EXHIBIT 99(A)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of March 26,
1998, by and among Organogenesis Inc., a Delaware corporation, with headquarters
located at 000 Xxx Xxxx, Xxxxxx, XX 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 series of Preferred
Stock, $1.00 par value per share (the "PREFERRED STOCK"): the Company's Series C
Convertible Preferred Stock ("SERIES C PREFERRED STOCK") which shall be
convertible into shares of the Company's Common Stock, $.01 par value per share
(the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in accordance with
the terms of the Company's Certificate of Designations, Preferences and Rights
of the Series C Preferred Shares, in the form attached hereto as Exhibit A (the
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"CERTIFICATE OF DESIGNATIONS");
C. The Company has authorized the issuance of Common Stock Purchase
Warrants (the "WARRANTS"), to acquire shares of Common Stock (such shares of
Common Stock issued upon exercise of the Warrants are hereinafter referred to
as, the "WARRANT SHARES", and together with the Series C Preferred Stock, the
Warrants and the Conversion Shares, the "SECURITIES");
D. The Buyers wish to purchase, upon the terms and conditions stated
in this Agreement, an aggregate of $20 million of Series C Preferred Stock in
the respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers; and to receive, in consideration for such purchase, (i) at the Closing
(as hereinafter defined), Warrants, to purchase an aggregate of 160,000 shares
of Common Stock, subject to adjustment as provided therein in the form attached
hereto as Exhibit B (the "INITIAL WARRANTS") and (ii) the right to receive
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additional Warrants under certain conditions specified herein, to purchase an
aggregate of 160,000 shares of Common Stock, subject to adjustment as provided
therein, in the form attached hereto as Exhibit C (the "CONTINGENT WARRANTS");
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and
E. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit D (the "REGISTRATION RIGHTS
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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 SERIES C PREFERRED SHARES.
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a. Purchase of Series C Preferred Shares. Subject to the
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satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to the Buyers and the Buyers shall purchase
from the Company an aggregate of 200 shares of Series C Preferred Stock (the
"SERIES C PREFERRED SHARES"), in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers (the "CLOSING"). The per share purchase
price (the "PURCHASE PRICE") of the Preferred Shares shall be $100,000 or an
aggregate purchase price of $20 million. On the Closing Date (as defined below)
the Company shall deliver to each Buyer a stock certificate representing such
number of Series C Preferred Shares which such Buyer is then purchasing (as
indicated opposite such Buyer's name on the Schedule of Buyers), duly executed
on behalf of the Company and registered in the name of such Buyer or its
designee (the "STOCK CERTIFICATES").
b. Closing Date. The date and time of the Closing (the "CLOSING
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DATE") shall be 10:00 a.m. on March 26, 1998, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below (or such later date as is mutually agreed to by the Company and
the Buyers). The Closing shall occur on the Closing Date at the offices of
Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
c. Form of Payment. On the Closing Date, each Buyer shall pay
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the Purchase Price to the Company for the Series C Preferred Shares to be issued
and sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions.
d. Warrants. In consideration of the purchase of the Series C
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Preferred Shares, the Company shall on the Closing Date issue and deliver to
each Buyer, Initial Warrants to acquire an aggregate of 8,000 shares of Common
Stock for each $1 million face amount of Series C Preferred Stock purchased by
such Buyer. If, at any one time after the Closing Date, the average of the
Closing Bid Prices (as defined on the Certificate of Designations) for the
Common Stock for any ten consecutive trading days is less than $22.00 per share
(the "TRIGGERING EVENT"), the Company shall deliver to each Buyer within three
(3) days of the Triggering Event, Contingent Warrants to purchase 8,000 shares
of Common Stock for each $1 million face amount of Series C Preferred Stock held
by such Buyer on the date of the Triggering Event.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is acquiring the Series C
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Preferred Shares and the Warrants and (ii) upon conversion of the Series C
Preferred Shares and exercise of the Warrants, will acquire the Conversion
Shares and Warrant Shares, respectively, then issuable 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
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Buyer does not agree to hold any 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
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investor" as that term is defined in Rule 501(a) of Regulation D.
c Reliance on Exemptions. Such Buyer understands that the
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Series C Preferred Shares and Warrants 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 the Series C Preferred
Shares and the Warrants.
d. Information. Such Buyer and its advisors, if any, have been
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furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Series C
Preferred Shares and the Warrants 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. 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 Section 3 below.
e. No Governmental Review. Such Buyer understands that no
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United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Series C
Preferred Shares and the Warrants 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 Series C Preferred Shares and the Warrants.
f. Transfer or Resale. Such Buyer understands that except as
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provided in the Registration Rights Agreement: (i) 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 thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, 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
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
such 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
such securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
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 the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
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g. Legends. Such Buyer understands that the certificates or
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other instruments representing the Series C Preferred Shares and the Warrants
and, until such time as the sale 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 Warrants, 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
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 SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) any such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of any of the Securities may be made without
registration under the 1933 Act, or (iii) any of the Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold. Each Buyer
acknowledges, covenants and agrees to sell any of 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. In the event the above legend is removed from any of the Securities, the
Company may, upon reasonable advance notice to the holder, require that the
above legend be placed on any of the Securities that cannot then be sold
pursuant to an effective registration statement or Rule 144(k) under the 1933
Act (or any successor rule thereto).
h. Authorization; Enforcement. This Agreement has been duly and
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validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country
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specified in the Schedule of Buyers.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyers as set
forth in this Section 3.
a. Organization and Qualification. The Company and its
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subsidiaries (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 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 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 on the Company and its
subsidiaries taken as a whole or on the transaction contemplated hereby.
b. Authorization; Enforcement; Compliance with Other
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Instruments. (i) The Company has the requisite corporate power and authority to
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enter into and perform this Agreement and the Registration Rights Agreement, to
issue, sell and perform its obligations with respect to the Series C Preferred
Stock and the Warrants in accordance with the terms hereof, the Certificate of
Designations and the Warrants, as applicable, and to issue the Conversion Shares
and the Warrant Shares upon conversion of the Series C Preferred Shares and the
exercise of the Warrants, respectively, in accordance with the Certificate of
Designations and the Warrants, respectively, (ii) the execution and delivery of
this Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Series C Preferred Shares and
the Warrants and the reservation for issuance and the issuance of the Conversion
Shares issuable upon conversion of the Series C Preferred Shares and the Warrant
Shares upon exercise of the Warrants 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 stockholders, (iii) this Agreement, the
Registration Rights Agreement, the certificates for the Series C Preferred
Shares and the Warrants have been (or in the case of the Contingent Warrants,
will be upon issuance) duly executed and delivered by the Company, (iv) this
Agreement, Registration Rights Agreement, the certificates for the Series C
Preferred Shares and the Initial Warrants constitute and the Contingent Warrants
(if issued) upon issuance will 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 the Closing Date, the Certificate of
Designations will have been filed with the Secretary of State of the State of
Delaware and will be in full force and effect, enforceable against the Company
in accordance with its terms.
c. Capitalization. As of the date hereof, the authorized
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capital stock of the Company consists of 40,000,000 shares of Common Stock, of
which as of March 20, 1998, 23,166,524 shares were issued and outstanding and
1,000,000 shares of Preferred Stock, of which as of March 20, 1998, no shares
were issued and outstanding. All of such outstanding shares
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have been validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), no shares of Common Stock or Preferred Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed in
Schedule 3(c), as of the date hereof, (i) 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, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement).
Except as disclosed in Schedule 3(c), there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of any of the Securities as described in this Agreement. The Company
has furnished to the Buyer true and correct copies of the Company's Certificate
of Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE 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 Series C Preferred Shares and
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Warrants 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
Designations and the Warrants, respectively. Not less than 1,400,000 shares of
Common Stock have been duly authorized and reserved for issuance upon conversion
of the Series C Preferred Shares and exercise of the Warrants. Upon conversion
or exercise in accordance with the Certificate of Designations and the Warrants,
as applicable, the Conversion Shares and 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.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
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execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the Warrants by the Company, the performance by the Company of its
obligations under the Certificate of Designations and the Warrants and the
consummation by the Company of the transactions contemplated hereby and thereby
will not (i) result in a violation of the Certificate of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
Preferred Stock of the Company or By-laws 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 the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the principal market or exchange on which the Common Stock is traded or
listed) applicable to the Company or any of its
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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 its subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of Preferred Stock of the
Company or By-laws or their organizational charter or by-laws, respectively, or
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 which violation or default would have a material
adverse effect on the business, operations, financial condition or results of
operations of the Company and any of its subsidiaries, individually or taken as
a whole. 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 which violation would have a material
adverse effect on the business, operations, financial condition or results of
operations of the Company and any of its subsidiaries, individually or taken as
whole. 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 or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement or the Warrants or perform its
obligations under the Certificate of Designations 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 is not in violation of the listing
requirements of the American Stock Exchange. The Company and its subsidiaries
are unaware of any facts or circumstances which might give rise to any of the
foregoing or to delisting of the Common Stock by the American Stock Exchange.
f. SEC Documents; Financial Statements. Since December 31,
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1996, 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 Securities Exchange Act of 1934, as amended (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
"DESIGNATED SEC DOCUMENTS"). The Company has delivered to the Buyer or its
representative true and complete copies of the Designated SEC Documents and the
Risk Factors attached hereto as Exhibit H (the "RISK FACTORS"). As of their
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respective dates, the Designated 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 Designated SEC Documents, and none of
the Designated SEC Documents, at the time they were filed with the SEC, nor the
Risk Factors 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 Designated 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
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(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). The Company has not provided and will not provide
to any Buyer any material non-public information which, according to applicable
law, rule or regulation should have been disclosed publicly by the Company but
which has not been so disclosed as of the date hereof.
g. Absence of Certain Changes. Except as expressly set forth in
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Schedule 3(g), since December 31, 1996, there has been no material adverse
change and no material adverse development in the business, properties,
operations, financial condition, results of operations or prospects of the
Company and its subsidiaries taken as a whole. 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 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,
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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
or its subsidiaries or their respective directors or officers, or the Common
Stock, wherein an unfavorable decision, ruling or finding would (i) have a
material adverse effect on the transactions contemplated hereby (ii) adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement, the Registration
Rights Agreement, the Warrants or any of the documents contemplated herein or
(iii), except as expressly set forth in Schedule 3(h), have a material adverse
effect on the business, operations, properties, financial condition, results of
operations or prospects of the Company and its subsidiaries taken as a whole.
i. Acknowledgment Regarding Buyers' Purchase of the Series C
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Preferred Shares and the Warrants. The Company acknowledges and agrees that
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each of the Buyers is acting solely in the capacity of arm's length purchaser
with respect to this Agreement and the transactions contemplated hereby. 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
this Agreement and the transactions contemplated hereby and any advice given by
any of the Buyers or any of their respective representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Buyer's purchase of the Series C Preferred Shares.
The Company further represents to each Buyer that the Company's decision to
enter into this Agreement has been based solely on the independent evaluation by
the Company and its representatives.
j. No General Solicitation. Neither the Company, nor any of its
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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 any of
the Securities offered hereby.
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k. No Integrated Offering. Neither the Company, nor any of its
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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 the offering of any of the Securities
to be integrated with prior offerings by the Company for purposes of the 1933
Act or any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of the American Stock Exchange.
l. Employee Relations. Neither the Company nor any of its
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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. None of the
Company's or its subsidiaries' employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.
m. Intellectual Property Rights. The Company and its
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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 (collectively "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct their respective businesses as now conducted.
Except as set forth on Schedule 3(m), none of the Intellectual Property Rights
or other intellectual property rights have expired or terminated, or are
expected to expire or terminate in the near future. The Company and its
subsidiaries do not have any knowledge of any event, fact or circumstance that
may have a material adverse effect on the business, operations, properties,
financial condition, results of operations or prospects of the Company and its
subsidiaries, either individually or taken as a whole, relating to (i) any
infringement by the Company or its subsidiaries of any Intellectual Property
Rights or other similar rights of others, or of any such development of similar
or identical trade secrets or technical information by others or (ii) any person
or entity now infringing any Intellectual Property Rights or other similar
rights or any such development of similar or identical trade secrets or
technical information owned or used by the Company or any of its subsidiaries
and, except as set forth on Schedule 3(m), there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its subsidiaries regarding any Intellectual
Property Rights or other infringement; and the Company and its subsidiaries are
unaware of any facts or circumstances which might have a reasonable likelihood
to give rise to any of the foregoing. The Company and its subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their Intellectual Property Rights.
n. Environmental Laws. The Company and its subsidiaries (i)
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are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where the failure to
comply with such laws or regulations or to receive or comply with such permits,
licenses, approvals would not have a material adverse
9
effect on the business, operations, financial condition or results of operations
of the Company and its subsidiaries, individually or taken as a whole.
o. Title. The Company or its subsidiaries own no real
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property. The Company and its subsidiaries have 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(o) or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries. Any real property and facilities held under lease by the Company
and 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.
p. Insurance. The Company and each of its subsidiaries are
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insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts is prudent and customary in the businesses in
which the Company and its subsidiaries are engaged. 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 materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
q. Regulatory Permits. 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, 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.
r. Internal Accounting Controls. The Company and each of its
----------------------------
subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, 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.
s. No Materially Adverse Contracts, Etc. Except as disclosed
------------------------------------
in the Designated SEC Documents, 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 reasonable judgment of
the Company's officers has or is expected in the future to have a material
adverse effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.
10
t. Tax Status. Except as set forth on Schedule 3(t), the
----------
Company and each of its subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for all
current tax periods. 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.
u. Certain Transactions. Except as set forth on Schedule 3(u)
--------------------
and except for arm's 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 (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.
v. [Intentionally Omitted]
w. S-3 Registration. The Company is currently eligible to
----------------
register securities, including the Conversion Shares and the Warrant Shares, on
a registration statement on Form S-3 under the 1933 Act.
4. COVENANTS AND AGREEMENTS.
------------------------
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 the
Closing Date, 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 the Closing 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.
c. Reporting Status. Until the earlier of (i) the date as of
----------------
which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion Shares and Warrant Shares without
restriction pursuant to Rule 144(k) promulgated
11
under the 1933 Act (or successor thereto), (ii) the date on which (A) the
Investors shall have sold all the Conversion Shares and Warrant Shares and (B)
none of the Series C Preferred Shares or Warrants are outstanding (the
"REGISTRATION PERIOD"), or (iii) the date on which the Company has merged or
consolidated with or sold substantially all of its assets to another entity, (x)
the Company shall timely 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 and (y)
the Company will use its best efforts to maintain its ability and eligibility to
register securities on Form S-3.
d. Use of Proceeds. The Company will use the proceeds from the
---------------
sale of the Series C Preferred Shares and Warrants for capital expenditures,
general working capital and costs of the offering.
e. Financial Information. The Company agrees to send the
---------------------
following to each Investor (as that term is defined in the Registration Rights
Agreement) during the Registration Period: (i) within one (1) day after release
thereof, copies of all press releases issued by the Company or any of its
subsidiaries and (ii) copies of any notices and other information made available
or given to the stockholders of the Company generally, contemporaneously with
the making available or giving thereof to the stockholders.
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 the number of shares of Common Stock needed to provide
for the issuance of the Conversion Shares and Warrant Shares, in the aggregate,
upon conversion of the Series C Preferred Shares and the exercise of the
Warrants, respectively, in accordance with the terms of this Agreement and the
Certificate of Designations.
g. Listing. The Company shall promptly secure the listing of
-------
the Conversion Shares and Warrant Shares upon The American Stock Exchange, Inc.
("AMEX") (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, the listing of all
Conversion Shares and Warrant Shares from time to time issuable under the terms
of this Agreement, the Certificate of Designations and the Warrants on each
national securities exchange and automated quotation system (including the
Nasdaq National Marketing System), if any, upon which shares of Common Stock are
then listed. The Company shall promptly provide to each Buyer copies of any
notices it receives from the AMEX regarding the continued eligibility of the
Common Stock for listing on the AMEX. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(g).
h. Expenses. Each of the Company and the Buyers shall each pay
--------
its respective costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution, delivery and performance of
this Agreement or the Certificate of Designations, the Warrants and the
Registration Rights Agreement; provided, that at the Closing as the Buyers may
request, the Company shall reimburse the Buyers for Buyers' attorneys' fees and
expenses in connection with this Agreement or the Certificate of Designations,
the Warrants and the Registration Rights Agreement up to an aggregate of
$10,000.
12
i. Additional Issuances of Securities.
----------------------------------
(a) Right of First Refusal. If at any time on or before
----------------------
the first anniversary of the Closing Date, the Company shall desire to issue any
Common Stock or any security convertible, exchangeable or exercisable for Common
Stock or any other right to acquire any Common Stock (the "CONVERTIBLE
SECURITIES") pursuant to Section 4(2) of the 1933 Act or an offering under
Regulation D or Regulation S of the 1933 Act or in any other private placement
(other than pursuant to Company authorized stock option plans or future equity
financing whereby Common Stock or Convertible Securities are issued to any
person or entity which has or is proposed to have a material business,
technology or commercial relationship with the Company in addition to any equity
financing provided by such person or entity), then the Company shall first
comply with the terms of this Section 4(i).
(b) Notice Requirements. The Company shall notify, or
-------------------
cause to be notified, the Buyers not less than twenty (20) business days prior
to the time the Company intends to consummate such issuance (the "ISSUANCE
NOTICE"). The Issuance Notice shall set forth all of the material terms of such
proposed issuance.
(c) Exercise of Right of First Refusal. The right of first
----------------------------------
refusal provided for in this Section 4(i) may be exercised by the Buyers by
delivery of a written notice to the Company (the "EXERCISE NOTICE"), within ten
(10) business days following receipt of the Issuance Notice (the "REFUSAL
PERIOD"). The Exercise Notice shall state that the Buyers agree to purchase all
or any specified part (to this extent set forth in this Section 4(i)) of the
proposed issuance of such Common Stock or Convertible Securities on terms
substantially equal to the terms set forth in the Issuance Notice. If the
transactions contemplated by an Exercise Notice are not consummated solely at
the fault of the Buyers, the Company shall be relieved from fulfilling its
obligations pursuant to such Exercise Notice.
(d) Right to Issue Securities. After expiration of the
-------------------------
Refusal Period, if the provisions of this Section 4(i) have been complied with
in all respects by the Company and no Exercise Notice has been given, or if
given, the Buyers have not agreed to purchase all of the securities set forth in
the Issuance Notice, the Company shall have the right for ninety (90) calendar
days following the termination of the Refusal Period to issue such securities,
or any portion thereof not being purchased by the Buyers, specified in the
Issuance Notice on the terms described in the Issuance Notice without further
notice to the Buyers, but after such ninety (90) calendar days, no such issuance
may be made without again giving notice to the Buyers and complying with all of
the requirements of this Section 4(i).
(e) The Buyers will be entitled to exercise their rights
under this Section 4(i) for any individual proposed issuance of securities by
the Company, but and subject to the provisions set forth in this Section 4(i),
only in connection with the first $10 million of consideration to be received by
the Company in any such issuance.
(f) The Company will not issue any Series C Preferred
Shares other than to the Buyers as contemplated hereby or as otherwise
contemplated in the Certificate of Designations.
13
(j) Dilutive Effect. The Company understands and acknowledges
---------------
that the number of Conversion Shares and Warrant Shares issuable upon conversion
of the Series C Preferred Shares and exercise of the Warrants, respectively,
will increase in certain circumstances. The Company further acknowledges and
agrees that its obligation to issue Conversion Shares and Warrant Shares upon
conversion of the Series C Preferred Shares and exercise of the Warrants,
respectively, in accordance with this Agreement, the Certificate of
Designations, and the Warrants, as applicable, is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
5. TRANSFER AGENT INSTRUCTIONS.
---------------------------
The Company shall issue irrevocable instructions to its transfer agent
(in the form attached hereto as Exhibit E) to issue certificates, or at a
Buyer's request, to electronically issue such shares (e.g. through DWAC or DTC),
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares or Warrant Shares in such amounts as specified from time to
time by each Buyer to the Company upon conversion of the Series C Preferred
Shares or exercise of the Warrants, respectively (the "IRREVOCABLE TRANSFER
AGENT INSTRUCTIONS"). Prior to registration of the Conversion Shares and
Warrant Shares under the 1933 Act, 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 Warrant Shares, prior to
registration of the Conversion Shares and 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, the Registration Rights Agreement, the
Certificate of Designations and the Warrants. Nothing in this Section 5 shall
affect in any way each Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of any of the Securities. If a Buyer
provides the Company with an opinion of counsel, reasonably satisfactory in form
and substance to the Company, that registration of a resale by such Buyer of any
of the Securities is not required under the 1933 Act, the Company shall permit
the transfer, and, in the case of the Conversion Shares or 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. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyers by vitiating the intent and 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.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the Series C
Preferred Shares to each Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of
14
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:
a. Such Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
b. Such Buyer shall have delivered to the Company the Purchase
Price for the Series C Preferred Shares being purchased by such Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of such Buyer shall be
true and correct in all material respects as of the 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
this Agreement to be performed, satisfied or complied with by such Buyer at or
prior to the Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
The obligation of each Buyer hereunder to purchase the Series C
Preferred Shares at the Closing is subject to the satisfaction, at or before the
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:
a. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to such Buyer.
b. The Certificate of Designations shall have been filed with
the Secretary of State of the State of Delaware, and a copy thereof certified by
such Secretary of State shall have been delivered to such Buyer.
c. The Common Stock shall be authorized for quotation on the
AMEX, trading in the Common Stock issuable upon conversion of the Series C
Preferred Shares and exercise of the Warrants to be traded on the AMEX shall not
have been suspended by the SEC or the AMEX and all of the Conversion Shares and
Warrant Shares issuable upon conversion of the Series C Preferred Shares or
exercise of the Warrants to be sold at the Closing shall be listed upon the
AMEX.
d. The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case such representations and warranties shall be true and
correct without further qualification) as of the 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 in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. Such Buyer shall have received a certificate, executed by
the Chief Executive Officer of the Company,
15
dated as of the 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 Closing Date regarding the representation
contained in Section 3(c) above.
e. Such Buyer shall have received the opinion of the Company's
counsel dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the form of Exhibit F attached
---------
hereto.
f. The Company shall have executed and delivered to such Buyer
the Stock Certificates (in such denominations as such Buyer shall request) for
the Series C Preferred Shares being purchased by such Buyer at the Closing and
the Initial Warrants.
g. The Board of Directors of the Company shall have adopted the
resolutions in substantially the form of Exhibit G attached hereto.
---------
h. As of the 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 Series C Preferred Shares and the exercise of the
Warrants, at least 1,400,000 sha res of Common Stock.
i. The Irrevocable Transfer Agent Instructions, in the form of
Exhibit E attached hereto, shall have been delivered to and acknowledged in
---------
writing by the Company's transfer agent.
j. The transactions contemplated hereby shall not violate any
law, regulation or order then in effect and applicable to Buyers or the Company.
8. INDEMNIFICATION.
---------------
In consideration of each Buyer's execution and delivery of this
Agreement and acquiring the Securities hereunder and in addition to all of the
Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of
Securities and all of their officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "BUYER
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 Buyer Indemnitee is a
party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "BUYER INDEMNIFIED
LIABILITIES"), incurred by any Buyer Indemnitee (and shall advance the same) as
a result of, or arising out of, or relating to (a) subject to Section 9(i), any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, the Certificate of Designations, the Warrants, the
Registration Rights Agreement 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 this Agreement, the Certificate of
Designations, the Warrants or the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby, or (c) any
cause of action,
16
suit or claim brought or made against such Buyer Indemnitee and arising out of
or resulting from the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Buyer Indemnitees, any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Series C Preferred Shares and Warrants or the status of such
Buyer or holder of any 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 Buyer Indemnified Liabilities which is permissible
under applicable law.
b. In consideration of the Company's execution and delivery of
this Agreement and selling the Series C Preferred Shares and Conversion Shares
hereunder and in addition to all of the Buyers' other obligations under this
Agreement, the Buyers shall defend, protect, indemnify and hold harmless the
Company and all of its officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "COMPANY 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 Company Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "COMPANY INDEMNIFIED LIABILITIES"),
incurred by any Company Indemnitee (and shall advance the same) as a result of,
or arising out of, or relating to (a) subject to Section 9(i), any
misrepresentation or breach of any representation or warranty made by the Buyers
in this Agreement or the Registration Rights Agreement, or (b) any breach of any
covenant, agreement or obligation of the Buyers contained in this Agreement or
the Registration Rights Agreement, provided, however, that in no event shall the
-------- -------
aggregate amount for which the Investors would be liable under this Section 8(b)
exceed $5,000,000. To the extent that the foregoing undertaking by the Buyers
may be unenforceable for any reason, the Buyers shall make the maximum
contribution to the payment and satisfaction of each of the Company Indemnified
Liabilities which is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws.
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. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
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.
17
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 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 waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
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 a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) 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:
Organogenesis Inc.
000 Xxx Xxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer and
Chief Strategic Officer
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
00
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000)000-0000
Facsimile: (000)000-0000
Attention: Xxxxx Xxxxxxxxx
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
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 Securities. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Buyers, except pursuant to a Major Transaction (as
defined in Section 3(c) of the Certificate of Designations) with respect to
which the Company is in compliance with Section 3 of the Certificate of
Designations. A Buyer may assign some or all of its rights hereunder without the
consent of the Company, provided, however, that (i) 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 and (ii) no Buyer may assign its rights hereunder in a manner
that would cause the offering of Securities hereunder to be required to be
registered under the 1933 Act.
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. The representations and warranties of the Company
--------
and the Buyers contained in Sections 3 and 2, respectively, shall survive the
Closing until two years after the Closing Date including without limitation all
financial statements thereto. The agreements and covenants set forth in Sections
4, 5 and 9, and the indemnification provisions set forth in Section 8, shall
survive the Closing. 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
19
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
l. Placement Agent. The Company acknowledges that it has
---------------
engaged a placement agent in connection with the sale of the Series C Preferred
Shares and Warrants, which placement agent may have formally or informally
engaged other agents on its behalf. The Company shall be responsible for the
payment of any placement agent's fees or broker's commissions relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney's fees and out of pocket expenses) arising in
connection with any such claim.
m. 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.
20
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:
-------- -------
ORGANOGENESIS INC. XXXXX INTERNATIONAL
By:_______________________ By:_________________________
Name: Name:
Its: Its:
SHEPHERD INVESTMENTS
INTERNATIONAL, LTD.
By:_________________________
Name:
Its:
SCHEDULE OF BUYERS
Number of
Investor Address and Series C Investor's Advisors and Legal
Investor Name Facsimile Number Preferred Share Counsel Address
-------------------------- ------------------------ --------------- ------------------------------------
Xxxxx International c/o Staro Asset Management 100 Xxxxxxx Xxxxx, Esq.
(Bermuda) 0000 Xxxx Xxxxxx Xxxxxx Xxxxxxx Xxxx Xxxxx LLP
Mequon, Wisconsin 53092 Xxx Xxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Shepherd Investments c/o Staro Asset Management 100 Xxxxxxx Xxxxx, Esq.
International, Ltd. 0000 Xxxx Xxxxxx Xxxxxx Xxxxxxx Xxxx Xxxxx LLP
(British Virgin Islands) Xxxxxx, Xxxxxxxxx 00000 Xxx Xxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(A)
SUBSIDIARIES
------------
Xxx Capital Corp. (a Delaware Corporation)
ECM Pharma/TM/, Inc. (a Delaware Corporation)
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(C)
-------------
CAPITALIZATION
--------------
As of March 20, 1998
1. Common Stock The authorized capital stock of the Corporation consists of
40,000,000 shares of Common Stock, of which:
(A) 23,166,524 shares are duly authorized, validly issued
and outstanding, fully paid and nonassessable;
(B) 5,312,504 shares are duly authorized and reserved for
issuance to officers, employees or directors of, or
consultants to, the Corporation pursuant to options or
other rights to acquire such shares approved or to be
approved by the Board of Directors or a committee
thereof pursuant to the Corporation's stock option and
employee stock purchase plans;
2. Preferred Stock The Company has authorized 1,000,000 shares of Preferred
Stock, of which:
(A) 250,000 shares have been designated as Series A
Preferred Stock, all of which shares of Series A
Preferred stock have been issued and converted into
Common Stock; and
(B) 50,000 shares have been designated as Series B
Preferred Stock, all of which are duly authorized and
unissued.
3. Reedland Capital Partners will receive three year warrants to purchase 40,000
shares of the Company's common stock, par value $.01 per share, with an
exercise price of $36.00 per share pursuant to the Company's engagement of
Reedland as Placement Agent. These warrants will have provisions for cashless
exercise and all customary and appropriate anti-dilution protections. The
shares of common stock underlying the warrants will be included in the
Registration Statement filed on behalf of the Buyers.
4. The Company has adopted a Shareholder Rights Plan as disclosed in SEC
Disclosure Documents.
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(E)
-------------
CONFLICTS
---------
Neither the Company nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of Preferred Stock of the
Company or By-laws or their organizational charter or by-laws, respectively, or
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.
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(G)
-------------
MATERIAL CHANGES
----------------
Other than losses as reflected in the Company's quarterly financial results for
the Quarter ended September 30, 1997 (as reflected on its form 10-Q as reflected
in the SEC Disclosure Documents), and losses since that date (which losses have
continued at approximately the same rate as operating losses incurred during the
first nine months of fiscal year 1997) and the resulting reduction in total
assets, there has been no adverse change and no material adverse development in
the business, properties, operations, financial condition, results of operations
or prospects of the Company and its subsidiaries taken as a whole.
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(H)
-------------
LITIGATION
----------
No material litigation.
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(M)
-------------
INTELLECTUAL PROPERTY
---------------------
No intellectual property rights or other intellectual property rights have
expired or terminated, or are expected to expire or terminate in the near
future.
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(O)
-------------
LIENS
-----
The Company and its subsidiaries have 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.
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(T)
-------------
TAX STATUS
----------
No material taxes are due.
SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF MARCH 26, 1998
SCHEDULE 3(U)
-------------
CERTAIN TRANSACTIONS
--------------------
1. See SEC Disclosure Documents.
2. Xxxxxxx X. Xxxxxx, a partner at Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. ("ML") was elected to the Company's Board of Directors on March
19, 1998. ML has and continues to provide significant legal services to the
Company in amounts which will require disclosure in future SEC proxy
materials.
