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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported):
March 7, 2000
GELTEX PHARMACEUTICALS, INC.
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(Exact Name of Registrant as Specified in Charter)
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Delaware 0-26872 04-3136767
- ----------------------------- ------------------------ -----------------------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of Incorporation)
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153 SECOND AVENUE,
WALTHAM, MASSACHUSETTS 02451
(Address of principal executive office and zip code)
Registrant's telephone number, including area code:
(781) 290-5888
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ITEM 5. OTHER EVENTS.
On March 13, 2000, the Registrant publicly disseminated a press release
announcing that the Registrant had entered into two common stock purchase
agreements for the sale of up to an aggregate of 3,500,000 shares of Common
Stock. The shares had been registered pursuant to an effective Registration
Statement on Form S-3. Pursuant to a stock purchase agreement the Registrant has
issued an aggregate of 1,750,000 shares of Common Stock to five purchasers at a
purchase price of $20.00 per share for a total purchase price of $35 million.
The Registrant may sell up to an additional 1,750,000 shares of Common Stock to
Acqua Wellington North American Equities Fund, Ltd. at a small discount to
market price pursuant to another stock purchase agreement.
The foregoing description is qualified in its entirety by reference to the
following documents, each of which is incorporated herein by reference, (i) the
Common Stock Purchase Agreement dated as of March 7, 2000 by and among the
Registrant and certain investors named therein, attached hereto as Exhibit 10.1,
(ii) the Common Stock Purchase Agreement dated as of March 7, 2000 by and
between the Registrant and Acqua Wellington North American Equities Fund, Ltd.,
a copy of which is attached hereto as Exhibit 10.2, and (iii) the Registrant's
press release dated March 13, 2000, a copy of which is attached hereto as
Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
10.1 Common Stock Purchase Agreement dated as of March 7, 2000 by
and among the Registrant and certain purchasers named
therein.
10.2 Common Stock Purchase Agreement dated as of March 7, 2000 by
and between the Registrant and Acqua Wellington North
American Equities Fund, Ltd.
99.1 The Registrant's Press Release Dated March 13, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GELTEX PHARMACEUTICALS, INC.
By: /s/ Mark Skaletsky
-----------------------------------------
Mark Skaletsky
President and Chief Executive Officer
Date: March 20, 2000
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EXHIBIT INDEX
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Exhibit Sequential
Number Description Page Number
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10.1 Common Stock Purchase Agreement, dated as of March 7, 2000, by and
among the Registrant and certain purchasers named therein, is filed
herewith,
10.2 Common Stock Purchase Agreement, dated as of March 7, 2000, by and
between the Registrant and Acqua Wellington North American Equities
Fund, Ltd., is filed herewith.
99.1 The Registrant's Press Release dated March 13, 2000, is filed
herewith.
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EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 7, 2000
BY AND AMONG
GELTEX PHARMACEUTICALS, INC.
AND
THE PURCHASERS NAMED HEREIN
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TABLE OF CONTENTS
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PAGE
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ARTICLE I DEFINITIONS.......................................................................................................1
SECTION 1.1 Definitions.............................................................................................1
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ARTICLE II PURCHASE AND SALE OF COMMON STOCK................................................................................2
SECTION 2.1 Authorization...........................................................................................2
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SECTION 2.2 Purchase and Sale of Stock..............................................................................2
--------------------------
SECTION 2.3 Registration Statement and Prospectus...................................................................2
-------------------------------------
SECTION 2.4 Purchase Price and Closing..............................................................................2
--------------------------
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................................................................3
SECTION 3.1 Representation and Warranties of the Company............................................................3
--------------------------------------------
SECTION 3.2 Representation, Warranties and Covenants of Purchasers.................................................10
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ARTICLE IV COVENANTS.......................................................................................................11
SECTION 4.1 Securities.............................................................................................11
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SECTION 4.2 Registration and Listing...............................................................................11
------------------------
SECTION 4.3 Compliance with Laws...................................................................................12
--------------------
SECTION 4.4 Keeping of Records and Books of Account................................................................12
---------------------------------------
SECTION 4.5 Reporting Requirements.................................................................................12
----------------------
SECTION 4.6 Non-public Information.................................................................................12
----------------------
SECTION 4.7 Prospectus Delivery....................................................................................12
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SECTION 4.8 No Shorting............................................................................................13
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SECTION 4.9 Effective Registration Statement.......................................................................13
--------------------------------
ARTICLE V CONDITIONS TO CLOSING............................................................................................13
SECTION 5.1 Conditions Precedent to the Obligation of the Company to Close this Agreement and to Sell the Shares...13
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SECTION 5.2 Conditions Precedent to the Obligation of the Purchasers to Close this Agreement.......................14
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ARTICLE VI INDEMNIFICATION.................................................................................................15
SECTION 6.1 General Indemnity......................................................................................15
-----------------
SECTION 6.2 Indemnification Procedures.............................................................................16
--------------------------
ARTICLE VII MISCELLANEOUS..................................................................................................17
SECTION 7.1 Fees and Expenses......................................................................................17
-----------------
SECTION 7.2 Specific Enforcement, Consent to Jurisdiction..........................................................17
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SECTION 7.3 Entire Agreement; Amendment............................................................................18
---------------------------
SECTION 7.4 Notices................................................................................................18
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SECTION 7.5 Waivers................................................................................................19
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SECTION 7.6 Headings...............................................................................................19
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SECTION 7.7 Successors and Assigns.................................................................................19
-----------------------
SECTION 7.8 Governing Law..........................................................................................19
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SECTION 7.9 Survival...............................................................................................19
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SECTION 7.10 Counterparts...........................................................................................19
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SECTION 7.11 Publicity..............................................................................................19
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SECTION 7.12 Severability...........................................................................................20
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SECTION 7.13 Further Assurances.....................................................................................20
------------------
SECTION 7.14 Confidentiality........................................................................................20
---------------
SECTION 7.15 Termination............................................................................................20
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
March 7, 2000 by and among GelTex Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), Biopharma Equities Holdings, N.V., UBS Brinson, Inc., Acqua
Wellington North American Equities Fund, Ltd. and Deerfield Management (referred
to herein individually as a "Purchaser," or collectively as the "Purchasers").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
(a) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or day on which banks are permitted to close in the State of Delaware.
(b) "COMMISSION" shall have the meaning assigned to such term in
Section 2.3 hereof.
(c) "COMMISSION DOCUMENTS" shall have the meaning assigned to such
term in Section 3.1(f) hereof.
(d) "COMMISSION FILINGS" means the Company's Form 10-K for the fiscal
year ended December 31, 1998, the Company's Form 8-K filed on March 6, 2000, its
Registration Statement on Form S-3 No. 333-96277 its Registration Statement on
Form S-3 No 333-95313, its Registration Statement on Form S-4 No. 333-88459, and
all other filings made by the Company after the date hereof pursuant to the
Securities Exchange Act of 1934.
(e) "EFFECTIVE DATE" shall mean the date the Registration Statement
is declared effective.
(f) "MATERIAL ADVERSE EFFECT" shall mean any effect on the business,
results of operations, assets or financial condition of the Company that is
material and adverse to the Company and its subsidiaries, taken as a whole
and/or any condition, circumstance, or situation that would prohibit the Company
from entering into and performing any of its obligations under this Agreement in
any material respect.
(g) "PROSPECTUS" as used in this Agreement means the prospectus in
the form included in the Registration Statement, as supplemented from time to
time pursuant to Rule 424(b) of the Securities Act of 1933, as amended (the
"Securities Act").
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(h) "REGISTRATION STATEMENT" shall mean the registration statement on
Form S-3, Commission File Number 333-96277 under the Securities Act, filed with
the Securities and Exchange Commission for the registration of the Shares, as
such Registration Statement may be amended from time to time.
(i) "SHARES" shall mean the shares of Common Stock of the Company
that are sold under the terms of this Agreement.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
SECTION 2.1 AUTHORIZATION. The Company has duly authorized the sale
and issuance, pursuant to the terms of this Agreement, of up to 1,750,000 shares
of its Common Stock, $0.01 par value per share (the "Common Stock").
SECTION 2.2 PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions of this Agreement, at the Closing (as defined in Section 2.4) the
Company shall issue and sell to the Purchasers and each Purchaser shall purchase
from the Company the number of shares of Common Stock, as set forth on EXHIBIT A
to this Agreement, at a purchase price of Twenty Dollars ($20.00) per share (the
"Purchase Price").
SECTION 2.3 REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act, the
Registration Statement, including a prospectus subject to completion relating to
the Shares.
SECTION 2.4 PURCHASE PRICE, CLOSING AND SETTLEMENT. In consideration
of and in express reliance upon the representations, warranties, covenants,
terms and conditions of this Agreement, the Company agrees to issue and sell to
the Purchasers and the Purchasers, agree to purchase from the Company, that
number of the shares of the Company's Common Stock as set forth on EXHIBIT A to
this Agreement. The closing of the execution and delivery of this Agreement (the
"Closing") shall take place at the offices of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, PC, One Financial Center, Boston, MA 02110 at (i) 1:00 p.m.
Eastern Time on March 8, 2000, or (ii) such other time and place or on such date
as the Purchasers and the Company may agree upon (the "Closing Date"). Each
party shall deliver all documents, instruments and writings required to be
delivered by such party pursuant to this Agreement at or prior to the Closing.
The Shares shall be delivered and settled on the business day immediately
following the Closing (the "Settlement Date"). On the Settlement Date, the
Company shall deliver the Shares purchased by the Purchaser to the Purchaser or
its designees via DWAC, against payment therefor to the Company's designated
account by wire transfer of immediately available funds provided that the Shares
are received by the Purchaser no later than 1:00 p.m. (EST) or next day
available funds if the Shares are received thereafter.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATION AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power to own, lease and operate
its properties and assets and to conduct its business as it is now being
conducted. As of the date hereof, the Company does not have any subsidiaries (as
defined in Section 3.1(g)) except as set forth in the Registration Statement and
in the Company's most recent Form 10-K, including the accompanying financial
statements (the "Form 10-K"), or in the Company's most recent Form 10-Q (the
"Form 10-Q"), or on SCHEDULE 3.1(g) attached hereto. The Company and each such
subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which the failure to be so qualified will not have a
Material Adverse Effect.
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue and sell the Shares in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and, except as contemplated by
Section 3.1(e), no further consent or authorization of the Company or its Board
of Directors or stockholders is required. This Agreement has been duly executed
and delivered by the Company. This Agreement constitutes, or when executed and
delivered shall constitute, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
(c) CAPITALIZATION. The authorized capital stock of the Company and
the shares thereof issued and outstanding as of March 1, 2000 are set forth on
Schedule 3.1(c) attached hereto. All of the outstanding shares of the Company's
Common Stock have been duly and validly authorized, and are fully paid and
non-assessable. Except as set forth in this Agreement or as set forth in the
Registration Statement, the Commission Documents, the Commission Filings, or on
Schedule 3.1(c) hereto, as of March 1, 2000, no shares of Common Stock are
entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement, or in the Common Stock Purchase Agreement
between the Company and Acqua Wellington North American Equities Fund, Ltd. to
be entered into on or about the date of this Agreement (the "Structured Equity
Agreement"), the Registration Statement, the Commission Documents or the
Commission Filings, as of the date hereof, there are no contracts, commitments,
understandings, or arrangements by which the Company is or
3
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may become bound to issue additional shares of the capital stock of the Company
or options, securities or rights convertible into shares of capital stock of the
Company. Except for customary transfer restrictions contained in agreements
entered into by the Company in order to sell restricted securities or as
described in the Registration Statement, the Commission Documents or the
Commission Filings, as of the date hereof, the Company is not a party to any
agreement granting registration rights to any person with respect to any of its
equity or debt securities. Except as set forth in the Registration Statement,
the Commission Documents or the Commission Filings, as of the date hereof, the
Company is not a party to, and it has no knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of the Company. Except
as set forth in the Registration Statement, the Commission Documents or the
Commission Filings, the offer and sale of all capital stock, convertible
securities, rights, warrants, or options of the Company issued prior to the
Closing complied with all applicable federal and state securities laws, and no
stockholder has a right of rescission or damages with respect thereto which
would have a Material Adverse Effect. The Company has furnished or made
available to the Purchasers true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof (the "Articles"), and the
Company's Bylaws as in effect on the date hereof (the "Bylaws").
(d) ISSUANCE OF SHARES. The Shares have been duly authorized by all
necessary corporate action and, when paid for or issued in accordance with the
terms hereof, the Shares shall be validly issued and outstanding, fully paid and
non-assessable.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated therein do not (i) violate any provision of the Company's Articles
or Bylaws, (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, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party or by
which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except, in all cases, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The Company is not required under federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement, or
issue and sell the Shares in accordance with the terms hereof (other than any
filings which may be required to be made by the Company with the Commission, or
Nasdaq subsequent to the Closing, and, any registration statement which may be
filed pursuant hereto); provided that, for purpose of the representation made in
this sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Purchasers herein.
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(f) COMMISSION DOCUMENTS, FINANCIAL STATEMENTS. The Common Stock of
the Company is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, except as disclosed
in the Registration Statement, or the Commission Documents or the Commission
Filings, as of the date hereof, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Commission pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the "Commission Documents"). The Company has delivered or
made available to the Purchasers true and complete copies of the Commission
Documents filed with the Commission since December 31, 1998 and prior to the
Closing Date. The Company has not provided to the Purchasers any information
which, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement or the
Structured Equity Agreement. The Form 10-K for the year ended December 31, 1998
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such
document, and, as of its date, such Form 10-K did not contain any untrue
statement of a material fact or omit 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. The financial
statements of the Company included in the Commission Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis 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 not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) SUBSIDIARIES. The Commission Documents or SCHEDULE 3.1(g) set
forth each subsidiary of the Company as of the date hereof, showing the
jurisdiction of its incorporation or organization and showing the percentage of
each person's ownership of the outstanding stock or other interests of such
subsidiary. For the purposes of this Agreement, "subsidiary" shall mean any
corporation or other entity of which at least a majority of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other subsidiaries. Except as set forth in the Commission Documents or
the Commission Filings, none of such subsidiaries is a "significant subsidiary"
as defined in Regulation S-X.
(h) NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, the Company
has not experienced or suffered any Material Adverse Effect, except continued
losses from operations.
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(i) NO UNDISCLOSED LIABILITIES. Except as disclosed in the Commission
Documents or the Commission Filings, neither the Company nor any of its
subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any subsidiary (including the notes thereto) in conformity with GAAP
and are not disclosed in the Commission Documents or Commission Filings, other
than those incurred in the ordinary course of the Company's or its subsidiaries'
respective businesses since December 31, 1999 and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.
(j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect.
(k) INDEBTEDNESS. The Commission Documents or the Commission Filings
set forth as of December 31, 1999 all outstanding secured and unsecured
Indebtedness of the Company or any subsidiary, or for which the Company or any
subsidiary has commitments. For the purposes of this Agreement, "Indebtedness"
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of $100,000 due under leases required to
be capitalized in accordance with GAAP. Neither the Company nor any subsidiary
is in default with respect to any Indebtedness.
(l) TITLE TO ASSETS. Each of the Company and the subsidiaries has good
and marketable title to all of its real and personal property reflected in the
Commission Documents, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except for those indicated in the Commission
Documents or the Commission Filings, or such that could not reasonably be
expected to cause a Material Adverse Effect. All leases of the Company and each
of its subsidiaries are valid and subsisting and in full force and effect in all
material respects.
(m) ACTIONS PENDING. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as set forth in the Commission Documents or the
Commission Filings, there is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened, against or involving
the Company, any subsidiary or any of their respective properties or assets and
which, if adversely determined, is reasonably likely to result in a Material
Adverse Effect.
6
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(n) COMPLIANCE WITH LAW. The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Commission Documents or the Commission
Filings or such that do not cause a Material Adverse Effect. The Company and
each of its subsidiaries have all franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it, except for such
franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals, the failure to possess which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(o) CERTAIN FEES. No brokers, finders or financial advisory fees or
commissions will be payable by the Company or any subsidiary with respect to the
transactions contemplated by this Agreement.
(p) DISCLOSURE. To the best of the Company's knowledge, neither this
Agreement nor any other documents, certificates or instruments furnished to the
Purchasers by or on behalf of the Company or any subsidiary in connection with
the transactions contemplated by this Agreement contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under which
they were made herein or therein, not misleading.
(q) OPERATION OF BUSINESS. The Company or one of the subsidiaries owns
or possesses all patents, trademarks, service marks, trade names, copyrights,
licenses and authorizations as set forth in the Commission Documents or the
Commission Filings and all rights with respect to the foregoing, which are
necessary for the conduct of its business as now conducted without any conflict
with the rights of others, except to the extent set forth in the Commission
Documents or that a Material Adverse Effect could not reasonably be expected to
result from such conflict.
(r) ENVIRONMENTAL COMPLIANCE. Except as disclosed in the Commission
Filings, the Company and each of its subsidiaries have obtained all material
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations of all governmental authorities, or from any
other person, that are required under any Environmental Laws. "Environmental
Laws" shall mean all applicable laws relating to the protection of the
environment including, without limitation, all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. Except for such
instances as would not individually or in the aggregate have a Material Adverse
Effect, to the best of the Company's knowledge, there are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting the Company or its subsidiaries that violate or could
reasonably be expected to violate any Environmental Law after the Closing or
that could reasonably be expected to give rise to any
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environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.
(s) MATERIAL AGREEMENTS. Except as set forth in the Commission
Documents or Commission Filings, neither the Company nor any subsidiary is a
party to any written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement, a copy of which would be required to be filed
with the Commission as an exhibit to a registration statement on Form S-3
(collectively, "Material Agreements") if the Company or any subsidiary were
registering securities under the Securities Act. The Company and each of its
subsidiaries has in all material respects performed all the obligations required
to be performed by them to date under the foregoing agreements, have received no
notice of default and, to the best of the Company's knowledge are not in default
under any Material Agreement now in effect, the result of which could reasonably
be expected to cause a Material Adverse Effect.
(t) TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Commission Documents or the Commission Filings, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts or arrangements
or other continuing transactions exceeding $100,000 between (a) the Company, any
subsidiary or any of their respective customers (excluding agreements related to
the purchase or lease of the Company's products) or suppliers on the one hand,
and (b) on the other hand, any officer, employee, consultant or director of the
Company, or any of its subsidiaries, or any person who would be covered by Item
404(a) of Regulation S-K or any corporation or other entity controlled by such
officer, employee, consultant, director or person.
(u) SECURITIES ACT OF 1933. The Company has complied in all material
respects with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Shares hereunder.
(i) Each Prospectus included as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the provisions of the
Securities Act. The Commission has not issued any order preventing or suspending
the use of any Prospectus.
(ii) The Company meets the requirements for the use of
Form S-3 under the Securities Act. The Registration Statement in the form in
which it became effective and also in such form as it may be when any
post-effective amendment thereto became effective and the Prospectus and any
supplement or amendment thereto when filed with the Commission under Rule 424(b)
under the Securities Act, complied in all material respects with the provisions
of the Securities Act and did not at any such times contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in
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conformity with information relating to the Purchasers furnished to the Company
in writing by or on behalf of the Purchasers expressly for use therein.
(iii) The Company has not distributed and, prior to the
completion of the sale of the Shares to the Purchasers, will not distribute any
offering material in connection with the offer and sale of the Shares other than
the Registration Statement, the Prospectus or other materials, if any, permitted
by the Securities Act.
(v) EMPLOYEES. As of the date hereof, neither the Company nor any
subsidiary has any collective bargaining arrangements or agreements covering any
of its employees, except as set forth in the Commission Documents or the
Commission Filings. As of the date hereof, except as set forth in the Commission
Documents or the Commission Filings, to the knowledge of the Company, no
officers or employees of or consultants to the Company or any subsidiary has any
employment contract, agreement regarding proprietary information, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or restrictive covenant, restricting the right of such officer,
employee or consultant to be employed or engaged by the Company or such
subsidiary. As of the date hereof, except as disclosed in the Registration
Statement, the Commission Documents, or the Commission Filings, no officer,
consultant or key employee of the Company or any subsidiary whose termination,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or engagement with
the Company or any subsidiary.
(w) USE OF PROCEEDS. The proceeds from the sale of the Shares will be
used by the Company and its subsidiaries for the purposes set forth in the
Prospectus under "Use of Proceeds."
(x) PUBLIC UTILITY HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT
STATUS. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(y) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan by the Company or any of its
subsidiaries which is or would have a Material Adverse Effect. The execution and
delivery of this Agreement and the issue and sale of the Shares will not involve
any transaction which is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended, PROVIDED that, if any of the
Purchasers, or any person or entity that owns a beneficial interest in any of
the Purchasers, is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a "party in
interest" (within the meaning of Section 3(14) of ERISA), the requirements of
Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this
Section 3.1(y), the term "Plan" shall mean an "employee pension benefit plan"
(as defined in Section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
any subsidiary or by any trade or business, whether or not
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incorporated, which, together with the Company or any subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.
(z) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF SHARES. The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Purchaser 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 hereunder and any advice given by the Purchaser or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Purchaser's purchase of the
Shares.
SECTION 3.2 REPRESENTATION, WARRANTIES AND COVENANTS OF PURCHASERS.
Each Purchaser hereby makes the following representations, warranties and
covenants to the Company with respect to itself and not to any other Purchaser:
(a) ORGANIZATION AND STANDING OF THE PURCHASERS. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation.
(b) AUTHORIZATION AND POWER. The Purchaser has the requisite corporate
power and authority to enter into and perform this Agreement and to purchase the
Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Purchaser, its
Board of Directors or stockholders is required. This Agreement constitutes, or
when executed and delivered shall constitute, a valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership, or similar laws relating to, or affecting generally the
enforcement of creditor's rights and remedies or by other equitable principles
of general application.
(c) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby and thereby or relating hereto do not and will not (i) result in a
violation of such Purchaser's charter documents or bylaws 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, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Purchaser is a party, (iii) create or impose or lien,
charge or encumbrance on any property of the Purchaser under any agreement or
any commitment to which the Purchaser is party or by which the Purchaser is on
or by which any of its respective properties or assets are bound or (iv) result
in a violation of any law, rule or regulation, or any order, judgment or decree
of any court or governmental agency applicable to the Purchaser or its
properties, except for such conflicts, defaults and violations as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Purchaser to enter into and perform its obligations under this
Agreement in any material respect. The Purchaser is not required to obtain any
consent,
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authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or to purchase the Shares in accordance with
the terms hereof, PROVIDED that for purposes of the representation made in this
sentence, the Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.
(d) INFORMATION. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Purchaser. The Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. The
Purchaser 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 Shares. Purchaser understands that it (and not the Company)
shall be responsible for its own tax liabilities that may arise as a result of
this investment or the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS
The Company covenants with the Purchasers as follows, which covenants
are for the benefit of the Purchasers and their permitted assignees (as defined
herein).
SECTION 4.1 SECURITIES. The Company shall notify the Commission and
Nasdaq, if applicable, in accordance with their rules and regulations, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Shares to the Purchasers
or subsequent holders.
SECTION 4.2 REGISTRATION AND LISTING. The Company will take all action
necessary to cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, will comply in all respects with its
reporting and filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the Securities Act or
the rules promulgated thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing obligations under the Exchange
Act or Securities Act, except as permitted herein. The Company will take all
action necessary to continue the listing or trading of its Common Stock and the
listing of the Shares purchased by Purchasers hereunder on the NASDAQ or any
relevant market or system, if applicable, and will comply in all respects with
the Company's reporting, filing and other obligations under the bylaws or rules
of the NASD or any relevant market or system.
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SECTION 4.3 COMPLIANCE WITH LAWS.
(a) The Company shall comply, and cause each subsidiary to comply,
with all applicable laws, rules, regulations and orders, noncompliance with
which could reasonably be expected to have a Material Adverse Effect.
(b) The Company will not be obligated to issue and the Purchasers will
not be obligated to purchase any shares of the Company's Common Stock which
would result in the issuance under this Agreement of Shares representing more
than nineteen and nine-tenths percent (19.9%) of the issued and outstanding
shares of the Company's Common Stock on the date hereof.
SECTION 4.4 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
SECTION 4.5 REPORTING REQUIREMENTS. Upon written request, the Company
shall furnish the following to the Purchasers:
(a) Quarterly Reports filed with the Commission on Form 10-Q as soon
as available, and in any event within 45 days after the end of each of the first
three fiscal quarters of the Company; and
(b) Annual Reports filed with the Commission on Form 10-K as soon as
available, and in any event within 90 days after the end of each fiscal year of
the Company.
SECTION 4.6 NON-PUBLIC INFORMATION. Neither the Company nor any of its
officers or agents shall disclose any material non-public information about the
Company to the Purchaser.
SECTION 4.7 PROSPECTUS DELIVERY. Prior to the execution and delivery
of this Agreement, the Company will deliver to the Purchasers, without charge,
in such quantities as reasonably requested by the Purchasers, copies of each
form of Prospectus. As soon after the execution and delivery of this Agreement
as possible and thereafter from time to time for such period as in the opinion
of counsel for the Purchasers a prospectus is required by the Securities Act to
be delivered in connection with sales by the Purchasers, the Company will
expeditiously deliver to the Purchasers, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as the Purchasers may
reasonably request and the Purchasers shall timely deliver each such Prospectus.
The Company consents to the use of the Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Securities Act and
with the securities or Blue Sky laws of the jurisdictions in which the Shares
may be sold by the Purchasers, in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
the Securities Act to be delivered in connection with sales of the Shares. If
during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Purchasers is required to be set
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forth in the Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with the Securities Act or any
other law, the Company will forthwith prepare and file with the Commission an
appropriate supplement or amendment thereto, and will expeditiously furnish to
the Purchasers a reasonable number of copies thereof.
SECTION 4.8 NO SHORTING. The Purchasers covenant that during the
period between the date this Agreement is executed and the Closing Date neither
the Purchasers nor any of their affiliates nor any entity managed by the
Purchasers will ever be in a net short position with respect to shares of the
Common Stock of the Company in any accounts directly or indirectly managed by
the Purchasers or any affiliate of the Purchasers or any entity managed by the
Purchasers.
SECTION 4.9 EFFECTIVE REGISTRATION STATEMENT. If, at the time this
Agreement is executed and delivered, it is necessary for the Registration
Statement or a post-effective amendment thereto to be declared effective before
the offering of the Shares may commence, the Company will endeavor to cause the
Registration Statement or such post-effective amendment to become effective as
soon as reasonably practicable and will advise the Purchasers promptly and, if
requested by the Purchasers, will confirm such advice in writing, when the
Company receives notice that the Registration Statement or such post-effective
amendment has become effective.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
CLOSE THIS AGREEMENT AND TO SELL THE SHARES. The obligation hereunder of the
Company to issue and sell the Shares to the Purchasers is subject to the
satisfaction or waiver of each of the conditions set forth below. These
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion.
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchasers shall be true and correct in
all material respects as of the Closing Date with the same effect as though such
representation and warranty had been made on and as of that date.
(b) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
registering the offer and sale of the Shares shall have been declared effective
by the Commission.
(c) PERFORMANCE BY THE PURCHASERS. The Purchasers shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchasers.
(d) NO INJUNCTION. No statute, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or
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governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
(e) NO SUSPENSION, ETC. Trading in the Company's Common Stock shall
not be suspended by the Commission or the NASD (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to Closing), and, at any time prior to the Closing, trading in
securities generally as reported on NASDAQ shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by American Stock Exchange, or on the New York Stock
Exchange, nor shall a banking moratorium have been declared either by the United
States or New York State authorities, nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on, or any material adverse
change in any financial market which, in each case, in the judgment of the
Company, makes it impracticable or inadvisable to issue the Shares.
(f) NO PROCEEDINGS OR LITIGATION. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
SECTION 5.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS
TO CLOSE THIS AGREEMENT. The obligation hereunder of the Purchasers to purchase
the Shares set forth opposite such Purchaser's name on Exhibit A is subject to
the satisfaction or waiver, at or before the Closing, of each of the conditions
set forth below. These conditions are for each Purchaser's sole benefit and may
be waived by any Purchaser at any time in its sole discretion.
(a) PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(b) NO SUSPENSION, ETC. Trading in the Company's Common Stock shall
not be suspended by the Commission or the NASD (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to Closing), and, at any time prior to the Closing, trading in
securities generally as reported on NASDAQ shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by the American Stock Exchange, or on the New York Stock
Exchange, nor shall a banking moratorium have been declared either by the United
States or New York State authorities, nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on, or any material adverse
change in any financial market which, in each case, in the judgment of the
Purchasers, makes it impracticable or inadvisable to purchase the Shares.
(c) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or
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governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
(d) NO PROCEEDINGS OR LITIGATION. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL INDEMNITY.
(a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and
hold harmless the Purchasers and each person, if any, who controls the
Purchasers within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act from and against any losses, claims, damages,
liabilities and expenses (including reasonable costs of defense and
investigation and all reasonable attorney's fees) to which the Purchasers and
each person, if any, who controls the Purchasers may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained, or incorporated by reference, in the Registration Statement or
the Prospectus relating to the shares being sold to the Purchasers, or any
amendment or supplement to it, or (ii) the omission or alleged omission to state
in that Registration Statement or any document incorporated by reference in the
Registration Statement, a material fact required to be stated therein or
necessary to make the statements therein not misleading, PROVIDED that the
Company shall not be liable under this Section 6.1(a) to the extent that a court
of competent jurisdiction shall have determined by a final judgment that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act, undertaken or omitted to be taken by the Purchasers or such
person through its bad faith or willful misconduct; PROVIDED, however, that the
foregoing indemnity shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Purchasers expressly for use in the Registration Statement,
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and PROVIDED, further, that with respect to the Prospectus, the
foregoing indemnity shall not inure to the benefit of the Purchasers or any such
person from whom the person asserting any loss, claim, damage, liability or
expense purchased Common Stock, if copies of the Prospectus were timely
delivered to the Purchasers pursuant hereto and a copy of the Prospectus (as
then amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of the Purchasers
or any such person to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Common Stock to such
person, and if the Prospectus (as so amended or
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supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense.
The Company will reimburse the Purchasers and each such controlling
person promptly upon demand for any legal or other costs or expenses reasonably
incurred by such Purchasers or the controlling person in investigating,
defending against, or preparing to defend against any such claim, action, suit
or proceeding, except that the Company will not be liable to the extent a claim
or action which results in a loss, claim, damage, liability or expense arises
out of, or is based upon, an untrue statement, alleged untrue statement,
omission or alleged omission, included in the Registration Statement or any
Prospectus in reliance upon, and in conformity with, written information
furnished by the Purchasers to the Company for inclusion in the Registration
Statement or Prospectus.
(b) INDEMNIFICATION BY THE PURCHASERS. The Purchasers will indemnify
and hold harmless the Company, each of its directors and officers, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act from and against any
expenses (including reasonable costs of defense and investigation and all
reasonable attorneys fees) to which the Company, and director or officer of the
Company and each person, if any, who controls the Company may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any Prospectus or (ii) the omission or alleged omission to
state in the Registration Statement or any Prospectus a material fact required
to be stated therein or necessary to make the statements therein not misleading,
to the extent, but only to the extent, the untrue statement, alleged untrue
statement, omission or alleged omission was made in reliance upon, and in
conformity with, written information furnished by the Purchasers to the Company
for inclusion in the Registration Statement or Prospectus, and the Purchasers
will reimburse the Company and each such director, officer or controlling person
promptly upon demand for any legal or other costs or expenses reasonably
incurred by the Company or the other person in investigating, defending against,
or preparing to defend against any such claim, action, suit or proceeding.
SECTION 6.2 INDEMNIFICATION PROCEDURES. Promptly after a person
receives notice of a claim or the commencement of an action for which the person
intends to seek indemnification under paragraph (a) or (b) of Section 6.1, the
person will notify the indemnifying party in writing of the claim or
commencement of the action, suit or proceeding, but failure to notify the
indemnifying party will not relieve the indemnifying party from liability under
paragraph (a) or (b) of Section 6.1, except to the extent it has been materially
prejudiced by the failure to give notice. The indemnifying party will be
entitled to participate in the defense of any claim, action, suit or proceeding
as to which indemnification is being sought, and if the indemnifying party
acknowledges in writing the obligation to indemnify the party against whom the
claim or action is brought, the indemnifying party may (but will not be required
to) assume the defense against the claim, action, suit or proceeding with
counsel satisfactory to it. After an indemnifying party notifies an indemnified
party that the indemnifying party wishes to assume the defense of a claim,
action, suit or proceeding the indemnifying party will not be liable for any
legal or other expenses incurred by the indemnified party in connection with the
defense against the claim, action, suit or proceeding except that if, in the
opinion of counsel to the indemnifying
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party, one or more of the indemnified parties should be separately represented
in connection with a claim, action, suit or proceeding the indemnifying party
will pay the reasonable fees and expenses of one separate counsel for the
indemnified parties. Each indemnified party, as a condition to receiving
indemnification as provided in Paragraph (a) or (b) or Section 6.1, will
cooperate in all reasonable respects with the indemnifying party in the defense
of any action or claim as to which indemnification is sought. No indemnifying
party will be liable for any settlement of any action effected without its prior
written consent. No indemnifying party will, without the prior written consent
of the indemnified party, effect any settlement of a pending or threatened
action with respect to which an indemnified party is, or is informed that it may
be, made a party and for which it would be entitled to indemnification, unless
the settlement includes an unconditional release of the indemnified party from
all liability and claims which are the subject matter of the pending or
threatened action.
If for any reason the indemnification provided for in this Agreement is not
available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in paragraph (a) or (b) of Section
6.1, each indemnifying party will, in lieu of indemnifying the indemnified
party, contribute to the amount paid or payable by the indemnified party as a
result of the loss or liability, (i) in the proportion which is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and by the indemnified party on the other from the sale of stock which is the
subject of the claim, action, suit or proceeding which resulted in the loss or
liability or (ii) if that allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits of the
sale of stock, but also the relative fault of the indemnifying party and the
indemnified party with respect to the statements or omissions which are the
subject of the claim, action, suit or proceeding that resulted in the loss or
liability, as well as any other relevant equitable considerations.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 FEES AND EXPENSES. Except as set forth in Article VI, each
of the parties hereto shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby whether
or not the transactions contemplated hereby are consummated.
SECTION 7.2 SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.
(a) The Company and the Purchasers acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
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(b) Each of the Company and the Purchasers (i) hereby irrevocably
submits to the jurisdiction of the United States District Court and other courts
of the United States sitting in The Commonwealth of Massachusetts for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Purchasers consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.
SECTION 7.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Purchasers make any representations, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
SECTION 7.4 NOTICES. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective if delivered to the Company in the manner set forth below
to the address or number set forth below and to each Purchaser in the manner set
forth below to the address or number set forth on Exhibit A, in each case (a)
upon hand delivery, by telex (with correct answer back received), telecopy or
facsimile (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications to the Company shall be:
GelTex Pharmaceuticals, Inc.
153 Second Avenue
Waltham, Massachusetts 02451
Tel. No.: (781) 290-5888
Fax No.: (781) 672-5822
Attention: Mark Skaletsky, President and CEO
With copies to: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Tel. No.: (617) 542-6000
Fax No.: (617) 542-2241
Attention: Lewis J. Geffen
18
<PAGE> 22
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days prior written notice of such changed address to
the other party hereto.
SECTION 7.5 WAIVERS. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
SECTION 7.6 HEADINGS. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
SECTION 7.7 SUCCESSORS AND ASSIGNS. The Purchasers may not assign this
Agreement to any person without the prior written consent of the Company, which
consent will not be unreasonably withheld. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. After
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.
SECTION 7.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to the choice of law provisions.
SECTION 7.9 SURVIVAL. The representations and warranties of the
Company and the Purchasers contained in Article III and the covenants contained
in Article IV shall survive the execution and delivery hereof and the Closing
until the termination of this Agreement, and the agreements and covenants set
forth in Article VI of this Agreement shall survive the execution and delivery
hereof and the Closing hereunder. Section 7.14 shall survive the termination of
this Agreement.
SECTION 7.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
SECTION 7.11 PUBLICITY. Prior to the Closing, neither the Company nor
any Purchaser shall issue any press release or otherwise make any public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby or the existence of this Agreement. In the event the Company
is required by law, based upon an opinion of the Company's counsel, to issue a
press release or otherwise make a public statement or announcement with respect
to this Agreement prior to the Closing, the Company shall consult with the
Purchasers on the form and substance of such press release. Promptly after the
Closing, the Company may issue a press release or otherwise make a public
statement or announcement
19
<PAGE> 23
with respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement; PROVIDED, that prior to issuing any such press
release, making any such public statement or announcement, the Company obtains
the prior consent of the Purchasers, which consent shall not be unreasonably
withheld or delayed.
SECTION 7.12 SEVERABILITY. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.
SECTION 7.13 FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of the Purchasers or the Company, each of the
Company and each Purchaser shall execute and deliver such instrument, documents
and other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement.
SECTION 7.14 CONFIDENTIALITY. Each Purchaser agrees to maintain the
confidentiality of all information about the Company received from any officer,
employee or agent of the Company, until such time as that confidential
information is released to the public generally other than as a result of any
disclosure by a Purchaser.
SECTION 7.15 TERMINATION. This Agreement may be terminated at any time
by the mutual consent of the parties hereto or by any party by written notice to
all other parties if the transactions contemplated hereby have not been
consummated by December 31, 2000 through no fault of the party seeking such
termination.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
20
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
GELTEX PHARMACEUTICALS, INC.
By: /s/ Mark Skaletsky
----------------------------------
Name: Mark Skaletsky
Title: President and CEO
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By: /s/ Anthony L. M. Inder Rieden
----------------------------------
Name: Anthony L. M. Inder Rieden
Title: Director
UBS BRINSON, INC.
By: /s/ Simon J. Boote
----------------------------------
Name: Simon J. Boote
Title: Managing Director
BIOPHARMA EQUITIES HOLDINGS, N.V.
By: /s/ Reijer Lenstra
----------------------------------
Name: Reijer Lenstra
Title: Portfolio Manager
DEERFIELD MANAGEMENT
By: /s/ Arnold H. Snider
----------------------------------
Name: Arnold H. Snider
Title: General Partner
-21-
<PAGE> 25
EXHIBIT A
NUMBER OF SHARES OF COMMON STOCK PURCHASED
<TABLE>
<CAPTION>
Name of Purchaser and Number of Shares of
Notice Information Common Stock Purchased
- --------------------------------------------------------------------------------
<S> <C>
Acqua Wellington North American Equities 250,000
Fund, LTD.
Address:
c/o Mees Pierson Fund Services
(Bahamas) Ltd.
Montague Sterling Centre
East Bay Street, P.O. Box SS-6238
Nassua, Bahamas
Attention: Anthony L. M. Inder Rieden
Telephone: 242-394-2700
Telecopy: 242-394-9667
With a copy to:
Parker Chapin LLP
405 Lexington Avenue
New York, New York 10174
Attention: Christopher S. Auguste
Telephone: 212-704-6000
Telecopy: 212-704-6288
- --------------------------------------------------------------------------------
UBS Brinson, Inc. 600,000
Address:
UBS Brinson, Inc.
10 East 50th Street
New York, New York 10022
Attention: Toni Claudio
Telephone: 212-335-1059
- --------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 26
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Telecopy: 212-335-1383
With a copy to:
UBS Brinson, Inc.
10 East 50th Street
New York, New York 10022
Attention: Charles Mathys
Telephone: 212-335-1210
Telecopy: 212-335-1506
- --------------------------------------------------------------------------------
Biopharma Equities Holdings, N.V. 650,000
Address:
161 West 61st Street, Suite 9C
New York, New York 10023
Attention: Reijer Lenstra
Telephone: 212-541-9631
Telecopy: N/A
With a copy to: N/A
- --------------------------------------------------------------------------------
Deerfield Partners, L.P. 184,250
Deerfield International Limited 65,750
Address:
450 Lexington Avenue, Suite 1450
New York, New York 10017
Attention: Ralph Dannucci
Telephone: 212-551-1600
Telecopy: 212-599-3075
With a copy to: N/A
- --------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 27
INDEX OF SCHEDULES
Schedule 3.1(c) - Capitalization
Schedule 3.1(g) - Subsidiaries
24
<PAGE> 28
SCHEDULE 3.1(c)
CAPITALIZATION
As of March 1, 2000
<TABLE>
<S> <C>
Authorized Capital Stock: 55,000,000 shares
50,000,000 shares designated as Common
Stock, $.01 par value per share ("Common
Stock") and 5,000,000 shares of
preferred stock, $.01 par value per
share ("Preferred Stock"), 500,000
shares of which have been designated as
Series A Participating Preferred Stock.
Common Stock Outstanding: 18,039,162
Preferred Stock Outstanding: 0
Options and Warrants Outstanding: 3,967,017
</TABLE>
25
<PAGE> 29
SCHEDULE 3.1(g)
SUBSIDIARIES
<TABLE>
<CAPTION>
Subsidiary State of Incorporation or Ownership
Organization
<S> <C> <C>
SunPharm Corporation Delaware GelTex Pharmaceuticals, Inc. - 100%
</TABLE>
26
<PAGE> 1
EXHIBIT 10.2
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 7, 2000
BY AND BETWEEN
GELTEX PHARMACEUTICALS, INC.
AND
ACQUA WELLINGTON
NORTH AMERICAN EQUITIES FUND, LTD.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I Definitions............................................................1
Section 1.1 Definitions............................................................1
ARTICLE II Purchase and Sale of Common Stock......................................2
Section 2.1 Purchase and Sale of Stock.............................................2
Section 2.2 The Shares.............................................................3
Section 2.3 Registration Statement and Prospectus..................................3
Section 2.4 Purchase Price and Closing.............................................3
ARTICLE III Representations and Warranties.........................................3
Section 3.1 Representation and Warranties of the Company...........................3
Section 3.2 Representation, Warranties and Covenants of the Purchaser.............10
ARTICLE IV Covenants.............................................................12
Section 4.1 Securities............................................................12
Section 4.2 Registration and Listing..............................................12
Section 4.3 Registration Statement................................................12
Section 4.4 Compliance with Laws..................................................12
Section 4.5 Keeping of Records and Books of Account...............................13
Section 4.6 Reporting Requirements................................................13
Section 4.7 Other Agreements......................................................13
Section 4.8 Non-public Information................................................14
Section 4.9 No Stop Orders........................................................14
Section 4.10 Amendments to the Registration Statement..............................14
Section 4.11 Prospectus Delivery...................................................14
ARTICLE V Conditions to Closing and Draw Downs..................................15
Section 5.1 Conditions Precedent to the Obligation of
the Company to Sell the Shares........................................15
Section 5.2 Conditions Precedent to the Obligation of the Purchaser to Close......16
Section 5.3 Conditions Precedent to the Obligation of the Purchaser
to Accept a Draw Down and Purchase the Shares.........................17
ARTICLE VI Draw Down Terms.......................................................17
Section 6.1 Drawn Down Terms......................................................17
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VII Termination...........................................................19
Section 7.1 Termination by Mutual Consent.........................................19
Section 7.2 Other Termination.....................................................19
Section 7.3 Effect of Termination.................................................19
ARTICLE VIII Indemnification.......................................................20
Section 8.1 General Indemnity.....................................................20
Section 8.2 Indemnification Procedures............................................21
ARTICLE IX Miscellaneous.........................................................22
Section 9.1 Fees and Expenses.....................................................22
Section 9.2 Specific Enforcement, Consent to Jurisdiction.........................22
Section 9.3 Entire Agreement; Amendment...........................................23
Section 9.4 Notices...............................................................23
Section 9.5 Waivers...............................................................24
Section 9.6 Headings..............................................................24
Section 9.7 Successors and Assigns................................................24
Section 9.8 Governing Law.........................................................24
Section 9.9 Survival..............................................................24
Section 9.10 Counterparts..........................................................25
Section 9.11 Publicity.............................................................25
Section 9.12 Severability..........................................................25
Section 9.13 Further Assurances....................................................25
</TABLE>
-ii-
<PAGE> 4
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
March 7, 2000 by and between GelTex Pharmaceuticals, Inc., a Delaware
corporation (the "Company") and Acqua Wellington North American Equities Fund,
Ltd., a company organized under the laws of the Commonwealth of The Bahamas (the
"Purchaser").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
(a) "COMMISSION" shall have the meaning assigned to such term in
Section 2.3 hereof.
(b) "COMMISSION DOCUMENTS" shall have the meaning assigned to such
term in Section 3.1(f) hereof.
(c) "COMMISSION FILINGS" means the Company's Form 10-K for the fiscal
year ended December 31, 1998, its Form 8-K dated March 6, 2000, its Registration
Statement on Form S-3 No. 333-96277 its Registration Statement on Form S-3 No
333-95313, its Registration Statement on Form S-4 No. 333-88459, and all other
filings made by the Company after the date hereof pursuant to the Securities
Exchange Act of 1934.
(d) "DRAW DOWN" shall have the meaning assigned to such term in
Section 6.1(a) hereof.
(e) "DRAW DOWN AMOUNT" means the actual amount of a Draw Down up to
$6,000,000.
(f) "DRAW DOWN DISCOUNT PERCENTAGE" means (i) 95% if the Threshold
Price is equal to or exceeds $18.00; (ii) 94.375% if the Threshold Price is
equal to or exceeds $15.00 but is less than $18.00; (iii) 93.375% if the
Threshold Price is equal to or exceeds $12.00 but is less than $15.00; and (iv)
92.875% if the Threshold Price is equal to or exceeds $10.00 but is less than
$12.00.
(g) "DRAW DOWN NOTICE" shall have the meaning assigned to such term
in Section 6.1(i) hereof.
(h) "DRAW DOWN PRICING PERIOD" shall mean a period of eighteen (18)
consecutive trading days starting with the first trading day specified in Draw
Down Notice or
-1-
<PAGE> 5
such other period of consecutive trading days as mutually agreed upon by the
Company and the Purchaser.
(i) "EFFECTIVE DATE" shall mean March 6, 2000.
(j) "MATERIAL ADVERSE EFFECT" shall mean any effect on the business,
results of operations, prospects, assets or financial condition of the Company
that is material and adverse to the Company and its subsidiaries, taken as a
whole and/or any condition, circumstance, or situation that would prohibit the
Company from entering into and performing any of its obligations under this
Agreement in any material respect.
(k) "MATERIAL CHANGE IN OWNERSHIP" shall mean that, as of a
particular measurements date, the officers and directors of the Company shall
beneficially own in the aggregate less than 2% of the outstanding Common Stock
of the Company that those officers and directors beneficially own as of the date
hereof.
(l) "PROSPECTUS" as used in this Agreement means the prospectus in
the form included in the Registration Statement, as supplemented from time to
time pursuant to Rule 424(b) of the Securities Act of 1933, as amended (the
"Securities Act").
(m) "REGISTRATION STATEMENT" shall mean the registration statement on
Form S-3, Commission File Number 333-96277 under the Securities Act, filed with
the Securities and Exchange Commission for the registration of the Shares, as
such Registration Statement may be amended from time to time.
(n) "SETTLEMENT DATE" shall have the meaning assigned to such term in
Section 6.1(d) hereof.
(o) "SHARES" shall mean the shares of Common Stock of the Company
that may be purchased hereunder.
(p) "THRESHOLD PRICE" is the lowest VWAP at which the Company will
sell Shares during each Draw Down Pricing Period.
(q) "VWAP" shall mean the daily volume weighted average price (based
on a trading day from 9:30 a.m. to 4:00 p.m., E.S.T.) of the Company on NASDAQ
(or any successor thereto) as reported by Bloomberg Financial LP using the AQR
function.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
SECTION 2.1 PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions of this Agreement, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase from the Company up to $72,000,000 of the
Company's common stock, $.01 par value per share (the "Common Stock"), based on
Draw Downs in accordance with Section 6.1. In no
-2-
<PAGE> 6
event shall the amount of Common Stock required to be purchased by the Purchaser
exceed $6,000,000 per Draw Down.
SECTION 2.2 THE SHARES. The Company has authorized and has reserved
and covenants to continue to reserve, subject to Section 4.4(b) hereof, free of
preemptive rights and other similar contractual rights of stockholders,
1,750,000 shares of its Common Stock to cover the Shares to be issued in
connection with all Draw Downs.
SECTION 2.3 REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act, the
Registration Statement, including a prospectus subject to completion relating to
the Shares. The Registration Statement was declared effective on March 6, 2000.
SECTION 2.4 PURCHASE PRICE AND CLOSING. In consideration of and in
express reliance upon the representations, warranties, covenants, terms and
conditions of this Agreement, the Company agrees to issue and sell to the
Purchaser and the Purchaser agrees to purchase from the Company, that number of
the Shares to be issued in connection with each Draw Down. The closing of the
execution and delivery of this Agreement (the "Closing") shall take place at the
offices of Parker Chapin LLP, The Chrysler Building, 405 Lexington Avenue, New
York, NY 10174 at 5:00 p.m. Eastern Time on (i) March 13, 2000, or (ii) such
other time and place or on such date as the Purchaser and the Company may agree
upon (the "Closing Date"). Each party shall deliver all documents, instruments
and writings required to be delivered by such party pursuant to this Agreement
at or prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATION AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power to own, lease and operate
its properties and assets and to conduct its business as it is now being
conducted. As of the date hereof, the Company does not have any subsidiaries (as
defined in Section 3.1(g)) except as set forth in the Registration Statement and
in the Company's most recent Form 10-K, including the accompanying financial
statements (the "Form 10-K"), or in the Company's most recent Form 10-Q (the
"Form 10-Q"), or on SCHEDULE 3.1(g) attached hereto. The Company and each such
subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which the failure to be so qualified will not have a
Material Adverse Effect.
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue and sell the Shares in
-3-
<PAGE> 7
accordance with the terms hereof. The execution, delivery and performance of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and, except as contemplated by Section 3.1(e), no further
consent or authorization of the Company or its Board of Directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. This Agreement constitutes, or when executed and delivered shall
constitute, a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of creditor's rights and remedies or by
other equitable principles of general application.
(c) CAPITALIZATION. The authorized capital stock of the Company and
the shares thereof issued and outstanding as of March 1, 2000 are set forth on
SCHEDULE 3.1(c) attached hereto. All of the outstanding shares of the Company's
Common Stock have been duly and validly authorized, and are fully paid and
non-assessable. Except as set forth in this Agreement or as set forth in the
Registration Statement, the Commission Documents, the Commission Filings or on
SCHEDULE 3.1(c) attached hereto, as of March 1, 2000, no shares of Common Stock
are entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement, in the Common Stock Purchase Agreement
between the Company, the Purchaser and certain other purchasers named therein to
be entered into on or about the date of this Agreement (the "Directed Placement
Agreement"), the Registration Statement, the Commission Documents or the
Commission Filings, as of the date hereof, there are no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into shares of capital stock of the Company.
Except for customary transfer restrictions contained in agreements entered into
by the Company in order to sell restricted securities or as described in the
Registration Statement, the Commission Documents or the Commission Filings, as
of the date hereof, the Company is not a party to any agreement granting
registration rights to any person with respect to any of its equity or debt
securities. Except as set forth in the Registration Statement, the Commission
Documents or the Commission Filings, as of the date hereof, the Company is not a
party to, and it has no knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock of the Company. Except as set forth
in the Registration Statement, the Commission Documents or the Commission
Filings, the offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing complied
with all applicable federal and state securities laws, and no stockholder has a
right of rescission or damages with respect thereto which would have a Material
Adverse Effect. The Company has furnished or made available to the Purchaser
true and correct copies of the Company's Certificate of Incorporation as in
effect on the date hereof (the "Articles"), and the Company's Bylaws as in
effect on the date hereof (the "Bylaws").
(d) ISSUANCE OF SHARES. The Shares have been duly authorized by all
necessary corporate action and, when paid for or issued in accordance with the
terms hereof, the
-4-
<PAGE> 8
Shares shall be validly issued and outstanding, fully paid and non-assessable,
and the Purchaser shall be entitled to all rights accorded to a holder of Common
Stock.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated therein do not (i) violate any provision of the Company's Articles
or Bylaws, (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, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party or by
which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except, in all cases, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The Company is not required under federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement, or
issue and sell the Shares in accordance with the terms hereof (other than any
filings which may be required to be made by the Company with the Commission, or
Nasdaq subsequent to the Closing, and, any registration statement which may be
filed pursuant hereto); provided that, for purpose of the representation made in
this sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Purchaser herein.
(f) COMMISSION DOCUMENTS, FINANCIAL STATEMENTS. The Common Stock of
the Company is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, except as disclosed
in the Registration Statement, or the Commission Documents or the Commission
Filings, as of the date hereof, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Commission pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the "Commission Documents"). The Company has delivered or
made available to the Purchaser true and complete copies of the Commission
Documents filed with the Commission since December 31, 1998 and prior to the
Closing Date. The Company has not provided to the Purchaser any information
which, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement and the
Directed Placement Agreement. The Form 10-K for the year ended December 31, 1998
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such
document, and, as of its date, such Form 10-K did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
-5-
<PAGE> 9
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Commission Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis 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 not
include footnotes or may be condensed or summary statements), and fairly present
in all material respects the financial position of the Company and its
subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(g) SUBSIDIARIES. The Commission Documents or SCHEDULE 3.1(g) attached
hereto set forth each subsidiary of the Company as of the date hereof, showing
the jurisdiction of its incorporation or organization and showing the percentage
of each person's ownership of the outstanding stock or other interests of such
subsidiary. For the purposes of this Agreement, "subsidiary" shall mean any
corporation or other entity of which at least a majority of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other subsidiaries. Except as set forth in the Commission Documents or
the Commission Filings, none of such subsidiaries is a "significant subsidiary"
as defined in Regulation S-X.
(h) NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, the Company
has not experienced or suffered any Material Adverse Effect, except continued
losses from operations.
(i) NO UNDISCLOSED LIABILITIES. Except as disclosed in the Commission
Documents or the Commission Filings, neither the Company nor any of its
subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any subsidiary (including the notes thereto) in conformity with GAAP
and are not disclosed in the Commission Documents or Commission Filings, other
than those incurred in the ordinary course of the Company's or its subsidiaries'
respective businesses since December 31, 1999 and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.
(j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect.
(k) INDEBTEDNESS. The Commission Documents or the Commission Filings
set forth as of December 31, 1999 all outstanding secured and unsecured
Indebtedness of the
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Company or any subsidiary, or for which the Company or any subsidiary has
commitments. For the purposes of this Agreement, "Indebtedness" shall mean (a)
any liabilities for borrowed money or amounts owed in excess of $100,000 (other
than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.
(l) TITLE TO ASSETS. Each of the Company and the subsidiaries has good
and marketable title to all of its real and personal property reflected in the
Commission Documents, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except for those indicated in the Commission
Documents, the Commission Filings or such that could not reasonably be expected
to cause a Material Adverse Effect. All leases of the Company and each of its
subsidiaries are valid and subsisting and in full force and effect in all
material respects.
(m) ACTIONS PENDING. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as set forth in the Commission Documents or the
Commission Filings, there is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened, against or involving
the Company, any subsidiary or any of their respective properties or assets and
which, if adversely determined, is reasonably likely to result in a Material
Adverse Effect.
(n) COMPLIANCE WITH LAW. The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Commission Documents or the Commission
Filings or such that do not cause a Material Adverse Effect. The Company and
each of its subsidiaries have all franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it, except for such
franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals, the failure to possess which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(o) CERTAIN FEES. No brokers, finders or financial advisory fees or
commissions will be payable by the Company or any subsidiary with respect to the
transactions contemplated by this Agreement.
(p) DISCLOSURE. To the best of the Company's knowledge, neither this
Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchaser by or on behalf of the Company or any
subsidiary in connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact
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<PAGE> 11
or omit to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
(q) OPERATION OF BUSINESS. The Company or one of the subsidiaries owns
or possesses all patents, trademarks, service marks, trade names, copyrights,
licenses and authorizations as set forth in the Commission Documents or the
Commission Filings and all rights with respect to the foregoing, which are
necessary for the conduct of its business as now conducted without any conflict
with the rights of others, except to the extent set forth in the Commission
Documents or that a Material Adverse Effect could not reasonably be expected to
result from such conflict.
(r) ENVIRONMENTAL COMPLIANCE. Except as disclosed in the Commission
Filings, the Company and each of its subsidiaries have obtained all material
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations of all governmental authorities, or from any
other person, that are required under any Environmental Laws. "Environmental
Laws" shall mean all applicable laws relating to the protection of the
environment including, without limitation, all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. Except for such
instances as would not individually or in the aggregate have a Material Adverse
Effect, to the best of the Company's knowledge, there are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting the Company or its subsidiaries that violate or could
reasonably be expected to violate any Environmental Law after the Closing or
that could reasonably be expected to give rise to any environmental liability,
or otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation (i) under any Environmental Law, or (ii) based
on or related to the manufacture, processing, distribution, use, treatment,
storage (including without limitation underground storage tanks), disposal,
transport or handling, or the emission, discharge, release or threatened release
of any hazardous substance.
(s) MATERIAL AGREEMENTS. Except as set forth in the Commission
Documents or Commission Filings and except for the Directed Placement Agreement
(if such agreement has been entered into at the time this Agreement is entered
into) which shall be timely filed by the Company, neither the Company nor any
subsidiary is a party to any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement, a copy of which would be required
to be filed with the Commission as an exhibit to a registration statement on
Form S-3 (collectively, "Material Agreements") if the Company or any subsidiary
were registering securities under the Securities Act immediately prior to the
effectiveness of this Agreement. The Company and each of its subsidiaries has in
all material respects performed all the obligations required to be performed by
them to date under the foregoing agreements, have received no notice of default
and, to the best of the Company's knowledge are not in default under any
Material Agreement now in effect, the result of which could reasonably be
expected to cause a Material Adverse Effect.
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<PAGE> 12
(t) TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Commission Documents or the Commission Filings, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts or arrangements
or other continuing transactions exceeding $100,000 between (a) the Company, any
subsidiary or any of their respective customers (excluding agreements related to
the purchase or lease of the Company's products) or suppliers on the one hand,
and (b) on the other hand, any officer, employee, consultant or director of the
Company, or any of its subsidiaries, or any person who would be covered by Item
404(a) of Regulation S-K or any corporation or other entity controlled by such
officer, employee, consultant, director or person.
(u) SECURITIES ACT OF 1933. The Company has complied in all material
respects with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Shares hereunder.
(i) Each Prospectus included as part of the Registration
Statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the provisions of the
Securities Act. The Commission has not issued any order preventing or
suspending the use of any Prospectus.
(ii) The Company meets the requirements for the use of Form S-3
under the Securities Act. The Registration Statement in the form in which
it became effective and also in such form as it may be when any
post-effective amendment thereto became effective and the Prospectus and
any supplement or amendment thereto when filed with the Commission under
Rule 424(b) under the Securities Act, complied in all material respects
with the provisions of the Securities Act and did not at any such times
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the circumstances
under which they were made) not misleading, except that this representation
and warranty does not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to the Purchaser furnished to the
Company in writing by or on behalf of the Purchaser expressly for use
therein.
(iii) The Company has not distributed and, prior to the
completion of the sale of the Shares to the Purchaser, will not distribute
any offering material in connection with the offer and sale of the Shares
other than the Registration Statement, the Prospectus or other materials,
if any, permitted by the Securities Act.
(v) EMPLOYEES. As of the date hereof, neither the Company nor any
subsidiary has any collective bargaining arrangements or agreements covering any
of its employees, except as set forth in the Commission Documents or the
Commission Filings. Each of the Company and its subsidiaries requires its
officers, employees and certain consultants to enter into agreements regarding
proprietary information, noncompetition, nonsolicitation, confidentiality, or
other similar agreements containing restrictive covenants. As of the date
hereof, except as disclosed in the Registration Statement, the Commission
Documents, the Commission Filings or SCHEDULE 3.1(v), no officer, consultant or
key employee of the Company
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<PAGE> 13
or any subsidiary whose termination, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, has terminated
or, to the knowledge of the Company, has any present intention of terminating
his or her employment or engagement with the Company or any subsidiary.
(w) USE OF PROCEEDS. The proceeds from the sale of the Shares will be
used by the Company and its subsidiaries for the purposes set forth in the
Prospectus under "Use of Proceeds".
(x) PUBLIC UTILITY HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT
STATUS. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(y) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan by the Company or any of its
subsidiaries which is or would have a Material Adverse Effect. The execution and
delivery of this Agreement and the issue and sale of the Shares will not involve
any transaction which is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended, PROVIDED that, if any of the
Purchaser, or any person or entity that owns a beneficial interest in any of the
Purchaser, is an "employee pension benefit plan" (within the meaning of Section
3(2) of ERISA) with respect to which the Company is a "party in interest"
(within the meaning of Section 3(14) of ERISA), the requirements of Sections
407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section
3.1(y), the term "Plan" shall mean an "employee pension benefit plan" (as
defined in Section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any
subsidiary or by any trade or business, whether or not incorporated, which,
together with the Company or any subsidiary, is under common control, as
described in Section 414(b) or (c) of the Code.
(z) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF SHARES. The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Purchaser 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 hereunder and any advice given by the Purchaser or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Purchaser's purchase of the
Shares.
SECTION 3.2 REPRESENTATION, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser hereby makes the following representations, warranties and
covenants to the Company:
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(a) ORGANIZATION AND STANDING OF THE PURCHASER. The Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the Commonwealth of The Bahamas.
(b) AUTHORIZATION AND POWER. The Purchaser has the requisite corporate
power and authority to enter into and perform this Agreement and to purchase the
Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Purchaser, its
Board of Directors or stockholders is required. This Agreement constitutes, or
when executed and delivered shall constitute, a valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership, or similar laws relating to, or affecting generally the
enforcement of creditor's rights and remedies or by other equitable principles
of general application.
(c) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby and thereby or relating hereto do not and will not (i) result in a
violation of such Purchaser's charter documents or bylaws 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, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Purchaser is a party, (iii) create or impose or lien,
charge or encumbrance on any property of the Purchaser under any agreement or
any commitment to which the Purchaser is party or by which the Purchaser is on
or by which any of its respective properties or assets are bound or (iv) result
in a violation of any law, rule or regulation, or any order, judgment or decree
of any court or governmental agency applicable to the Purchaser or its
properties, except for such conflicts, defaults and violations as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Purchaser to enter into and perform its obligations under this
Agreement in any material respect. The Purchaser is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement or to purchase the Shares in accordance
with the terms hereof, PROVIDED that for purposes of the representation made in
this sentence, the Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.
(d) INFORMATION. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Purchaser. The Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. The
Purchaser 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 Shares. Purchaser understands that it (and not the Company)
shall be responsible for its own tax liabilities that may arise as a result of
this investment or the transactions contemplated by this Agreement.
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<PAGE> 15
(e) NO SHORTING. The Purchaser has the right to sell shares of the
Company's Common Stock equal in number to the number of the Shares to be
purchased pursuant to this Agreement during the Draw Down Pricing Period. The
Purchaser covenants, however, that prior to and during the term of the Draw Down
Pricing Period, neither the Purchaser nor any of its affiliates nor any entity
managed by the Purchaser will ever be in a net short position with respect to
shares of the Common Stock of the Company in any accounts directly or indirectly
managed by the Purchaser or any affiliate of the Purchaser or any entity managed
by the Purchaser.
ARTICLE IV
COVENANTS
The Company covenants with the Purchaser as follows, which covenants are
for the benefit of the Purchaser and its permitted assignees (as defined
herein).
SECTION 4.1 SECURITIES. The Company shall notify the Commission and
Nasdaq, if applicable, in accordance with their rules and regulations, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Shares to the Purchaser
or subsequent holders.
SECTION 4.2 REGISTRATION AND LISTING. The Company will take all action
necessary to cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, will comply in all respects with its
reporting and filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the Securities Act or
the rules promulgated thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing obligations under the Exchange
Act or Securities Act, except as permitted herein. The Company will take all
action necessary to continue the listing or trading of its Common Stock and the
listing of the Shares purchased by Purchaser hereunder on the NASDAQ or any
relevant market or system, if applicable, and will comply in all respects with
the Company's reporting, filing and other obligations under the bylaws or rules
of the NASD or any relevant market or system.
SECTION 4.3 REGISTRATION STATEMENT. Before the Purchaser shall be
obligated to accept a Draw Down request from the Company, the Company shall have
caused a sufficient number of shares of Common Stock to be registered to cover
the Shares to be issued in connection with this Agreement.
SECTION 4.4 COMPLIANCE WITH LAWS.
(a) The Company shall comply, and cause each subsidiary to comply,
with all applicable laws, rules, regulations and orders, noncompliance with
which could reasonably be expected to have a Material Adverse Effect.
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(b) The Company will not be obligated to issue and the Purchaser will
not be obligated to purchase any shares of the Company's Common Stock which
would result in the issuance under this Agreement of Shares representing more
than nineteen and nine-tenths percent (19.9%) of the issued and outstanding
shares of the Company's Common Stock on the date hereof.
SECTION 4.5 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
SECTION 4.6 REPORTING REQUIREMENTS. Upon written request, the Company
shall furnish the following to the Purchaser so long as such Purchaser shall be
obligated hereunder to purchase Shares:
(a) Quarterly Reports filed with the Commission on Form 10-Q as soon
as available, and in any event within 45 days after the end of each of the first
three fiscal quarters of the Company; and
(b) Annual Reports filed with the Commission on Form 10-K as soon as
available, and in any event within 90 days after the end of each fiscal year of
the Company.
SECTION 4.7 OTHER AGREEMENTS. The Company is restricted from entering
in any other financing agreement ("Other Financing") without the prior written
consent of the Purchaser, which consent will not be unreasonably withheld,
conditioned or delayed or without terminating its agreement with the Purchaser,
except that the Company may (i) enter into a loan, credit or lease facility with
a bank or financing institution, (ii) establish an employee stock option plan or
agreement or finance the acquisition of other companies, equipment, technologies
or lines of business, (iii) issue shares of Common Stock and/or Preferred Stock
in connection with the Company's current option plans, stock purchase plans,
rights plans, currently outstanding warrants or options, acquisition of
products, licenses or other assets and strategic partnerships or joint ventures
or increase the number of shares available under any such plans (the primary
purpose of which is not to raise equity) and (iv) enter into the Directed
Purchase Agreement and sell up to 1,750,000 shares of Common Stock as
contemplated thereby (each a "Permitted Transaction"). If the Purchaser consents
to the Company entering into an Other Financing, the Purchaser shall have the
option, which option shall be exercised within ten (10) calendar days of its
consent, to purchase all or a portion of the Other Financing on the same,
absolute terms and conditions contemplated therein. If the Purchaser does not
exercise its purchase option in writing before 5 p.m. on such tenth (10th)
calendar day, the Company shall have the right to close the Other Financing on
the scheduled closing date with a third party; PROVIDED that all of the terms
and conditions of such closing are the same as those provided to the Purchaser.
SECTION 4.8 NON-PUBLIC INFORMATION. Neither the Company nor any of its
officers or agents shall disclose any material non-public information about the
Company to the Purchaser.
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SECTION 4.9 NO STOP ORDERS. The Company will advise the Purchaser
promptly and, if requested by the Purchaser, will confirm such advice in
writing: (i) of its receipt of notice of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prospectus or
for additional information; (ii) of its receipt of notice of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for offering or
sale in any jurisdiction or the initiation of any proceeding for such purpose;
and (iii) of its becoming aware of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Securities Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act or any other law. If at any time
the Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make commercially reasonable efforts to
obtain the withdrawal of such order at the earliest possible time.
SECTION 4.10 AMENDMENTS TO THE REGISTRATION STATEMENT. The Company
will not (i) file any amendment to the Registration Statement or make any
amendment or supplement to the Prospectus of which the Purchaser shall not
previously have been advised or to which the Purchaser shall reasonably object
after being so advised or (ii) so long as, in the reasonable opinion of counsel
for the Purchaser, a Prospectus is required to be delivered in connection with
sales by any Purchaser or dealer, file any information, documents or reports
pursuant to the Exchange Act without delivering a copy of such information,
documents or reports to the Purchaser promptly following such filing.
SECTION 4.11 PROSPECTUS DELIVERY. Prior to the execution and delivery
of this Agreement, the Company will deliver to the Purchaser, without charge, in
such quantities as reasonably requested by the Purchaser, copies of each form of
Prospectus. As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Purchasers a prospectus is required by the Securities Act to be
delivered in connection with sales by the Purchaser, the Company will
expeditiously deliver to the Purchaser, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as the Purchaser may
reasonably request. The Company consents to the use of the Prospectus (and of
any amendment or supplement thereto) in accordance with the provisions of the
Securities Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares may be sold by the Purchaser, in connection with the offering
and sale of the Shares and for such period of time thereafter as the Prospectus
is required by the Securities Act to be delivered in connection with sales of
the Shares. If during such period of time any event shall occur that in the
judgment of the Company or in the opinion of counsel for the Purchaser is
required to be set forth in the Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Prospectus to comply with the Securities
Act or any other law, the Company will forthwith prepare and, subject to the
provisions of Section 4.10 above, file with
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<PAGE> 18
the Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Purchaser a reasonable number of copies thereof.
ARTICLE V
CONDITIONS TO CLOSING AND DRAW DOWNS
SECTION 5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
CLOSE THIS AGREEMENT AND TO SELL THE SHARES. The obligation hereunder of the
Company to issue and sell the Shares to the Purchaser is subject to the
satisfaction or waiver, at or before each Draw Down, of each of the conditions
set forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the date of each Draw Down
request (the "Draw Down Exercise Date") as though made at that time, except for
representations and warranties that are expressly made as of a particular date.
(b) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
registering the offer and sale of the Shares shall have been declared effective
by the Commission and shall have been amended or supplemented, as required, to
disclose the sale of the Shares prior to each Settlement Date, as applicable.
(c) PERFORMANCE BY THE PURCHASER. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to each Settlement Date.
(d) NO INJUNCTION. No statute, 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.
(e) NO SUSPENSION, ETC. Trading in the Company's Common Stock shall
not be suspended by the Commission or the NASD (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to Closing), and, at any time prior to each Draw Down request,
trading in securities generally as reported on NASDAQ shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by American Stock Exchange, or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States or New York State authorities, nor shall there have occurred
any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of the Company, makes it impracticable or inadvisable to issue the
Shares.
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(f) NO PROCEEDINGS OR LITIGATION. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
SECTION 5.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
CLOSE THIS AGREEMENT. The obligation hereunder of the Purchaser to enter this
Agreement is subject to the satisfaction or waiver, at or before the Closing, of
each of the conditions set forth below. These conditions are for the Purchaser's
sole benefit and may be waived by the Purchaser at any time in its sole
discretion.
(a) PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(b) NO SUSPENSION, ETC. Trading in the Company's Common Stock shall
not be suspended by the Commission or the NASD (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to Closing), and, at any time prior to the Closing, trading in
securities generally as reported on NASDAQ shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by the American Stock Exchange, or on the New York Stock
Exchange, nor shall a banking moratorium have been declared either by the United
States or New York State authorities, nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on, or any material adverse
change in any financial market which, in each case, in the judgment of the
Purchaser, makes it impracticable or inadvisable to purchase the Shares.
(c) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) NO PROCEEDINGS OR LITIGATION. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
(e) OPINION OF COUNSEL, ETC. At the Closing, the Purchaser shall have
received an opinion of counsel to the Company, dated the date of Closing, in the
form of Exhibit A hereto, and such other certificates and documents as the
Purchaser or its counsel shall reasonably require incident to the Closing.
-16-
<PAGE> 20
SECTION 5.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACCEPT A DRAW DOWN AND PURCHASE THE SHARES. The obligation hereunder of the
Purchaser to accept a Draw Down request and to acquire and pay for the Shares is
subject to the satisfaction or waiver, at or before each Draw Down Exercise
Date, of each of the conditions set forth below. The conditions are for the
Purchaser's sole benefit and may be waived by the Purchaser at any time in its
sole discretion.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. Each of
the representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Draw Down Exercise
Date as though made at that time (except for representations and warranties that
speak as of a particular date).
(b) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
registering the Shares shall have been declared effective by the Commission
prior to the Closing Date and shall thereafter be amended or supplemented, as
required, to disclose the sale of the Shares prior to the Closing Date or each
Settlement Date, as applicable.
(c) NO SUSPENSION. Trading in the Company's Common Stock shall not
have been suspended by the Commission or the NASD (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to each Draw Down request), and, at any time prior to such
request, trading in securities generally as reported on NASDAQ shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by the American Stock Exchange.
(d) MATERIAL ADVERSE EFFECT; MATERIAL CHANGE IN OWNERSHIP. No Material
Adverse Effect and no Material Change in Ownership shall have occurred.
ARTICLE VI
DRAW DOWN TERMS
SECTION 6.1 DRAWN DOWN TERMS. Subject to the satisfaction of the
conditions set forth in this Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue a Draw Down Notice
with respect to up to (i) $6,000,000 if the Threshold Price is equal to or
exceeds $18.00; (ii) $5,000,000 if the Threshold Price is equal to or exceeds
$15.00 but is less than $18.00; (iii) $4,000,000 if the Threshold Price is equal
to or exceeds $12.00 but is less than $15.00; and (iv) up to $3,000,000 if the
Threshold Price is equal to or exceeds $10.00 but is less than $12.00, or such
other amount, and under such terms, mutually agreed upon by the Purchaser and
the Company (a "DRAW DOWN") during any Draw Down Pricing Period, which Draw Down
the Purchaser will be obligated to accept. Prior to issuing any Draw Down
Notice, the Company shall have Shares representing at least the Draw Down Amount
registered under the Registration Statement.
(b) The number of Shares to be issued in connection with each Draw
Down shall be equal to the sum of the quotients (for each trading day of the
Draw Down Pricing Period
-17-
<PAGE> 21
for which the VWAP equals or exceeds the Threshold Price) of (x) 1/18th (or such
other fraction based upon the agreed upon Draw Down Pricing Period) of the Draw
Down Amount divided by (y) the applicable Draw Down Discount Percentage
multiplied by the VWAP for such day.
(c) Only one Draw Down shall be allowed in each Draw Down Pricing
Period.
(d) The number of Shares purchased by the Purchaser with respect to
each Draw Down shall be determined on a daily basis during each Draw Down
Pricing Period and settled on the second business day following the end of each
Draw Down Pricing Period (the "SETTLEMENT DATE").
(e) There shall be a minimum of five (5) trading days (or such other
number of trading days mutually agreed upon by the Purchaser and the Company)
between Draw Downs.
(f) There shall be a maximum of twelve (12) Draw Downs during the term
of this Agreement.
(g) Each Draw Down will expire on the last trading day of each Draw
Down Pricing Period.
(h) For each trading day during the Draw Down Pricing Period that the
VWAP is at or above the Threshold Price, one-eighteenth (1/18th) (or such other
fraction based upon the agreed upon Draw Down Pricing Period) of the Draw Down
Amount shall be allocated to purchase Shares at a price equal to the product of
(x) the Draw Down Discount Percentage times (y) the VWAP for such day. For each
trading day during the Draw Down Pricing Period that the VWAP is less than the
Threshold Price, the Purchaser may elect in its sole discretion to allocate
1/18th (or such other fraction based upon the agreed upon Draw Down Pricing
Period) of the Draw Down Amount to purchase Shares at the end of such Draw Down
Pricing Period at a price equal to the product of (A) the Draw Down Discount
Percentage times (B) the Threshold Price. At no time shall the Threshold Price
be set below $10.00 unless agreed upon by the Company and the Purchaser. If
trading in the Company's Common Stock is suspended for any reason for more than
three (3) hours in any trading day, at the Purchaser's option, the price of the
Common Stock shall be deemed to be below the Threshold Price for that trading
day.
(i) The Company must inform the Purchaser via facsimile transmission
as to the Draw Down Amount the Company wishes to exercise before commencement of
trading on the first trading day of the Draw Down Pricing Period (the "DRAW DOWN
NOTICE"). In addition to the Draw Down Amount, the Company shall set the
Threshold Price with each Draw Down Notice and shall designate the first trading
day of the Draw Down Pricing Period.
(j) On each Settlement Date, the Company shall deliver the Shares
purchased by the Purchaser to the Purchaser or its designees via DWAC, against
payment therefor to the Company's designated account by wire transfer of
immediately available funds provided that the Shares are received by the
Purchaser no later than 1:00 p.m. (EST) or next day available funds if the
Shares are received thereafter.
-18-
<PAGE> 22
(k) If during any Draw Down Pricing Period, the Company with the
consent of the Purchaser shall issue any shares of Common Stock (other than
shares of Common Stock issued under this Agreement or in connection with a
Permitted Transaction), the Purchaser may in its sole discretion (i) purchase up
to the same number of shares of Common Stock at the price and on such terms as
the Company issued Shares of Common Stock during such Draw Down Pricing Period,
(ii) purchase up to the Draw Down Amount of shares of Common Stock at the
applicable Draw Down Discount Percentage times the VWAP for such Draw Down
Pricing Period, or (iii) elect not to purchase any Shares during such Draw Down
Pricing Period. The Purchaser shall notify the Company of its election of the
business day preceding the Settlement Date.
(l) If on the Settlement Date, the Company fails to deliver the Shares
to be purchased by the Purchaser, and such failure continues for ten (10)
trading days, the Company shall pay, in cash or restricted shares of Common
Stock, at the option of the Purchaser, as liquidated damages and not as a
penalty to the Purchaser an amount equal to two percent (2%) of the Draw Down
Amount for the initial thirty (30) days and each additional thirty (30) day
period thereafter until such failure has been cured, which shall be pro rated
for such periods less than thirty (30) days (the "Periodic Amount"). Cash
payments to be made pursuant to this clause (l) shall be due and payable
immediately upon demand in immediately available cash funds. Certificates
evidencing the restricted shares of Common Stock shall be delivered immediately
upon demand. The parties agree that the Periodic Amount represents a reasonable
estimate on the part of the parties, as of the date of this Agreement, of the
amount of damages that may be incurred by the Purchaser if the Company fails to
deliver the Shares on the Settlement Date. If the Purchaser elects to receive
shares of Common Stock instead of cash, the Purchaser shall have the right to
demand registration once within twelve (12) months of the date of issuance of
such shares of Common Stock and piggyback registration rights if the Company
files a separate registration statement.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION BY MUTUAL CONSENT. The term of this Agreement
shall be fourteen (14) months from the Effective Date. This Agreement may be
terminated at any time by mutual consent of the parties.
SECTION 7.2 OTHER TERMINATION. The Purchaser may terminate this
Agreement upon (x) one (1) day's notice if the Company issues convertible
debentures or enters an equity financing facility as set forth in Section 4.7
without the Purchaser's prior written consent, or (y) one (1) day's notice if an
event resulting in a Material Adverse Effect or a Material Change of Control in
Ownership has occurred.
SECTION 7.3 EFFECT OF TERMINATION. In the event of termination by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either
-19-
<PAGE> 23
party. If this Agreement is terminated as provided in Section 7.1 or 7.2 herein,
this Agreement shall become void and of no further force and effect, except as
provided in Section 9.9. Nothing in this Section 7.3 shall be deemed to release
the Company or the Purchaser from any liability for any breach under this
Agreement, or to impair the rights of the Company and the Purchaser to compel
specific performance by the other party of its obligations under this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 GENERAL INDEMNITY.
(a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and
hold harmless the Purchaser and each person, if any, who controls the Purchaser
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act from and against any losses, claims, damages, liabilities and
expenses (including reasonable costs of defense and investigation and all
reasonable attorney's fees) to which the Purchaser and each person, if any, who
controls the Purchaser may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement or the Prospectus
relating to the shares being sold to the Purchaser, or any amendment or
supplement to it, or (ii) the omission or alleged omission to state in that
Registration Statement or any document incorporated by reference in the
Registration Statement, a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that the
Company shall not be liable under this Section 8.1(a) to the extent that a court
of competent jurisdiction shall have determined by a final judgment that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act, undertaken or omitted to be taken by the Purchaser or such
person through its bad faith or willful misconduct; PROVIDED, however, that the
foregoing indemnity shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Purchasers expressly for use in the Registration Statement,
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and PROVIDED, further, that with respect to the Prospectus, the
foregoing indemnity shall not inure to the benefit of the Purchasers or any such
person from whom the person asserting any loss, claim, damage, liability or
expense purchased Common Stock, if copies of the Prospectus were timely
delivered to the Purchasers pursuant hereto and a copy of the Prospectus (as
then amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of the Purchasers
or any such person to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Common Stock to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or expense.
-20-
<PAGE> 24
The Company will reimburse the Purchaser and each such controlling
person promptly upon demand for any legal or other costs or expenses reasonably
incurred by the Purchaser or the controlling person in investigating, defending
against, or preparing to defend against any such claim, action, suit or
proceeding, except that the Company will not be liable to the extent a claim or
action which results in a loss, claim, damage, liability or expense arises out
of, or is based upon, an untrue statement, alleged untrue statement, omission or
alleged omission, included in the Registration Statement or any Prospectus in
reliance upon, and in conformity with, written information furnished by the
Purchase to the Company for inclusion in the Registration Statement or
Prospectus.
(b) INDEMNIFICATION BY THE PURCHASER. The Purchaser will indemnify and
hold harmless the Company, each of its directors and officers, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act from and against any
expenses (including reasonable costs of defense and investigation and all
reasonable attorneys fees) to which the Company and any director or officer of
the Company and each person, if any, who controls the Company may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities and expenses (or actions in respect thereof) arise out of
or are based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus or (ii) the omission or alleged
omission to state in the Registration Statement or any Prospectus a material
fact required to be stated therein or necessary to make the statements therein
not misleading, to the extent, but only to the extent, the untrue statement,
alleged untrue statement, omission or alleged omission was made in reliance
upon, and in conformity with, written information furnished by the Purchaser to
the Company for inclusion in the Registration Statement or Prospectus, and the
Purchaser will reimburse the Company and each such director, officer or
controlling person promptly upon demand for any legal or other costs or expenses
reasonably incurred by the Company or the other person in investigating,
defending against, or preparing to defend against any such claim, action, suit
or proceeding.
SECTION 8.2 INDEMNIFICATION PROCEDURES. Promptly after a person
receives notice of a claim or the commencement of an action for which the person
intends to seek indemnification under paragraph (a) or (b) of Section 8.1, the
person will notify the indemnifying party in writing of the claim or
commencement of the action, suit or proceeding, but failure to notify the
indemnifying party will not relieve the indemnifying party from liability under
paragraph (a) or (b) of Section 8.1, except to the extent it has been materially
prejudiced by the failure to give notice. The indemnifying party will be
entitled to participate in the defense of any claim, action, suit or proceeding
as to which indemnification is being sought, and if the indemnifying party
acknowledges in writing the obligation to indemnify the party against whom the
claim or action is brought, the indemnifying party may (but will not be required
to) assume the defense against the claim, action, suit or proceeding with
counsel satisfactory to it. After an indemnifying party notifies an indemnified
party that the indemnifying party wishes to assume the defense of a claim,
action, suit or proceeding the indemnifying party will not be liable for any
legal or other expenses incurred by the indemnified party in connection with the
defense against the claim, action, suit or proceeding except that if, in the
opinion of counsel to the indemnifying party, one or more of the indemnified
parties should be separately represented in connection with a claim, action,
suit or proceeding the indemnifying party will pay the reasonable fees and
expenses of one separate counsel for the indemnified parties. Each indemnified
party, as a
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<PAGE> 25
condition to receiving indemnification as provided in Paragraph (a) or (b) or
Section 8.1, will cooperate in all reasonable respects with the indemnifying
party in the defense of any action or claim as to which indemnification is
sought. No indemnifying party will be liable for any settlement of any action
effected without its prior written consent. No indemnifying party will, without
the prior written consent of the indemnified party, effect any settlement of a
pending or threatened action with respect to which an indemnified party is, or
is informed that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.
If for any reason the indemnification provided for in this Agreement
is not available to, or is not sufficient to hold harmless, an indemnified party
in respect of any loss or liability referred to in paragraph (a) or (b) of
Section 8.1, each indemnifying party will, in lieu of indemnifying the
indemnified party, contribute to the amount paid or payable by the indemnified
party as a result of the loss or liability, (i) in the proportion which is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and by the indemnified party on the other from the sale of stock
which is the subject of the claim, action, suit or proceeding which resulted in
the loss or liability or (ii) if that allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits of the sale of stock, but also the relative fault of the indemnifying
party and the indemnified party with respect to the statements or omissions
which are the subject of the claim, action, suit or proceeding that resulted in
the loss or liability, as well as any other relevant equitable considerations.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 FEES AND EXPENSES. Except as set forth in Article VIII,
the Company shall pay (i) all reasonable fees and expenses related to the
transactions contemplated by this Agreement; PROVIDED, that the Company shall
pay, at the Closing, all reasonable attorneys fees and expenses (exclusive of
disbursements and out-of-pocket expenses and reasonably itemized) incurred by
the Purchaser up to $40,000 in connection with the preparation, negotiation,
execution and delivery of this Agreement, (ii) all reasonable fees and expenses
incurred by the Purchaser in connection with any amendments, modifications or
waivers of this Agreement or incurred in connection with the enforcement of this
Agreement, including, without limitation, all reasonable attorneys fees and
expenses, and (iii) all stamp or other similar taxes and duties levied in
connection with issuance of the Shares pursuant hereto.
SECTION 9.2 SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.
(a) The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof or
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<PAGE> 26
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
(b) Each of the Company and the Purchaser (i) hereby irrevocably
submits to the jurisdiction of the United States District Court and other courts
of the United States sitting in the State of New York for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Purchaser consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.
SECTION 9.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Purchaser makes any representations, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
SECTION 9.4 NOTICES. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery, by telex (with correct answer
back received), telecopy or facsimile at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
If to the Company: GelTex Pharmaceuticals, Inc.
153 Second Avenue
Waltham, Massachusetts 02451
Tel. No.: (781) 290-5888
Fax No.: (781) 672-5822
Attention: Mark Skaletsky, President and CEO
With copies to: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Tel. No.: (617) 542-6000
Fax No.: (617) 542-2241
Attention: Lewis J. Geffen
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<PAGE> 27
If to the Purchaser: Acqua Wellington North American Equities Fund, Ltd.
c/o Mees Pierson Fund Services (Bahamas) Ltd.
Montague Sterling Centre
East Bay Street, P.O. Box SS-6238
Nassau, Bahamas
Tel. No.: (242) 394-2700
Fax No.: (242) 394-9667
Attention: Anthony L.M. Inder Rieden
With copies to: Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Tel. No.: (212) 704-6000
Fax No.: (212) 704-6288
Attention: Christopher S. Auguste
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days prior written notice of such changed address to
the other party hereto.
SECTION 9.5 WAIVERS. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
SECTION 9.6 HEADINGS. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
SECTION 9.7 SUCCESSORS AND ASSIGNS. The Purchaser may not assign this
Agreement to any person without the prior written consent of the Company, which
consent will not be unreasonably withheld. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. After
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.
SECTION 9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.
SECTION 9.9 SURVIVAL. The representations and warranties of the
Company and the Purchaser contained in Article III and the covenants contained
in Article IV shall survive the execution and delivery hereof and the Closing
until the termination of this Agreement, and the agreements and covenants set
forth in Article VIII of this Agreement shall survive the execution
-24-
<PAGE> 28
and delivery hereof and the Closing hereunder. Section 9.14 shall survive the
termination of this Agreement.
SECTION 9.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
SECTION 9.11 PUBLICITY. Prior to the Closing, neither the Company nor
the Purchaser shall issue any press release or otherwise make any public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby or the existence of this Agreement. In the event the Company
is required by law, based upon an opinion of the Company's counsel, to issue a
press release or otherwise make a public statement or announcement with respect
to this Agreement prior to the Closing, the Company shall consult with the
Purchaser on the form and substance of such press release. Promptly after the
Closing, each party may issue a press release or otherwise make a public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby or the existence of this Agreement; PROVIDED, that prior to
issuing any such press release, making any such public statement or
announcement, the party wishing to make such release, statement or announcement
obtains the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed.
SECTION 9.12 SEVERABILITY. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.
SECTION 9.13 FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
SECTION 9.14 CONFIDENTIALITY. Purchaser agrees to maintain the
confidentiality of all information about the Company received from any officer,
employee or agent of the Company, until such time as that confidential
information is released to the public generally other than as a result of any
disclosure by Purchaser.
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<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
GELTEX PHARMACEUTICALS, INC.
By: /s/ Mark Skaletsky
----------------------------
Name: Mark Skaletsky
Title: President and CEO
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By:
----------------------------
Name:
Title:
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
GELTEX PHARMACEUTICALS, INC.
By:
-------------------------------
Name:
Title:
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By: /s/ Anthony L. M. Inder Rieden
-------------------------------
Name: Anthony L. M. Inder Rieden
Title: Director
<PAGE> 31
EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
OPINION OF COUNSEL
<PAGE> 32
DISCLOSURE SCHEDULES
RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF MARCH 7, 2000 BETWEEN
GELTEX PHARMACEUTICALS, INC. AND
ACQUA WELLINGTON NORTH AMERICAN EQUITIES FUND, LTD.
ALL SECTION AND SUBSECTION NUMBERS AND LETTERS RELATE AND COINCIDE TO SUCH
NUMBERS AND LETTERS AS SET FORTH IN THE COMMON STOCK PURCHASE AGREEMENT (THE
"AGREEMENT"). ANY TERMS REQUIRING DEFINITION HEREIN ARE DEFINED IN THE
AGREEMENT.
ALL REPRESENTATIONS AND WARRANTIES SET FORTH IN THE AGREEMENT ARE MODIFIED
IN THEIR ENTIRETY BY THESE DISCLOSURE SCHEDULES. THE DISCLOSURES CONTAINED IN
THESE DISCLOSURE SCHEDULES SHALL BE READ IN THEIR ENTIRETY, AND ALL THE
DISCLOSURES SHALL BE READ TOGETHER.
<PAGE> 33
SCHEDULE 3.1(c)
As of March 1, 2000
<TABLE>
<S> <C>
Authorized Capital Stock: 55,000,000 shares
50,000,000 shares designated as Common
Stock, $.01 par value per share ("Common
Stock") and 5,000,000 shares of
preferred stock, $.01 par value per
share ("Preferred Stock"), 500,000
shares of which have been designated as
Series A Participating Preferred Stock
Common Stock Outstanding: 18,039,162
Preferred Stock Outstanding: 0
Options and Warrants Outstanding: 3,967,017
</TABLE>
<PAGE> 34
SCHEDULE 3.1(G)
SUBSIDIARIES
<TABLE>
<CAPTION>
State of Incorporation
Subsidiary or Organization Ownership
- ---------- --------------- ---------
<S> <C> <C>
SunPharm Corporation Delaware GelTex Pharmaceuticals, Inc.- 100%
</TABLE>
<PAGE> 1
EXHIBIT 99.1
CONTACTS:
GELTEX PHARMACEUTICALS, INC. BURNS MCCLELLAN
Paul Mellett, CFO Justin Jackson (media)
(781) 434-3484 Ethan Denkensohn (investors)
(212) 213-0006
FOR IMMEDIATE RELEASE
GELTEX ANNOUNCES DIRECTED EQUITY PLACEMENTS
THE COMPANY PRESENTS CHOLESTAGEL(R) DATA AT ACC
WALTHAM, MA, MARCH 13, 2000 - GelTex Pharmaceuticals, Inc. (NASDAQ: GELX)
announced today that it entered into a definitive agreement and sold 1,750,000
newly issued shares of Common Stock to certain institutional investors for $35.0
million. The purchase price was $20.00 per share.
Additionally, the Company has entered into an agreement with Acqua Wellington
North American Equities Fund, Ltd. for a financing facility covering the sale
of up to 1,750,000 shares of Common Stock over the next twelve months. These
shares may be sold, at GelTex's discretion, at a small discount to market. The
total amount of investment is dependent, in part, on GelTex's stock price, with
GelTex to control the amount and timing of stock sold.
These transactions were entered into, pursuant to an effective shelf
registration statement previously filed by GelTex with the Securities and
Exchange Commission, covering the sale of up to 3.5 million shares of its Common
Stock. The monies raised in these financings will support GelTex's research,
drug discovery and development programs, increased manufacturing capacity for
Cholestagel(R) (colesevelam hyrocholoride) and other general corporate purposes.
GelTex also announccd that a previously reported Cholestagel six month Phase 3
pivotal clinical study was presented at the American College of Cardiology
meeting yesterday in Anaheim, CA. The study was presented by Michael Davidson,
M.D., President of The Chicago Center for Clinical Research. Cholestagel is
currently under FDA review.
GelTex Pharmaceuticals, Inc. develops polymer-based, non-absorbed
pharmaceuticals that selectively bind and eliminate target substances from the
intestinal tract. GelTex's releases are available at http://www.geltex.com
This press release contains forward-looking statements concerning GelTex's
financing plans. Actual results may materially differ due to variations in the
Company's stock price and the accuracy of the Company's analysis regarding its
need for additional capital.
