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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of March 22, 1999, (THIS
"AGREEMENT") by and among AVANIR Pharmaceuticals (formerly known as LIDAK
Pharmaceuticals), a California corporation with headquarters located at 0000
Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "COMPANY"), and
the investors listed on the Schedule of Buyers attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Company has authorized the following new series of its
Preferred Stock, no par value per share, which shall be called the Company's
Series D Convertible Preferred Stock ("PREFERRED STOCK"), and which shall be
convertible into shares of the Company's Class A Common Stock, no par value per
share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in
accordance with the terms of the Company's Certificate of Determination of the
Preferred Shares, substantially in the form attached hereto as Exhibit A (the
"CERTIFICATE OF DETERMINATION");
C. The Buyers wish to purchase, upon the terms and conditions stated
in this Agreement, initially an aggregate of 200 shares of the Preferred Stock
(the "INITIAL PREFERRED SHARES") in the respective amounts set forth opposite
each Buyer's name on the Schedule of Buyers along with warrants to purchase up
to 500 shares of Common Stock (as exercised, collectively, the "WARRANT SHARES")
for each share of Preferred Stock purchased, such warrants to be substantially
in the form attached hereto as Exhibit E (the "WARRANTS");
D. Subject to the terms and conditions set forth in this Agreement,
the Buyers will be required to buy and the Company will be required to sell an
aggregate of 100 shares of Preferred Stock (pro rata based on the number of
Initial Preferred Shares each Buyer purchased in relation to the total number of
Initial Preferred Shares) (the "MANDATORY PREFERRED SHARES") along with the
related Warrants;
E. Subject to the terms and conditions set forth in this Agreement,
each Buyer may have the right to purchase up to a number of additional shares of
Preferred Stock (which aggregate number shall not exceed such Buyer's pro rata
portion of 200 shares) equal to the sum of (i) the product of .5 multiplied by
the number of Initial Preferred Shares purchased by such Buyer; (ii)
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the number of shares of Preferred Stock held by such Buyer on the date which is
365 days after the Initial Closing Date (as defined below); and (iii) the number
of shares of Preferred Stock converted by such Buyer on or before the date which
is 365 days after the Initial Closing Date at a Conversion Price (as defined in
the Certificate of Determination) equal to the Fixed Conversion Price (as
defined in the Certificate of Determination) of such shares of Preferred Stock
as in effect on the date of conversion (collectively, the "ADDITIONAL PREFERRED
SHARES"), along with the related Warrants (the Initial Preferred Shares, the
Mandatory Preferred Shares and the Additional Preferred Shares collectively are
referred to in this Agreement as the "PREFERRED SHARES");
F. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit B (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. Purchase of Preferred Shares. Subject to satisfaction
(or waiver) of the conditions set forth in Sections 6(a) and 7(a), the Company
shall issue and sell to the Buyers and the Buyers severally shall purchase from
the Company an aggregate of 200 Initial Preferred Shares, in the respective
amounts set forth opposite each Buyer's name on the Schedule of Buyers, along
with the related Warrants (the "INITIAL CLOSING"). Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 1(c), 6(b) and 7(b) below,
each Buyer shall buy and the Company shall sell that number of Mandatory
Preferred Shares equal to such Buyer's pro rata portion of an aggregate of 100
Mandatory Preferred Shares (based on the number of Initial Preferred Shares such
Buyer purchased in relation to the total number of Initial Preferred Shares
issued and sold, along with the related Warrants (the "MANDATORY CLOSING").
Subject to the satisfaction (or waiver) of the conditions set forth in Sections
1(d), 6(c) and 7(c), at the option of each Buyer, the Company shall issue at
multiple closings, if applicable, and sell to such Buyer, and such Buyer may
purchase from the Company, up to that number of Additional Preferred Shares
(which aggregate number shall not exceed such Buyer's pro rata portion of 200
shares) equal to the sum of (i) the product of .5 multiplied by the number of
Initial Preferred Shares purchased by such Buyer, (ii) the number of Preferred
Shares held by such Buyer on the date which is 365 days after the Initial
Closing Date and (iii) the number of Preferred Shares converted by such Buyer,
on or before the date which is 365 days after the Initial Closing Date, at a
Conversion Price equal to the Fixed Conversion Price of such Preferred Shares as
in effect on the corresponding date of conversion, along with the related
Warrants (the "ADDITIONAL CLOSINGS"). (The Initial Closing, the Mandatory
Closing and the Additional Closings collectively are referred to in this
Agreement as the "CLOSINGS"). The aggregate purchase price (the "PURCHASE
PRICE") of each Preferred Share and related Warrant at each of the Closings
shall be $10,000.
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b. The Initial Closing Date. The date and time of the
Initial Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m. Central Time,
within five (5) business days following the date hereof, subject to satisfaction
(or waiver) of the conditions to the Initial Closing set forth in Sections 6(a)
and 7(a) (or such later date as is mutually agreed to by the Company and the
Buyers). The Initial Closing shall occur on the Initial Closing Date at the
offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000-0000.
c. The Mandatory Closing Date. The date and time of the
Mandatory Closing (the "MANDATORY CLOSING DATE") shall be 10:00 a.m. Central
Time, on the tenth (10th) business day following the Mandatory Share Notice Date
(as defined below), subject to satisfaction (or waiver) of the conditions to the
Mandatory Closing set forth in Sections 6(b) and 7(b) and the conditions set
forth in this Section 1(c) (or such later date as is mutually agreed to by the
Company and the Buyers). The Company shall deliver written notice (the
"MANDATORY SHARE NOTICE") to each Buyer on a date (the "MANDATORY SHARE NOTICE
DATE") as soon as reasonably practicable, but in no event later than the first
business day, following the date that the Initial Registration Statement (as
defined in the Registration Rights Agreement) registering the Initial
Registrable Securities (as defined in the Registration Rights Agreement) has
been declared effective by the SEC in accordance with the terms of the
Registration Rights Agreement. The Mandatory Share Notice shall set forth (x)
each Buyer's pro rata portion (based on the number of Initial Preferred Shares
such Buyer purchased in relation to the total number of Initial Preferred Shares
purchased by all of the Buyers) of the aggregate number of the Mandatory
Preferred Shares (which aggregate number shall be 100 Preferred Shares), rounded
to the closest whole Preferred Share, which such Buyer is required to purchase
at such Mandatory Closing, (y) the aggregate Purchase Price for such Buyer's
Mandatory Preferred Shares and (z) the date of the Mandatory Closing Date.
Notwithstanding the foregoing, no Buyer shall be required to purchase the
Mandatory Preferred Shares unless each of the following conditions is satisfied:
(i) during the period beginning on the Mandatory Share Notice Date and ending on
and including the Mandatory Closing Date, the Initial Registration Statement
covering the resale of the Conversion Shares and the Warrant Shares at all times
has been effective and available for the sale of no less than the sum of (I)
200% of the sum of (A) the number of Conversion Shares then issuable upon the
conversion of the then outstanding Initial Preferred Shares and the Mandatory
Preferred Shares to be issued at the Mandatory Closing (as if converted at the
Conversion Price on the Mandatory Share Notice Date and as if the Mandatory
Preferred Shares were issued and outstanding) and (B) the number of Conversion
Shares outstanding as of the Mandatory Share Notice Date and (II) 100% of the
sum of (y) the number of Warrant Shares then issuable upon exercise of the
outstanding Warrants and (z) the number of Warrant Shares outstanding as of the
Mandatory Share Notice Date; (ii) no event constituting a Major Transaction (as
defined in Section 3(c) of the Certificate of Determination), including an
agreement to consummate a Major Transaction, or a Triggering Event (as defined
in Section 3(d) of the Certificate of Determination) shall have occurred nor
shall any pending event which would constitute a Major Transaction have been
publicly disclosed from the period beginning on and including the Initial
Closing Date and ending on and including the Mandatory Closing Date; (iii) at
all times during the period beginning on the date of this Agreement and ending
on and including the Mandatory Closing Date, the Common Stock shall
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have been authorized for quotation on the Nasdaq National Market or listed on
the American Stock Exchange ("AMEX") or the New York Stock Exchange, Inc.
("NYSE") and shall not have been suspended from trading on such exchanges
(except for a voluntary suspension of not more than one day due to a business
announcement by the Company), nor shall delisting or suspension by such
exchanges have been threatened (except as set forth in the letter to the Company
dated February 8, 1999 from the Nasdaq Stock Market, Inc., provided that the
Company has satisfied the requirements set forth in such letter) either (A) in
writing by such exchanges or (B) by falling below the minimum listing
maintenance requirements of such exchanges; (iv) during the period beginning on
the Initial Closing Date and ending on and including the Mandatory Closing Date,
the Company shall have delivered Conversion Shares upon conversion of the
Preferred Shares on a timely basis as set forth in Section 2(f)(ii) of the
Certificate of Determination and otherwise shall have been in compliance with
and shall not have breached any provision of the Transaction Documents (as
defined below) and the Certificate of Determination;(v) the Company shall have
received the approval of the Company's shareholders, pursuant to Section 4(l),
to issue the Conversion Shares upon the Conversion of the Preferred Shares and
the Warrant Shares upon exercise of the Warrants in excess of the Exchange Cap
(as defined in the Certificate of Determination); and (vi) the Company shall not
have previously delivered a Mandatory Share Notice. The Mandatory Closing shall
occur on the Mandatory Closing Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000
Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000.
d. The Additional Closing Date. The date and time of the
Additional Closings (the "ADDITIONAL CLOSING DATES") shall be 10:00 a.m. Central
time, on the date specified in the Additional Share Notice (as defined below),
subject to satisfaction (or waiver) of the conditions to each of the Additional
Closings set forth in Sections 6(c) and 7(c) and the conditions contained in
this Section 1(d) (or such later date as is mutually agreed to by the Company
and the Buyers). At any time during the period beginning on the Initial Closing
Date and ending on and including the Maturity Date (as defined in the
Certificate of Determination) of the Initial Preferred Shares, but subject to
the requirements of Sections 6(c) and 7(c) and the conditions contained in this
Section 1(d); each Buyer may purchase, at such Buyer's option, Additional
Preferred Shares by delivering written notice to the Company (an "ADDITIONAL
SHARE NOTICE") at least five (5) business days (the "ADDITIONAL SHARE NOTICE
DATE") prior to the Additional Closing Date set forth in the Additional Share
Notice; provided, however, that the aggregate purchase price of such Additional
Preferred Shares shall not be less than $250,000 for any Additional Closing;
and, provided further, that the aggregate number of Additional Preferred Shares
purchased by any Buyer shall not exceed such Buyer's pro rata portion (based on
the number of Initial Preferred Shares such Buyer purchased in relation to the
total number of Initial Preferred Shares purchased by all of the Buyers) of 200
Preferred Shares. The Additional Share Notice shall set forth (i) the number of
Additional Preferred Shares such Buyer will purchase (which number shall not (X)
exceed such Buyer's pro rata portion of 200 shares, or (Y) exceed the sum of (a)
the product of .5 multiplied by the number of Initial Preferred Shares purchased
by such Buyer, (b) the number of Preferred Shares held by such Buyer on the date
which is 365 days after the Initial Closing Date and (c) the number of Preferred
Shares converted by such Buyer on or before the date which is 365 days after the
Initial Closing Date at a Conversation Price equal to the Fixed Conversion Price
of such
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Preferred Shares as in effect on the date of conversion), (ii) the aggregate
Purchase Price for the Additional Preferred Shares and (iii) the date for the
Additional Closing Date. A Buyer shall only be allowed to deliver an Additional
Share Notice on a day on which the Closing Bid Price (as defined in the
Certificate of Determination) of the Common Stock is greater than the Market
Price (as defined in the Certificate of Determination) in effect on the Initial
Closing Date. The Additional Closing shall occur on the Additional Closing Date
at the offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000-0000. (The Initial Closing Date, the Mandatory Closing
Date, and the Additional Closing Dates collectively are referred to in this
Agreement as the "CLOSING DATES").
e. Form of Payment. On each of the Closing Dates, (i) each
Buyer shall pay the Purchase Price to the Company for the Preferred Shares and
the related Warrants to be issued and sold to such Buyer at the respective
Closing, by wire transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall deliver to each
Buyer, stock certificates (in the denominations as such Buyer shall request)
(the "STOCK CERTIFICATES") representing such number of the Preferred Shares
which such Buyer is then purchasing (as indicated opposite such Buyer's name on
the Schedule of Buyers or in the applicable notice), along with the related
Warrants, duly executed on behalf of the Company and registered in the name of
such Buyer or its designee. The Stock Certificates shall bear the restrictive
legends required pursuant to Section 2(g).
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only
itself that:
a. Investment Purpose. Such Buyer (i) is acquiring the
Preferred Shares and the Warrants, (ii) upon conversion of the Preferred Shares,
will acquire the Conversion Shares then issuable and (iii) upon exercise of the
Warrants, will acquire the Warrant Shares issuable upon exercise thereof (the
Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares,
collectively are referred to herein as the "SECURITIES"), for its own account
for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D. Such Buyer has
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of acquiring the
Preferred Shares and the Warrants.
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c. Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such Securities.
d. Information. Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Buyer. Such Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company,
including the Company's management. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to rely on the
Company's representations and warranties contained in Sections 3 and 9(m) below.
Such Buyer understands that its investment in the Securities involves a high
degree of risk. Such Buyer has sought such accounting, legal and tax advice as
it has considered necessary to make an informed investment decision with respect
to its acquisition of the Securities.
e. No Governmental Review. Such 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
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that except
as provided in the Registration Rights Agreement: (i) the Securities have not
been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered for resale thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a form, scope and substance
reasonably acceptable to the Company or its counsel, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with assurance reasonably acceptable to the Company or its
counsel that such Securities can be sold, assigned or transferred pursuant to
Rule 144 promulgated under the 1933 Act (or a successor rule thereto)("RULE
144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, 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 defined in the 0000 Xxx) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to
register such Securities under
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the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Preferred Shares and the Warrants and, until
such time as the resale of the Conversion Shares and the Warrant Shares have
been registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED FOR RESALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE RESALE OF THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN FORM, SCOPE AND SUBSTANCE REASONABLY
ACCEPTABLE TO THE COMPANY OR ITS COUNSEL, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if (i) such Securities are registered for resale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a form, scope and substance reasonably acceptable
to the Company or its counsel, to the effect that a public sale, assignment or
transfer of such Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with assurances reasonably acceptable
to the Company that such Securities can be sold pursuant to Rule 144. Each Buyer
acknowledges, covenants and agrees to sell the Securities represented by a
certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act.
h. Authorization; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable against such Buyer in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency,
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reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies. Such Buyer has the requisite corporate or other power and authority to
enter into and perform this Agreement and the Registration Rights Agreement. The
execution and delivery of this Agreement and the Registration Rights Agreement
by such Buyer and the consummation by such Buyer of the transactions
contemplated hereby and thereby, including, without limitation, the payment of
the Purchase Price for each Preferred Share purchased has been duly authorized
by such Buyer's board of directors or other person or body having the power to
authorize such actions by such Buyer.
i. Residency. Such Buyer is a resident of that jurisdiction
specified on the Schedule of Buyers.
j. Organization. Such Buyer is duly organized and validly
existing in good standing under the laws of the jurisdiction in which it is
organized.
k. No Conflicts. The execution, delivery and performance by
such Buyer of this Agreement and the Registration Rights Agreement does not (i)
result in a violation of such Buyer's organizational documents or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which such Buyer is a party.
l. Section 9 of the Securities Exchange Act. So long as a
Buyer holds any Preferred Shares, such Buyer will comply at all times with the
provisions of Section 9 of the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), and the rules promulgated thereunder (including, without
limitation, Regulation M) with respect to transactions involving the securities
of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in
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this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on
the business, properties, assets, operations, results of operations, financial
condition or, insofar as can reasonably be foreseen, prospects of the Company
and its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined below) or the
Certificate of Determination.
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5), the Warrants
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the "TRANSACTION DOCUMENTS"), and to issue the Securities in accordance with the
terms hereof and thereof; (ii) the execution and delivery of the Transaction
Documents and the Certificate of Determination by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Preferred Shares and the
Warrants and the reservation for issuance and the issuance of the Conversion
Shares and the Warrant Shares issuable upon conversion or exercise thereof, have
been duly authorized by the Company's Board of Directors and no further consent
or authorization is required by the Company, its Board of Directors or its
shareholders, (iii) the Transaction Documents have been duly executed and
delivered by the Company, (iv) the Transaction Documents constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies, and (v)
prior to each of the Closing Dates, the Certificate of Determination will have
been filed with the Secretary of State of the State of California and will be in
full force and effect, enforceable against the Company in accordance with its
terms.
c. Capitalization. The authorized capital stock of the
Company consists of (i) 99,288,000 shares of Common Stock, of which as of March
19, 1999, 40,941,292 shares were issued and outstanding, 1,939,407 shares were
issuable and reserved for issuance pursuant to the Company's 1994 Stock Option
Plan, 1,875,000 shares were issuable and reserved for issuance under the
Company's 1998 Stock Option Plan, 8,137,388 shares were issuable and reserved
for issuance under the Class A Common Stock Investment Agreement dated as of
January 22, 1999 by and between Promethean Investment Group, L.L.C. and the
Company, and 8,853,794 shares were issuable and reserved for issuance pursuant
to securities (other than the shares issuable pursuant to this Agreement)
exercisable or exchangeable for, or convertible into, shares of Common Stock and
(ii) 712,000 shares of Class B Common Stock, no par value per share, of which as
of March 19, 1999, 49,000 shares were issued and outstanding and 419,000 shares
were reserved for issuance pursuant to stock options issued and outstanding
exercisable into shares of Class B Common Stock (iii) 10,000,000 shares of
preferred stock, no par value per share, of which as of March 19, 1999 no shares
were issued and outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable.
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Except as disclosed in Schedule 3(c), (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company; (ii) there are no
outstanding debt securities; (iii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries; (iv) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of its securities under the 1933 Act (except the Registration Rights
Agreement); (v) there are no outstanding securities of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement; and (vii) the Company
does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement. The Company has furnished to the
Buyers true and correct copies of the Company's Articles of Incorporation, as
amended and as in effect on the date hereof (the "ARTICLES OF INCORPORATION"),
and the Company's By-laws, as in effect on the date hereof (the "BY-LAWS"), and
the terms of all securities convertible into or exercisable for Common Stock and
the material rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Preferred Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issue thereof and (iii) entitled to the rights
and preferences set forth in the Certificate of Determination. At least
8,137,388 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(f) below) have been duly authorized
and reserved for issuance upon conversion of the Preferred Shares and exercise
of the Warrants. Upon conversion or exercise in accordance with the Certificate
of Determination or the Warrants, as the case may be, the Conversion Shares and
the Warrant Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. Based
in part upon the representations and warranties of the Buyers set forth in
Section 2, the issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the Certificate of
Determination and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the reservation
for issuance and issuance of the Conversion Shares and the Warrant Shares) will
not
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result in a violation of the Articles of Incorporation, any Certificate of
Determination of any outstanding series of preferred stock of the Company or the
By-laws; (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party; or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and regulations and the rules and regulations of the principal
market or exchange on which the Common Stock is traded or listed) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Except as disclosed in
Schedule 3(e), neither the Company nor any of its Subsidiaries is in violation
of any term of or in default under (i) its Articles of Incorporation, any
Certificate of Determination of any outstanding series of preferred stock or
By-laws, respectively, or (ii) any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations that would not individually or in the aggregate
have a Material Adverse Effect. The business of the Company and its Subsidiaries
is not being conducted, and shall not be conducted, in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations the sanctions for which either individually or in the aggregate would
not have a Material Adverse Effect. Except as specifically contemplated by this
Agreement and as required under the 1933 Act, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents or the
Certificate of Determination in accordance with the terms hereof or thereof.
Except as disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing. Except as disclosed
in Schedule 3(e), the Company is not in violation of the listing requirements of
the Nasdaq National Market as in effect on the date that this representation is
made or deemed to have been made and is not aware of any facts which would
reasonably lead to delisting or suspension of the Common Stock by the Nasdaq
National Market in the foreseeable future.
f. SEC Documents; Financial Statements. Since September 30,
1997, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act, (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC DOCUMENTS"). The Company has delivered to each Buyer or
its respective representatives true and complete copies of the SEC Documents. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and
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none of the SEC Documents, at the time they were filed with the SEC, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyers which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(d) of this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. Neither the
Company nor any of its Subsidiaries or any of their respective officers,
directors, employees or agents have provided the Buyers with any material,
nonpublic information, which was not publicly disclosed prior to the date hereof
and any material, nonpublic information provided to the Buyers by the Company or
its Subsidiaries or any of their respective officers, directors, employees or
agents prior to the Initial Closing Date shall be publicly disclosed by the
Company prior to the Initial Closing Date.
g. Absence of Certain Changes. Except as disclosed in
Schedule 3(g), since September 30, 1998 there has been no material adverse
change and no material adverse development in the business, properties,
operations, financial condition, liabilities, results of operations or prospects
of the Company or its Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.
h. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, except as expressly set forth in Schedule 3(h). Except
as set forth in Schedule 3(h), none of the directors or officers of the Company
have been involved in securities related litigation during the past five years.
i. Acknowledgment Regarding Buyers' Purchase of Preferred
Shares. The Company acknowledges and agrees that each of the Buyers is acting
solely in the capacity of arm's length purchaser with respect to the Transaction
Documents and the Certificate of Determination
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and the transactions contemplated hereby and thereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction
Documents and the Certificate of Determination and the transactions contemplated
hereby and thereby and any advice given by any of the Buyers or any of their
respective representatives or agents in connection with the Transaction
Documents and the Certificate of Determination and the transactions contemplated
hereby and thereby is merely incidental to such Buyer's purchase of the
Securities. The Company further represents to each Buyer that the Company's
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
Circumstances. Other than the transactions contemplated hereby, no event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, operations, financial condition, or, insofar as
can reasonably be foreseen, prospects, that would be required to be disclosed by
the Company under applicable securities laws on a registration statement
(including by way of incorporation by reference) filed with the SEC relating to
an issuance and sale by the Company of its Common Stock and which has not been
publicly disclosed.
k. No General Solicitation. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
l. No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable shareholder approval provisions, including, without limitation,
under the rules and regulations of The Nasdaq Stock Market, Inc. (except, for
purposes of any applicable shareholder approval provisions under the rules and
regulations of The Nasdaq Stock Market, Inc., possible integration with the
Equity Line (as defined in the Certificate of Determination)), nor will the
Company or any of its Subsidiaries take any action or steps that would require
registration of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.
m. Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. Neither the
Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that relations with
their employees are good. Except as set forth on Schedule 3(m), no executive
officer (as defined in Rule 501(f) of the 0000 Xxx) has notified the Company
that such officer intends to leave the Company or otherwise terminate such
officer's employment with the Company. No executive officer, to the best
knowledge of the Company and its Subsidiaries, is,
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or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.
n. Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(n), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights necessary to conduct its business as now or as proposed to be
conducted have expired or terminated, or are expected to expire or terminate
within two years from the date of this Agreement, except where such expirations
or terminations would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of trademarks, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secrets or other similar rights
of others, or of any such development of similar or identical trade secrets or
technical information by others and, except as set forth on Schedule 3(n), there
is no claim, action or proceeding being made or brought against or, to the
knowledge of the Company or any of its Subsidiaries, being threatened against,
the Company or its Subsidiaries regarding trademarks, trade name rights,
patents, patent rights, inventions, copyrights, licenses, service names, service
marks, service xxxx registrations, trade secrets or other infringement; and the
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing which would have a Material Adverse
Effect. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual
properties.
o. Environmental Laws. The Company and its Subsidiaries (i)
are in material compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in material compliance with
all terms and conditions of any such permit, license or approval, except where,
in each of the three foregoing cases, the failure to so comply would not have,
individually or in the aggregate, a Material Adverse Effect.
p. Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(p) or such
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as do not have a material adverse effect on the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company or any of its Subsidiaries. Any real property and facilities held under
lease by the Company or any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
q. Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
r. Regulatory Permits. Except as set forth on Schedule
3(r), the Company and its Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such items would not have, individually or in the aggregate,
a Material Adverse Effect; and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit, except for such certificates,
authorizations or permits which if not obtained, or such revocations or
modifications which, would have a Material Adverse Effect.
s. Internal Accounting Controls. The Company and each of
its Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
t. No Materially Adverse Contracts, Etc. Neither the
Company nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is expected in the future
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the judgment of
the Company's officers has or is expected to have a Material Adverse Effect.
u. Tax Status. Except as set forth on Schedule 3(u), the
Company and each of its Subsidiaries has made or filed all United States federal
and state income and all other tax
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returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
v. Certain Transactions. Except as set forth on Schedule
3(v) or in the SEC Documents filed at least ten (10) days prior to the date
hereof and except for arms' length transactions pursuant to which the Company
makes payments in the ordinary course of business upon terms no less favorable
than the Company could obtain from third parties and other than the grant of
stock options disclosed on Schedule 3(c), none of the officers, directors or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
w. Dilutive Effect. The Company understands and
acknowledges that the number of Conversion Shares issuable upon conversion of
the Preferred Shares and Warrant Shares issued upon exercise of the Warrants
will increase in certain circumstances. The Company further acknowledges that,
subject to such limitations as are expressly set forth in the Transaction
Documents, its obligation to issue Conversion Shares upon conversion of the
Preferred Shares in accordance with this Agreement and the Certificate of
Determination and its obligation to issue the Warrant Shares in accordance with
this Agreement and the Warrants is, in each case, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other shareholders of the Company.
x. No Other Agreements. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
y. Application of Takeover Protections. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation or the laws of the
state of its incorporation which is or could become applicable to the Buyers as
a result of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and the Buyer's ownership
of the Securities.
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z. Rights Agreement. The Company has not adopted a
shareholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change in control of the Company,
except for the shareholder rights plan disclosed in the Company's Current Report
on Form 8-K dated March 25, 1999 and filed with the SEC on March 11, 1999 (the
"RIGHTS PLAN"), which describes, among other things, beneficial ownership of 15%
of the Company's equity securities to trigger a rights distribution. Subject to
Section 2(a) of the Certificate of Determination which limits the beneficial
ownership of each Buyer and its affiliates to no more than 4.99% of the total
outstanding shares of Common Stock, the Company specifically represents,
warrants and agrees that none of the Buyers is intended to be or will be deemed
to be an Acquiring Person within the meaning of the Rights Plan because of the
acquisition of the Securities (including the Conversion Shares and the Warrant
Shares) pursuant to this Agreement, and the acquisition of the Securities
(including the Conversion Shares and the Warrant Shares) pursuant to this
Agreement, shall not, under any circumstances, trigger a Distribution Date
within the meaning of the Rights Plan.
aa. Foreign Corrupt Practices. Neither the Company, nor any
of its Subsidiaries, nor, to the knowledge of the Company or any of its
Subsidiaries, any director, officer, agent, employee or other person acting on
behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company: used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before each
of the Closing Dates, take such action as the Company shall reasonably determine
is necessary to qualify the Securities for, or obtain exemption for the
Securities for, sale to the Buyers at each of the Closings pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or "Blue Sky" laws of the states of the United States
following each of the Closing Dates.
c. Reporting Status. Until the earlier of (i) the date
which is one year after the date on which the Investors (as that term is defined
in the Registration Rights Agreement) may sell
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all of the Conversion Shares and the Warrant Shares without restriction pursuant
to Rule 144(k) promulgated under the 1933 Act (or successor thereto) and (ii)
the date which is five (5) years from the last Closing Date to occur (the
"REPORTING PERIOD"), the Company shall file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would otherwise permit such
termination.
d. Use of Proceeds. The Company will use the proceeds from
the sale of the Preferred Shares for general corporate and working capital
purposes.
e. Financial Information. The Company agrees to send the
following to each Investor (as defined in the Registration Rights Agreement)
during the Reporting Period: (i) within two (2) days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports
on Form 10-Q, any Current Reports on Form 8-K and any registration statements or
amendments (other than on Form S-8) filed pursuant to the 1933 Act; (ii) on the
same day as the release thereof, facsimile copies of all press releases issued
by the Company or any of its Subsidiaries and (iii) copies of any notices and
other information made available or given to the shareholders of the Company
generally, contemporaneously with the making available or giving thereof to the
shareholders.
f. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 200% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares (without regard to any
limitations on conversion) and 100% of the number of shares of Common Stock
needed to provide for the issuance of the Warrant Shares.
g. Additional Financing; Right of First Refusal. Subject to
the exceptions described below, the Company agrees that during the period
beginning on the date hereof and ending on the date which is 180 days after the
Initial Closing Date neither the Company nor its Subsidiaries will, without the
prior written consent of the holders of the Preferred Shares representing at
least two-thirds (2/3) of the Preferred Shares then outstanding, negotiate or
contract with any party for any equity financing (including any debt financing
with an equity component) or issue any equity securities of the Company or any
Subsidiary or securities convertible or exchangeable into or for equity
securities of the Company or any Subsidiary (including debt securities with an
equity component) in any form ("FUTURE OFFERINGS"). Subject to the exceptions
described below, the Company agrees that during the period beginning on the date
hereof and ending on the date which is 365 days after the Initial Closing Date,
neither the Company nor its Subsidiaries will, without the prior written consent
of the holders of the Preferred Shares representing at least two-thirds (2/3) of
the Preferred Shares then outstanding, negotiate or contract with any party for
any Future Offering, unless it shall have first delivered to each Buyer or a
designee appointed by such Buyer written notice (the "FUTURE OFFERING NOTICE")
describing the proposed Future Offering, including the terms and conditions
thereof, and providing each Buyer an option to purchase up to its Aggregate
Percentage (as defined below), as of the date of delivery of the Future Offering
Notice, in the Future Offering on the same terms
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and conditions set forth in the Future Offering Notice. The limitations referred
to in the preceding two sentences are collectively referred to as the "CAPITAL
RAISING LIMITATIONS". For purposes of this Section 4(g), "AGGREGATE PERCENTAGE"
at any time with respect to any Buyer shall mean the percentage obtained by
dividing (i) the aggregate number of Preferred Shares purchased by such Buyer at
the Closings by (ii) the aggregate number of Preferred Shares purchased by all
Buyers at the Closings. A Buyer can exercise its option to participate in a
Future Offering by delivering written notice thereof to participate to the
Company within ten (10) business days of receipt of a Future Offering Notice,
which notice shall state the quantity of securities being offered in the Future
Offering that such Buyer will purchase, up to its Aggregate Percentage, and that
number of securities it is willing to purchase in excess of its Aggregate
Percentage. In the event that one or more Buyers fail to elect to purchase up to
each such Buyer's Aggregate Percentage then each Buyer which has indicated that
it is willing to purchase a number of securities in excess of its Aggregate
Percentage shall be entitled to purchase its pro rata portion (determined in the
same manner as described in the preceding sentence) of the securities in the
Future Offering which one or more Buyers have not elected to purchase. In the
event the Buyers fail to elect to fully participate in the Future Offering
within the periods described in this Section 4(g), the Company shall have 30
days thereafter to sell the securities of the Future Offering for which such
Buyers' rights were not exercised, upon the same terms and conditions (including
the amount thereof) specified in the Future Offering Notice. In the event the
Company has not sold such securities of the Future Offering within such 30 day
period, the Company shall not thereafter issue or sell such securities without
first offering such securities to the Buyers in the manner provided in this
Section 4(g). The Capital Raising Limitations shall not apply to (i) a loan from
a commercial bank without any equity component, (ii) any transaction involving
the Company's issuances of securities (A) as consideration in a merger or
consolidation, (B) in connection with any strategic partnership or joint venture
(the primary purpose of which is not to raise equity capital), or (C) as
consideration for the acquisition of a business, product or license or other
assets by the Company, (iii) the issuance of Common Stock in a firm commitment,
underwritten public offering with net proceeds of at least $15,000,000, (iv) the
issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof, or
(v) the grant of additional options or warrants, or the issuance of additional
securities, under any Company stock option plan, restricted stock plan or stock
purchase plan for the benefit of the Company's employees or directors. The
Buyers shall not be required to participate or exercise their right of first
refusal with respect to a particular Future Offering in order to exercise their
right of first refusal with respect to later Future Offerings.
h. Listing. The Company shall promptly secure the listing
of all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation system
(including the Nasdaq National Market), if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Registrable Securities from time to time issuable under the terms
of the Transaction Documents and the Certificate of Determination. The Company
shall maintain the Common Stock's authorization for listing on the Nasdaq
National Market, AMEX or NYSE. Neither the Company nor any of its Subsidiaries
shall take any action which would be reasonably expected
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to result in the delisting or suspension of the Common Stock on the Nasdaq
National Market, AMEX or NYSE (other than to switch listings from the Nasdaq
National Market to AMEX or NYSE). The Company shall promptly provide to each
Buyer copies of any notices it receives from the Nasdaq National Market, AMEX or
NYSE regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section 4(h).
i. Expenses. Subject to Section 9(l) below and the receipt
of reasonable supporting documentation, following the Initial Closing, the
Company shall reimburse the Buyers for the Buyers' reasonable expenses
(including reasonable attorneys' fees and expenses) in connection with
negotiating and preparing the Transaction Documents and the Certificate of
Determination and consummating the transactions contemplated thereby and hereby
up to an aggregate of $40,000.
j. Transactions With Affiliates. So long as (i) any
Preferred Shares or Warrants are outstanding or (ii) any Buyer owns Conversion
Shares or Warrant Shares with a market value of greater than $500,000 the
Company shall not, and shall cause each of its Subsidiaries not to, enter into,
amend, modify or supplement, or permit any Subsidiary to enter into, amend,
modify or supplement, any agreement, transaction, commitment or arrangement with
any of its or any Subsidiary's officers, directors, persons who were officers or
directors at any time during the previous two years, shareholders who
beneficially own 5% or more of the outstanding shares of Common Stock, or
Affiliates or with any individual related by blood, marriage or adoption to any
such individual or with any entity in which any such entity or individual owns a
5% or more beneficial interest (each a "RELATED PARTY"), except for (a)
customary employment arrangements and benefit programs on reasonable terms or
(b) any agreement, transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company. For purposes hereof, any
director who is also an officer of the Company or any Subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment or arrangement. "AFFILIATE" for purposes hereof means,
with respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a 5% or more equity interest in that person or entity, (ii)
has 5% or more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) shares common control with that person or entity.
"CONTROL" or "CONTROLS" for purposes hereof means that a person or entity has
the power, direct or indirect, to conduct or govern the policies of another
person or entity.
k. Filing of Form 8-K. On or before the first business day
following each of the Closing Dates, the Mandatory Share Notice Date and each
Additional Share Notice Date, the Company shall file a Current Report on Form
8-K with the SEC describing the terms of the transaction contemplated by the
Transaction Documents and consummated at such Closing, in each case in the form
required by the 0000 Xxx.
l. Proxy Statement. The Company shall provide to each
shareholder entitled to vote at the next meeting of shareholders of the Company,
which meeting shall occur on or
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before May 31, 1999 (the "SHAREHOLDER MEETING DEADLINE"), a proxy statement,
which has been previously reviewed by the Buyers and a counsel of their choice,
soliciting each such shareholder's affirmative vote at such shareholder meeting
for approval of the Company's issuance of all of the Securities as described in
this Agreement, and the Company shall use its best efforts to solicit its
shareholders' approval of such issuance of the Securities and cause the Board of
Directors of the Company to recommend to the shareholders that they approve such
proposal. If the Company fails to hold a meeting of its shareholders by the
Shareholder Meeting Deadline, then, as partial relief (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to each holder of Preferred Shares an amount in cash per Preferred
Share equal to the product of (i) $10,000; multiplied by (ii) 0.02; multiplied
by (iii) the quotient of (x) the number of days after the Shareholder Meeting
Deadline that a meeting of the Company's shareholders is not held, divided by
(y) 30. The Company shall make the payments referred to in the immediately
preceding sentence within five (5) days of the earlier of (I) the holding of the
meeting of the Company's shareholders, the failure of which resulted in the
requirement to make such payments, and (II) the last day of each 30-day period
beginning on the Shareholder Meeting Deadline. In the event the Company fails to
make such payments in a timely manner, such payments shall bear interest at the
lower of the rate of 2.0% per month or the maximum rate allowable under
California law (pro rated for partial months) until paid in full.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares in such amounts as specified from time
to time by each Buyer to the Company upon conversion of the Preferred Shares or
exercise of the Warrants (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior
to registration of the Conversion Shares and the Warrant Shares under the 1933
Act, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5,
and stop transfer instructions to give effect to Section 2(f) hereof (in the
case of the Conversion Shares and the Warrant Shares, prior to registration of
the Conversion Shares and the Warrant Shares under the 0000 Xxx) will be given
by the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way each Buyer's obligations and agreements
set forth in Section 2(g) to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Securities. If a Buyer provides the
Company with an opinion of counsel, in form, scope and substance reasonable
acceptable to the Company or its counsel, that registration of a resale by such
Buyer of any of such Securities is not required under the 1933 Act, the Company
shall permit the transfer, and, in the case of the Conversion Shares and the
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such Buyer
and, if appropriate given the basis for registration of such resale not being
required, without any restrictive legends. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Buyers by vitiating the intent and
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purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5, that the Buyers shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. Initial Closing Date. The obligation of the Company
hereunder to issue and sell the Initial Preferred Shares to each Buyer at the
Initial Closing is subject to the satisfaction, at or before the Initial Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the Transaction
Documents and delivered the same to the Company.
(ii) The Certificate of Determination shall have been filed
with the Secretary of State of the State of California.
(iii) Such Buyer shall have delivered to the Company the
Purchase Price for the Preferred Shares and the related Warrants
being purchased by such Buyer at the Initial Closing by wire transfer
of immediately available funds pursuant to the wire instructions
provided by the Company.
(iv) The representations and warranties of such Buyer shall
be true and correct as of the date when made and as of the Initial
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer
shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by such Buyer at or prior to
the Initial Closing Date.
(v) No statute, rule regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(vi) All 200 Initial Preferred Shares shall have been
purchased by one or more of the Buyers.
(vi) No legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
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b. Mandatory Closing Date. The obligation of the Company
hereunder to issue and sell the Mandatory Preferred Shares to each Buyer at the
Mandatory Closing is subject to the satisfaction, at or before the Mandatory
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
(i) Such Buyer shall have delivered to the Company the
Purchase Price for the Mandatory Preferred Shares and the related
Warrants being purchased by such Buyer at the Mandatory Closing by
wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
(ii) The representations and warranties of such Buyer shall
be true and correct as of the date when made and as of the Mandatory
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer
shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by such Buyer at or prior to
the Mandatory Closing Date.
(iii) No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(iv) No legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
c. Additional Closing Dates. The obligation of the Company
hereunder to issue and sell the Additional Preferred Shares to each Buyer at the
Additional Closings is subject to the satisfaction, at or before the applicable
Additional Closing Dates, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:
(i) Such Buyer shall have delivered to the Company the
Purchase Price for the Additional Preferred Shares and the related
Warrants being purchased by such Buyer at the Additional Closing by
wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
(ii) The representations and warranties of such Buyer shall
be true and correct as of the date when made and as of the applicable
Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
such Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by the Transaction Documents to be
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performed, satisfied or complied with by such Buyer at or prior to
the applicable Additional Closing Date.
(iii) No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(iv) No legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. Initial Closing Date. The obligation of each Buyer
hereunder to purchase the Initial Preferred Shares at the Initial Closing is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Buyer.
(ii) The Certificate of Determination, shall have been
filed with the Secretary of State of the State of California, and a
copy thereof certified by such Secretary of State shall have been
delivered to such Buyer.
(iii) The Common Stock shall be authorized for quotation on
the Nasdaq National Market or listed on AMEX or NYSE, and shall not
have been suspended from trading on or delisted from such exchanges
(except for a voluntary suspension of not more than one day due to a
business announcement by the Company) nor shall delisting or
suspension by such exchanges have been threatened (except as set
forth in the letter to the Company dated February 8, 1999 from the
Nasdaq Stock Market, Inc.) either (A) in writing by such exchanges or
(B) by falling below the minimum listing maintenance requirements of
such exchanges and all of the Conversion Shares and the Warrant
Shares issuable upon conversion or exercise of the Initial Preferred
Shares and the related Warrants, as the case may be, to be sold at
the Initial Closing shall be listed upon the Nasdaq National Market,
AMEX or NYSE.
(iv) The representations and warranties of the Company
shall be true and correct as of the date when made and as of the
Initial Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction
Documents or the Certificate of Determination to be performed,
satisfied or complied with by the Company at or prior to the Initial
Closing Date. Such Buyer shall have received a certificate, executed
by the Chief Executive
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Officer of the Company, dated as of the Initial Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by such Buyer including, without limitation, an update as
of the Initial Closing Date regarding the representation contained in
Section 3(c) above.
(v) Such Buyer shall have received the opinion of Xxxxx &
XxXxxxxx dated as of the Initial Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially
the form of Exhibit C attached hereto.
(vi) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations
as such Buyer shall request) for the Initial Preferred Shares being
purchased by such Buyer at the Initial Closing.
(vii) The Board of Directors of the Company shall have
adopted resolutions consistent with Section 3(b)(ii) above and in a
form reasonably acceptable to such Buyer (the "RESOLUTIONS").
(viii) As of the Initial Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares
and exercise of the Warrants, at least 8,137,388 shares of Common
Stock.
(ix) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each Subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within ten (10) days of the Initial
Closing Date.
(xi) The Company shall have delivered to such Buyer a
secretary's certificate certifying as to (A) the Resolutions, (B) the
Articles of Incorporation and (C) By-laws, each as in effect at the
Initial Closing Date.
(xii) The Company shall have delivered to such Buyer a
certified copy of its Articles of Incorporation as certified by the
Secretary of State of the State of California within ten (10) days of
the Initial Closing Date.
(xiii) The Company shall have delivered to such Buyer a
letter from the Company's transfer agent certifying the number of
shares of Common Stock outstanding as of a date within five (5) days
of the Initial Closing Date.
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(xiv) The Company shall have executed and delivered to such
Buyer a copy of an amendment to the Class A Common Stock Investment
Agreement dated as of January 22, 1999 between the Company and
Promethean Investment Group L.L.C. in form and substance reasonably
satisfactory to such Buyer.
(xv) All 200 Initial Preferred Shares shall have been
purchased by one or more of the Buyers.
(xvi) No legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
(xvii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by the
Transaction Documents as such Buyer or its counsel may reasonably
request upon reasonable advance notice.
b. Mandatory Closing Date. The obligation of each Buyer
hereunder to purchase the Mandatory Preferred Shares at the Mandatory Closing is
subject to the satisfaction, at or before the Mandatory Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion:
(i) The Company shall have complied with and satisfied all
of the requirements of Section 1(c).
(ii) The Certificate of Determination, shall be in full
force and effect and shall not have been amended since the Initial
Closing Date, and a copy thereof certified by the Secretary of State
of the State of California shall have been delivered to such Buyer.
(iii) The Common Stock shall be authorized for quotation on
the Nasdaq National Market or listed on AMEX or NYSE, and shall not
have been suspended from trading on or delisted from such exchanges
nor shall delisting or suspension by such exchanges have been
threatened (except as set forth in the letter to the Company dated
February 8, 1999 from the Nasdaq Stock Market, Inc., provided that
the Company has satisfied the requirements set forth in such letter)
either (A) in writing by such exchanges or (B) by falling below the
minimum listing maintenance requirements of such exchanges and all of
the Conversion Shares and the Warrant Shares issuable upon conversion
or exercise of the Mandatory Preferred Shares and the related
Warrants, as the case may be, to be sold at the Mandatory Closing
shall be listed upon the Nasdaq National Market, AMEX or NYSE.
(iv) The representations and warranties of the Company
shall be true and correct as of the date when made and as of the
Mandatory Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the
covenants, agreements and
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conditions required by the Transaction Documents or the Certificate
of Determination to be performed, satisfied or complied with by the
Company at or prior to the Mandatory Closing Dates. Such Buyer shall
have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Mandatory Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by such Buyer including, without limitation, an update as
of the Mandatory Closing Date regarding the representation contained
in Section 3(c) above.
(v) Such Buyer shall have received the opinion of Xxxxx &
XxXxxxxx dated as of the Mandatory Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially
the form of Exhibit C attached hereto.
(vi) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations
as such Buyer shall request) for the Mandatory Preferred Shares being
purchased by such Buyer at the Mandatory Closing.
(vii) The Board of Directors of the Company shall have
adopted, and shall not have amended, the Resolutions.
(viii) As of the Mandatory Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares,
a number of shares of Common Stock equal to at least 200% of the
number of shares of Common Stock which would be issuable upon
conversion in full of the then outstanding Preferred Shares (without
regard to any limitations on conversions) and 100% of the number of
shares of Common Stock which would be issuable upon conversion in
full of the then outstanding Warrants, including for such purposes
the Mandatory Preferred Shares and the related Warrants to be issued
at such Mandatory Closing.
(ix) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent and shall be
in effect as of the Mandatory Closing Date.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each Subsidiary in the state of such corporation's state
of incorporation issued by the Secretary of State of such state of
incorporation as of a date within ten (10) days of the Mandatory
Closing Date.
(xi) The Company shall have delivered to such Buyer a
certified copy of its Articles of Incorporation as certified by the
Secretary of State of the State of California within ten days of the
Mandatory Closing Date.
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(xii) The Company shall have delivered to such Buyer a
secretary's certificate certifying as to (A) the Resolutions, (B) the
Articles of Incorporation and (C) By-laws, each as in effect at the
Mandatory Closing Date.
(xiii) The Company shall have delivered to such Buyer a
letter from the Company's transfer agent certifying the number of
shares of Common Stock outstanding as of a date within five days of
the Mandatory Closing Date.
(xiv) During the period beginning on the Mandatory Share
Notice Date and ending on and including the Mandatory Closing Date,
the Registration Statement covering the resale of the Conversion
Shares and the Warrant Shares has been declared effective by the SEC
and at all times has been effective and available for the sale of no
less than the sum of (I) 200% of the sum of (A) the number of
Conversion Shares then issuable upon the conversion of the Initial
Preferred Shares and the Mandatory Preferred Shares as if converted
at the Conversion Price on the Mandatory Share Notice Date and (B)
the number of Conversion Shares outstanding as of the Mandatory Share
Notice Date and (II) 100% of the sum of (g) the number of Warrant
Shares then issuable upon exercise of the outstanding Warrants and
(z) the number of Warrant Shares outstanding as of the Mandatory
Share Notice Date.
(xv) The Initial Registration Statement has been declared
effective by the SEC in accordance with the terms of the Registration
Rights Agreement on or before the date which is 90 days after the
Initial Closing Date.
(xvi) No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(xvii) No legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
(xviii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request upon
reasonable advance notice.
c. Additional Closing Dates. The obligation of each Buyer
hereunder to purchase the Additional Preferred Shares at each of the Additional
Closings is subject to the satisfaction, at or before each of the Additional
Closing Dates, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion:
(i) The Company shall have complied with the requirements
of Section 1(f).
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(ii) The Certificate of Determination, shall be in full
force and effect and shall not have been amended since the Initial
Closing Date, and a copy thereof certified by the Secretary of State
of the State of California shall have been delivered to such Buyer.
(iii) The Common Stock shall be authorized for quotation on
the Nasdaq National Market or listed on AMEX or NYSE, and shall not
have been suspended from trading on or delisted from such exchanges
nor shall delisting or suspension by such exchanges have been
threatened (except as set forth in the letter to the Company dated
February 8, 1999 from the Nasdaq Stock Market, Inc., provided that
the Company has satisfied the requirements set forth in such letter)
either (A) in writing by such exchanges or (B) by falling below the
minimum listing maintenance requirements of such exchanges and all of
the Conversion Shares and the Warrant Shares issuable upon conversion
or exercise of the Additional Preferred Shares and the related
Warrant, as the case may be, to be sold at the Additional Closing
shall be listed upon the Nasdaq National Market, AMEX or NYSE.
(iv) The representations and warranties of the Company
shall be true and correct as of the date when made and as of the
Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction
Documents or the Certificate of Determination to be performed,
satisfied or complied with by the Company at or prior to the
Additional Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of the Additional Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by such Buyer
including, without limitation, an update as of the Additional Closing
Date regarding the representation contained in Section 3(c) above.
(v) Such Buyer shall have received the opinion of Xxxxx &
XxXxxxxx dated as of the Additional Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially
the form of Exhibit C attached hereto.
(vi) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations
as such Buyer shall request) for the Additional Preferred Shares
being purchased by such Buyer at the Additional Closing.
(vii) The Board of Directors of the Company shall have
adopted, and shall not have amended, the Resolutions.
(viii) As of the Additional Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares,
a number of shares of Common Stock equal to at least 200% of the
number of shares of Common Stock which would be issuable upon
conversion in full of the then outstanding Preferred Shares (without
regard to any limitations on
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conversions) and 100% of the number of shares of Common Stock which
would be issuable upon conversion in full of the then outstanding
Warrants, including for such purposes the Additional Preferred Shares
and related Warrants to be issued at such Additional Closing.
(ix) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent and shall be
in effect as of the Additional Closing.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each Subsidiary in the state of such corporation's state
of incorporation issued by the Secretary of State of such state of
incorporation as of a date within ten (10) days of the Additional
Closing Date.
(xi) The Company shall have delivered to such Buyer a
certified copy of its Articles of Incorporation as certified by the
Secretary of State of the State of California within ten (10) days of
the Additional Closing Date.
(xii) The Company shall have delivered to such Buyer a
secretary's certificate certifying as to (A) the Resolutions, (B) the
Articles of Incorporation and (C) By-laws, each as in effect at the
Additional Closing Date.
(xiii) The Company shall have delivered to such Buyer a
letter from the Company's transfer agent certifying the number of
shares of Common Stock outstanding as of a date within five (5) days
of the Additional Closing Date.
(xiv) No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(xv) No legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
(xvi) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request upon
reasonable advance notice.
8. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents and the Certificate of Determination, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their shareholders, officers, directors, employees and
direct or indirect investors and any of the foregoing person's agents or other
representatives
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(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or the Certificate of Determination or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any breach of any covenant, agreement or obligation of the Company contained in
the Transaction Documents or the Certificate of Determination or any other
certificate, instrument or document contemplated hereby or thereby, or (c) any
cause of action, suit or claim brought or made against such Indemnitee (other
than a cause of action, suit or claim which (x) is brought or made by the
Company and (y) is not a shareholder derivative suit) and arising out of or
resulting from the execution, delivery, performance or enforcement of the
Transaction Documents or the Certificate of Determination (d) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities or (e) the status of such Buyer or
holder of the Securities as an investor in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
Except as otherwise set forth herein, the mechanics and procedures with respect
to the rights and obligations under this Section 8 shall be the same as those
set forth in Sections 6(a) and 6(c) of the Registration Rights Agreement,
including, without limitation, those procedures with respect to the settlement
of claims and the Company's right to assume the defense of claims.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. The corporate
laws of the State of California shall govern all issues concerning the relative
rights of the Company and its shareholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, and, if the
Company's principal place of business is in San Diego, California, the City of
San Diego, State of California, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address
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for such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. 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 in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes
all other prior oral or written agreements between the Buyers, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the Exhibits, Schedules and other
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the holders of at least
two-thirds (2/3) of the Preferred Shares then outstanding, and no provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Preferred Shares
then outstanding. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of any of the
Transaction Documents or the Certificate of Determination unless the same
consideration also is offered to all of the parties to the Transaction Documents
or holders of the Preferred Shares, as the case may be.
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated
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and kept on file by the sending party); or (iii) one (1) business day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to the Company:
AVANIR Pharmaceuticals
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx
With a copy to:
Xxxxx & XxXxxxxx
000 Xxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxx
If to a Buyer, to it at the address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers or at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
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g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of two-thirds (2/3) of the Preferred Shares then
outstanding including by merger or consolidation. A Buyer may assign some or all
of its rights hereunder without the consent of the Company; provided, however,
that any such assignment shall not release such Buyer from its obligations
hereunder unless such obligations are assumed by such assignee and the Company
has consented to such assignment and assumption, which consent shall not be
unreasonably withheld. Notwithstanding anything to the contrary contained in the
Transaction Documents or the Certificate of Determination, Buyer shall be
entitled to pledge the Securities in connection with a bona fide margin account.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8,
shall survive each of the Closings. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.
j. Publicity. The Company and each 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 any
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although each
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).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Initial Closing shall
not have occurred with respect to a Buyer on or before five (5) business days
from the date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the
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close of business on such date without liability of any party to any other
party; provided, however, that if this Agreement is terminated pursuant to this
Section 9(l), the Company shall remain obligated to reimburse the non-breaching
Buyers for expenses up to the amount described in Section 4(i) above.
m. Placement Agent. Each of the Company and the Buyers
acknowledges that it has not engaged any placement agent in connection with the
sale of the Preferred Shares and the related Warrants. Each party shall be
responsible for the payment of its own placement agent's fees or broker's
commissions in connection with the transactions contemplated hereby. The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim relating to the Company's
placement agent or broker. Each Buyer shall, severally and not jointly, pay, and
hold the Company harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys' fees and out-of-pocket expenses)
arising in connection with any such claim relating to such Buyer's placement
agent or broker.
n. No Strict 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.
o. Remedies. Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
the Certificate of Determination and all rights and remedies which such holders
have been granted at any time under any other agreement or contract and all of
the rights which such holders have under any law. Any person having any rights
under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
p. Payment Set Aside. To the extent that the Company makes
a payment or payments to the Buyers hereunder or pursuant to the Registration
Rights Agreement, the Certificate of Determination or the Warrants or the Buyers
enforce or exercise their rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
* * * * * *
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IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
AVANIR PHARMACEUTICALS HFTP INVESTMENT L.L.C.
By: Promethean Investment Group L.L.C.
Its: Investment Manager
By: /s/Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Financial Officer By:/s/ E. Xxxx Xxx
-----------------------------------------
Name: E. Xxxx Xxx
Its: Authorized Signatory
AG SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: XXXXXX, XXXXXX & CO., L.P.
Its: General Partner
By:/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
GAM ARBITRAGE INVESTMENTS,
INC.
By: XXXXXX, XXXXXX & CO., L.P.
Its: Investment Advisor
By:/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
XXXXXXXX, L.P.
By: XXXXXX, XXXXXX & CO., L.P.
Its: General Partner
By:/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
37
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT - P. 2 OF 2]
RAPHAEL, L.P.
By:/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
RAMIUS FUND, LTD.
By: AG RAMIUS PARTNERS, L.L.C.
Its: Investment Advisor
By:/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Managing Officer
38
SCHEDULE OF BUYERS
NUMBER OF
INITIAL
INVESTOR ADDRESS PREFERRED INVESTOR'S REPRESENTATIVES' ADDRESS
INVESTOR NAME AND FACSIMILE NUMBER SHARES AND FACSIMILE NUMBER
------------- -------------------- ------ --------------------
HFTP Investment L.L.C. c/o Promethean Investment Group, L.L.C. 100 Promethean Investment Group, L.L.C.
000 Xxxxxxxxx Xxx., 00xx Xxxxx 000 Xxxxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. X'Xxxxx, Xx. Attn: Xxxxx X. X'Xxxxx, Xx.
E. Xxxx Xxx E. Xxxx Xxx
Telephone: 000-000-0000 Telephone: 000-000-0000
Facsimile: 000-000-0000 Facsimile: 000-000-0000
Residence: New York
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 312-902-1061
AG Super Fund International c/o Xxxxxx, Xxxxxx & Co., L.P. 5
Partners, L.P. 000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
GAM Arbitrage Investments, c/o Xxxxxx, Xxxxxx & Co., L.P. 5
Inc. 000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: British Virgin Islands
Xxxxxxxx, L.P. c/o Xxxxxx, Xxxxxx & Co., L.P. 60
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
Raphael, L.P. c/o Xxxxxx, Xxxxxx & Co., L.P. 10
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
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NUMBER OF
INITIAL
INVESTOR ADDRESS PREFERRED INVESTOR'S REPRESENTATIVES' ADDRESS
INVESTOR NAME AND FACSIMILE NUMBER SHARES AND FACSIMILE NUMBER
------------- -------------------- ------ --------------------
Ramius Fund, Ltd. c/o Xxxxxx, Xxxxxx & Co., L.P. 20
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Bermuda
40
SCHEDULES
Schedule of Buyers
Schedule 3(a) - Subsidiaries
Schedule 3(c) - Capitalization
Schedule 3(e) - Conflicts
Schedule 3(g) - Material Changes
Schedule 3(h) - Litigation
Schedule 3(m) - Employee Relations
Schedule 3(n) - Intellectual Property
Schedule 3(p) - Liens
Schedule 3(r) - Regulatory Permits
Schedule 3(u) - Tax Status
Schedule 3(v) - Certain Transactions
EXHIBITS
Exhibit A - Form of Certificate of Determination
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Company Counsel Opinion
Exhibit D - Form of Irrevocable Transfer Agent Instructions
Exhibit E - Form of Class J Stock Purchase Warrant
