversion of the Note based
on changes from time to time in the conversion price thereof such that at any
time the number of shares of Common Stock included in the Registration Statement
required to be filed as provided in the first sentence of this Section 8(a)
shall be insufficient to cover the number of shares of Common Stock issuable on
conversion in full of the unconverted portion of the Note (after taking into
account any redemptions pursuant to Section 2.4(b) of the Note), then promptly,
but in no event later than 15 days after such insufficiency shall occur, the
Company shall file with the SEC an additional Registration Statement on Form S-3
(which shall not constitute a post-effective amendment to the Registration
Statement filed pursuant to the first sentence of this Section 8(a)) covering
such number of shares of Common Stock as shall be sufficient to permit such
conversion; provided, however, that nothing in this Section 8(a) shall limit the
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rights of the holder of the Note to have all or a portion of the Note redeemed
pursuant to Section 2.4(b) of the Note. For all purposes of this Agreement such
additional Registration Statement shall be deemed to be the Registration
Statement required to be filed by the Company pursuant to this Section 8(a), and
the Company and the Investors shall have the same rights and obligations with
respect to such additional Registration Statement as they shall have with
respect to the initial Registration Statement required to be filed by the
Company pursuant to this Section 8(a).
-24-
(2) Prior to the SEC Effective Date and during any time subsequent to
the SEC Effective Date when the Registration Statement for any reason is not
available for use by any Investor for the resale of any Shares, the Company
shall not file any other registration statement or any amendment thereto with
the SEC under the 1933 Act or request the acceleration of the effectiveness of
any other registration statement previously filed with the SEC other than any
registration statement on Form S-8.
(B) OBLIGATIONS OF THE COMPANY. In connection with the registration
of the Registrable Securities, the Company shall:
(1) use its best efforts to cause the Registration Statement referred
to in Section 8(a) to become effective as promptly as possible after the
execution and delivery of this Agreement by the parties hereto, and keep the
Registration Statement effective pursuant to Rule 415 at all times during the
Registration Period. The Company shall submit to the SEC, within three business
days after the Company learns that no review of the Registration Statement will
be made by the staff of the SEC or that the staff of the SEC has no further
comments on the Registration Statement, as the case may be, a request for
acceleration of effectiveness of the Registration Statement to a time and date
not later than 48 hours after the submission of such request. The Company
represents and warrants to the Investors that (a) the Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein), at the time it is first filed with the SEC, at the time it is ordered
effective by the SEC and at all times during which it is required to be
effective hereunder (and each such amendment and supplement at the time it is
filed with the SEC and at all times during which it is available for use in
connection with the offer and sale of the Registrable Securities) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (b) the Prospectus, at the time the Registration Statement is
declared effective by the SEC and at all times that the Prospectus is required
by this Agreement to be available for use by any Investor shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(2) prepare and file with the SEC such amendments (including post-
effective amendments) and supplements to the Registration Statement and the
Prospectus as may be necessary to keep the Registration Statement effective, and
the Prospectus current, at all times during the Registration Period, and, during
the Registration Period, comply with the provisions of the 1933 Act applicable
to the Company in order to permit the disposition by the Investors of all
Registrable Securities covered by the Registration Statement;
(3) furnish to each Investor whose Registrable Securities are included
in the
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Registration Statement and its legal counsel, (1) promptly after the same is
prepared and publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment thereto, each
Prospectus and each amendment or supplement thereto, (2) each letter written by
or on behalf of the Company to the SEC or the staff of the SEC and each item of
correspondence from the SEC or the staff of the SEC relating to such
Registration Statement (other than any portion of any thereof which contains
information for which the Company has sought confidential treatment), each of
which the Company hereby determines to be confidential information and which the
Buyer hereby agrees to keep confidential as a confidential Record in accordance
with Section 8(b)(9) and (3) such number of copies of a Prospectus and all
amendments and supplements thereto and such other documents, as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor;
(4) use its best efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under the securities or blue
sky laws of such jurisdictions as the Investors who hold a majority in interest
of the Registrable Securities reasonably request, (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period
and (iii) take all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale by the Investors in such jurisdictions;
provided, however, that the Company shall not be required in connection
-------- -------
therewith or as a condition thereto (I) to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 8(b)(4), (II) to subject itself to general taxation in any such
jurisdiction, (III) to file a general consent to service of process in any such
jurisdiction, (IV) to provide any undertakings that cause more than nominal
expense or burden to the Company or (V) to make any change in its charter or by-
laws which the Board of Directors of the Company determines to be contrary to
the best interests of the Company and its stockholders;
(5) as promptly as practicable after becoming aware of such event or
circumstance, notify each Investor of any event or circumstance of which the
Company has knowledge, as a result of which the Prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement and Prospectus
to correct such untrue statement or omission, and deliver a number of copies of
such supplement or amendment to each Investor as such Investor may reasonably
request;
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(6) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold of the issuance
by the SEC of any stop order or other suspension of effectiveness of the
Registration Statement at the earliest possible time;
(7) permit the Investors who hold Registrable Securities being sold
and a single firm of counsel designated as selling stockholders' counsel by the
Investors who hold a majority in interest of the Registrable Securities being
sold to review at such Investors' sole expense the Registration Statement and
all amendments and supplements thereto a reasonable period of time prior to
their filing with the SEC and shall not file any document in a form to which any
Investor or such counsel reasonably objects;
(8) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earning statement (in form complying with the provisions of
Rule 158 under the 0000 Xxx) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement;
(9) make available for inspection by any Investor and any Inspectors
retained by any such Investor at such Investor's sole expense, all Records as
shall be reasonably necessary to enable each Investor to exercise its due
diligence responsibility and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
-------- -------
hold in confidence and shall not make any disclosure (except to an Investor) of
any Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (iii) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 8(b)(9). Each Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company pursuant to this Agreement unless (i)
disclosure of such information is necessary to comply with
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federal or state securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor and allow such Investor, at such Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information;
(10) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement as of the SEC Effective Date to be listed
on Nasdaq or such other principal securities market on which securities of the
same class or series issued by the Company are then listed or traded;
(11) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the SEC Effective Date;
(12) cooperate with the Investors who hold Registrable Securities
being offered to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates to
be in such denominations or amounts as the Investors may reasonably request and
registered in such names as the Investors may request; and, not later than the
SEC Effective Date, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, (i) to the Transfer Agent (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) an instruction substantially in the form attached hereto as ANNEX
VIII and (ii) to the Investors whose Registrable Securities are included in such
Registration Statement and to the Transfer Agent an opinion of such counsel, in
the form attached hereto as ANNEX IX;
(13) during the Registration Period, the Company shall not bid for or
purchase any Common Stock or any right to purchase Common Stock or attempt to
induce any person to purchase any such security or right if such bid, purchase
or attempt would in any way limit the right of the Investors to sell Registrable
Securities by reason of the limitations set forth in Regulation M under the 1934
Act; and
(14) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.
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(C) OBLIGATIONS OF THE BUYER AND OTHER INVESTORS. In connection with
the registration of the Registrable Securities, the Investors shall have the
following obligations:
(1) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least four (4)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the Requested Information
if any of such Investor's Registrable Securities are eligible for inclusion in
the Registration Statement. If at least one (1) business day prior to the
filing date the Company has not received the Requested Information from an
Investor, then the Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Investor;
(2) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(3) Each Investor agrees that it will not effect any disposition of
the Registrable Securities except as contemplated in the Registration Statement
or as otherwise in compliance with applicable securities laws and that it will
promptly notify the Company of any material changes in the information set forth
in the Registration Statement regarding such Investor or its plan of
distribution; each Investor agrees (a) to notify the Company in writing in the
event that such Investor enters into any material agreement with a broker or a
dealer for the sale of the Registrable Securities through a block trade, special
offering, exchange distribution or a purchase by a broker or dealer and (b) in
connection with such agreement, to provide to the Company in writing the
information necessary to prepare any supplemental prospectus pursuant to Rule
424(c) under the 1933 Act which is required with respect to such transaction;
(4) Each Investor acknowledges that during the times specified in
Section 8(b)(5) or 8(b)(6) the Company must suspend the use of the Prospectus
until such time as an amendment to the Registration Statement has been filed by
the Company and declared effective by the SEC, the Company has prepared a
supplement to the Prospectus or the Company has filed an appropriate report with
the SEC pursuant to the 1934 Act. Each Investor hereby covenants that it will
not sell any Registrable Securities pursuant to the Prospectus in accordance
with Section
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8(b)(5) or 8(b)(6) during the period commencing at the time at which the Company
gives such Investor notice of the suspension of the use of the Prospectus and
ending at the time the Company gives such Investor notice that such Investor may
thereafter effect sales pursuant to the Prospectus, or until the Company
delivers to such Investor an amended or supplemented Prospectus;
(5) In connection with any sale of Registrable Securities which is
made pursuant to the Registration Statement through a broker, each Investor
shall instruct its broker or brokers to deliver the Prospectus to the purchaser
or purchasers in connection with such sale, shall supply copies of such
Prospectus to such broker or brokers and shall otherwise use its reasonable best
efforts to comply with the prospectus delivery requirements of the 1933 Act.
(D) EXPENSES OF REGISTRATION. All reasonable expenses incurred in
connection with registrations, filings or qualifications pursuant to this
Agreement shall be paid by the Company, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company and the Investors, but
excluding (a) fees and expenses of investment bankers retained by any Investor
and (b) brokerage commissions incurred by any Investor.
(E) REPORTS UNDER 1934 ACT. With a view to making available to the
Investors the benefits of Rule 144, the Company agrees to:
(1) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (A) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (B) such other information as may be necessary to permit the
Investors to sell such securities pursuant to Rule 144 without registration; and
(2) if at any time the Company is not required to file such reports
with the SEC, use its best efforts to, upon the request of an Investor, make
publicly available other information so long as is necessary to permit
publication by brokers and dealers of quotations for the Common Stock and sales
of the Registrable Securities in accordance with Rule 15c2-11 under the 1934
Act.
9. INDEMNIFICATION AND CONTRIBUTION
(a) To the extent not prohibited by applicable law, the Company will
indemnify and hold harmless each Indemnified Person against any Claims to which
any of them may become subject under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any
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post-effective amendment thereof, or any prospectus included therein: (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any state securities law or any rule or regulation
under the 1933 Act, the 1934 Act or any state securities law or (iv) any breach
or alleged breach by any person other than the Buyer of any representation,
warranty, covenant, agreement or other term of this Agreement, the Note, the
Final Maturity Note, the Security Agreement, the Transfer Agent Instructions or
the Warrants (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in Section
9(a)(3) with respect to the number of legal counsel, the Company shall reimburse
the Investors and each such controlling person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 9(a)(1) shall not apply to:
(I) a Claim arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information relating to an Indemnified Person
furnished in writing to the Company by such Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such Prospectus was timely made available by the Company pursuant to
Section 8(b)(3) hereof; and (II) amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors.
(2) In connection with the Registration Statement, each Investor
agrees to indemnify and hold harmless, to the same extent and in the same manner
set forth in Section 9(a)(1), each Indemnified Party against any Claim to which
any of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim arises out of or is based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement; and
such Investor will reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
--------
however, that the indemnity agreement contained in this Section 9(a)(2) shall
-------
not apply to amounts paid in settlement of any Claim if such
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settlement is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided, further, however, that the
-------- ------- -------
Investor shall be liable under this Section 9(a)(2) for only that amount of a
Claim as does not exceed the amount by which the proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement exceeds the amount paid by such Investor for such Registrable
Securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 9(a)(2) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the Prospectus, as then amended or
supplemented.
(3) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 9(a) of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 9(a), deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel reasonably satisfactory to the
Indemnified Person or the Indemnified Party, as the case may be; provided,
--------
however, that an Indemnified Person or Indemnified Party shall have the right to
-------
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 9(a), except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this Section 9(a) shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
(B) CONTRIBUTION. To the extent any indemnification by an
indemnifying party as set forth in Section 9(a) above is applicable by its terms
but is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 9(a) to the fullest extent permitted by law. In
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determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative fault of each party, the
parties' relative knowledge of and access to information concerning the matter
with respect to which the claim was asserted, the opportunity to correct and
prevent any statement or omission and any other equitable considerations
appropriate under the circumstances; provided, however, that (a) no contribution
-------- -------
shall be made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 9(a), (b) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any other person
who was not guilty of such fraudulent misrepresentation and (c) contribution by
any seller of Registrable Securities shall be limited to the amount by which the
proceeds received by such seller from the sale of such Registrable Securities
exceeds the amount paid by such Investor for such Registrable Securities.
10. MISCELLANEOUS.
(A) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(B) HEADINGS. The headings, captions and footers of this Agreement
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(C) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
(D) NOTICES. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by mail, personal delivery, by telephone
line facsimile transmission or courier and shall be effective five days after
being placed in the mail, if mailed, or upon receipt, if delivered personally,
by telephone line facsimile transmission or by courier, in each case addressed
to a party at such party's address (or telephone line facsimile transmission
number) shown in the introductory paragraph or on the signature page of this
Agreement or such other address (or telephone line facsimile transmission
number) as a party shall have provided by notice to the other party in
accordance with this provision. In the case of any notice to the Company, such
notice should be addressed to the Company at its address shown in the
introductory paragraph of this Agreement, Attention: Vice President and Chief
Financial Officer (telephone line facsimile number (000) 000-0000), and a copy
-
shall also be given to: Xxxxxxxx & Xxxxx, LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 Attention: Xxxxx Xxxx, Esq._(telephone line facsimile
transmission number (000) 000-0000), and in the case of any notice to the Buyer,
a copy shall be
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given to: Law Offices of Xxxxx X. Xxxxx, Penthouse Suite, 00 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (telephone line facsimile transmission number
(000) 000-0000), in each case with a copy to:
____________________________________________________________________
(telephone line facsimile transmission number ____________________).
(E) COUNTERPARTS. This Agreement may be executed in counterparts and
by the parties hereto on separate counterparts, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
agreement. A telephone line facsimile transmission of this Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.
(F) ENTIRE AGREEMENT; BENEFIT. This Agreement, including the Annexes
and Exhibit hereto, constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions, promises,
warranties, or undertakings, other than those set forth or referred to herein.
This Agreement, including the Annexes and Exhibit hereto, supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof. This Agreement and the terms and provisions hereof are
for the sole benefit of only the Company, the Buyer and their respective
successors and permitted assigns.
(G) WAIVER. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or exercise of any other right or power.
(H) AMENDMENT. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Buyer or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given. No course of dealing between the parties hereto shall operate
as an amendment of this Agreement.
(I) FURTHER ASSURANCES. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
(J) ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Buyer or any
other Investor under Sections 8 and 9 of this Agreement and the rights and
obligations of each Investor
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under Section 9 of this Agreement shall be automatically assigned by such
Investor to any transferee of all or any portion of such Investor's Registrable
Securities (or all or any portion of the Note) only if: (1) such Investor agrees
in writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (2) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee and (b) the securities with respect to which such
registration rights are being transferred or assigned, (3) immediately following
such transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the 1933 Act and applicable state
securities laws, and (4) at or before the time the Company received the written
notice contemplated by clause (2) of this sentence the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions
contained in Sections 8 and 9 hereof. In connection with any such transfer the
Company shall, at its sole cost and expense, promptly after such assignment take
such actions as shall be reasonably acceptable to the Initial Investor and such
transferee to assure that the Registration Statement and related Prospectus are
available for use by such transferee for sales of the Registrable Securities in
respect of which the rights to registration have been so assigned.
(K) EXPENSES. The Company shall pay on demand all expenses incurred
by the Buyer, including reasonable attorneys' fees and expenses, as a
consequence of, or in connection with, (1) the negotiation, preparation or
execution of any amendment, modification or waiver of the Transaction Documents,
(2) any default or breach of any of the Company's obligations set forth in the
Transaction Documents and (3) the enforcement or restructuring of any right of,
including the collection of any payments due, the Buyer under the Transaction
Documents, including any action or proceeding relating to such enforcement or
any order, injunction or other process seeking to restrain the Company from
paying any amount due the Buyer. Except as provided in Section 8(d) and in this
Section 10(k), each of the Company and the Buyer shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby.
(L) TERMINATION. The Buyer shall have the right to terminate this
Agreement by giving notice to the Company at any time at or prior to the Closing
Date if:
(1) the Company shall have failed, refused, or been unable at or prior
to the date of such termination of this Agreement to perform any of its
obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is not
fulfilled; or
(3) the closing shall not have occurred on a Closing Date on or before
June 30, 1997, other than solely by reason of a breach of this Agreement by
the Buyer.
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Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.
(M) SURVIVAL. All representations and warranties made as of the date
of this Agreement and as of any other date deemed to be made by the terms of
this Agreement and agreements of the Company and of the Buyer contained herein
will survive the execution and delivery hereof and the Closing hereunder and
delivery of and payment for the Note, and shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Buyer or any person who controls the Buyer within the meaning of the 1933 Act,
or by or on behalf of the Company or any person who controls the Company within
the meaning of the 1933 Act.
(N) PUBLIC STATEMENTS, PRESS RELEASES, ETC. The Company and the Buyer
shall have the right to approve before issuance any press releases or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release and shall be
provided with a copy thereof).
(O) CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
-36-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the dates
set forth below.
Principal Amount: $
Purchase Price: $
NAPRO BIOTHERAPEUTICS, INC.
By: __________________________________
Name:
Title:
Date: __________________________________
__________________________________
__
By __________________________________
Name:
Title:
Date: __________________________________
Address:
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Facsimile No.: _______________
-37-
EXHIBIT A
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COMPANY DISCLOSURE STATEMENT
A-38
