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EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF AUGUST 22, 2000
BY AND BETWEEN
MATRITECH, INC.
AND
ACQUA WELLINGTON
NORTH AMERICAN EQUITIES FUND, LTD.
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS................................................1
Section 1.1 Definitions.................................................1
ARTICLE II PURCHASE AND SALE OF COMMON STOCK..........................3
Section 2.1 Purchase and Sale of Stock..................................3
Section 2.2 The Shares..................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES.............................3
Section 3.1 Representation and Warranties of the Company................3
Section 3.2 Representation and Warranties of the Purchaser.............10
ARTICLE IV COVENANTS.................................................11
Section 4.1 Securities.................................................11
Section 4.2 Registration and Listing...................................11
Section 4.3 Registration Statement.....................................12
Section 4.4 Compliance with Laws.......................................12
Section 4.5 Keeping of Records and Books of Account....................12
Section 4.6 Reporting Requirements.....................................12
Section 4.7 Non-public Information.....................................12
Section 4.8 Effective Registration Statement...........................13
Section 4.9 No Stop Orders.............................................13
Section 4.10 Amendments to the Registration Statement...................13
Section 4.11 Prospectus Delivery........................................13
Section 4.12 Other Financing............................................14
Section 4.13 Notice.....................................................14
ARTICLE V CONDITIONS TO CLOSING, DRAW DOWNS AND CALLOPTIONS.........15
Section 5.1 Conditions Precedent to the Obligation of the Company
to Issue a Draw Down Notice or Grant a Call Option
and 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 or Call Option Grant and
Purchase the Shares......................................16
ARTICLE VI DRAW DOWN TERMS; CALL OPTION..............................18
Section 6.1 Draw Down Terms............................................18
Section 6.2 Purchaser's Call Option....................................20
ARTICLE VII TERMINATION...............................................20
Section 7.1 Termination by Mutual Consent..............................20
Section 7.2 Other Termination..........................................21
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Section 7.3 Effect of Termination......................................21
ARTICLE VIII INDEMNIFICATION...........................................21
Section 8.1 General Indemnity..........................................21
Section 8.2 Indemnification Procedures.................................23
ARTICLE IX MISCELLANEOUS.............................................24
Section 9.1 Fees and Expenses..........................................24
Section 9.2 Specific Enforcement, Consent to Jurisdiction..............24
Section 9.3 Entire Agreement; Amendment................................25
Section 9.4 Notices....................................................25
Section 9.5 Waivers....................................................26
Section 9.6 Headings...................................................26
Section 9.7 Successors and Assigns.....................................26
Section 9.8 Governing Law..............................................26
Section 9.9 Survival...................................................26
Section 9.10 Counterparts...............................................26
Section 9.11 Publicity..................................................26
Section 9.12 Severability...............................................27
Section 9.13 Further Assurances.........................................27
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is dated as of
August 22, 2000 by and between Matritech, 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) "CALL OPTION" shall have the meaning assigned to such term in
Section 6.2(a) hereof.
(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, 1999, Forms 10-Q for the periods
ended March 31, 2000 and June 30, 2000, Registration Statement on Form S-3, No.
333-40942. Final Prospectus (File No. 333-92719) filed pursuant to Rule
424(b)(3), filed January 7, 2000; Proxy Statement pursuant to section 14(a),
filed April 28, 2000; Current Report on Form 8-K, dated June 28, 2000 (relating
to the acquisition of ADL GmbH); and Final Prospectus (File NO. 333-40942) filed
pursuant to Rule 424(b)(3), filed July 28, 2000 and all other filings made by
the Company after the date hereof pursuant to the Securities Exchange Act of
1934.
(e) "COMMON STOCK" shall have the meaning assigned to such term in
Section 2.1 hereof.
(f) "DRAW DOWN AMOUNT" means the actual amount of a Draw Down up to
the greater of $30,000,000 or such other amount mutually agreed upon by the
Purchaser and the Company.
(g) "DRAW DOWN DISCOUNT PERCENTAGE" means 93% if the Threshold Price
is equal to or greater than $3.00 but less than or equal to $5.00; PROVIDED,
HOWEVER, that for every $1.00 increase in the Threshold Price above $5.00 the
draw down discount percentage shall be increased 0.1%, incrementally, up to a
maximum draw down discount percentage of 95.5%
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(h) "DRAW DOWN EXERCISE DATE" shall have the meaning assigned to such
term in Section 5.1 hereof.
(i) "DRAW DOWN NOTICE" shall have the meaning assigned to such term in
Section 6.1(i) hereof.
(j) "DRAW DOWN PRICING PERIOD" shall mean a period of twenty (20)
consecutive trading days following a Draw Down Notice, or such other period
mutually agreed upon by the Purchaser and the Company.
(k) "EFFECTIVE DATE" shall mean July 26, 2000, the date the
Registration Statement of the Company covering the Shares being subscribed for
hereby is declared effective.
(l) "INVESTMENT PERIOD " shall have the meaning assigned to such term
in Section 7.1 hereof.
(m) "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.
(n) "PROSPECTUS" as used in this Agreement means the prospectus in the
form included in the Registration Statement, as supplemented pursuant to Rule
424(b).
(o) "REGISTRATION STATEMENT" shall mean the registration statement on
Form S-3, Commission File Number 333-40942 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.
(p) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
(q) "SETTLEMENT DATE" shall have the meaning assigned to such term in
Section 6.1(d) hereof.
(r) "SHARES" shall mean the shares of Common Stock of the Company that
may be purchased hereunder.
(s) "THRESHOLD PRICE" is the lowest price at which the Company may set
in the Draw Down Notice to sell Shares during a Draw Down Pricing Period (not
taking into account the Draw Down Discount Percentage during such Draw Down
Pricing Period).
(t) "VWAP" shall mean the daily volume weighted average price (based
on a trading day from 9:30 a.m. to 4:00 p.m., eastern time) of the Common Stock
of the Company on the NASDAQ National Market as reported by Bloomberg Financial
LP using the AQR function.
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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 $30,000,000 of the
Company's common stock, $.01 par value per share (the "COMMON STOCK"), based on
Draw Downs of up to $2,500,000 per Draw Down and up to an additional $30,000,000
of Common Stock based on Call Options of at least the Draw Down Amount for the
applicable Draw Down Pricing Period that the Company may grant to the Purchaser
in the Company's sole discretion. In no event shall the amount of Common Stock
purchased by the Purchaser exceed $10,000,000 per Draw Down unless otherwise
mutually agreed upon by the Purchaser and the Company.
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,
2,450,000 shares of its Common Stock to cover the Shares to be issued in
connection with all Draw Downs.
SECTION 2.3 PURCHASE PRICE AND CLOSING. The Company agrees to issue
and sell to the Purchaser and, in consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchaser, agrees to purchase that number of the Shares to be
issued in connection with each Draw Down. The closing of the execution and
delivery of this Agreement shall take place at the offices of Parker Chapin LLP,
The Chrysler Building, 405 Lexington Avenue, New York, NY 10174 (the "CLOSING")
at 10:00 a.m., eastern time, on (i) August 22, 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(a) attached hereto. The Company and each such
subsidiary is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the
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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 4.4(b), 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 shall constitute
when executed and delivered, 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 August 7, 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 including SCHEDULE 3.1(c),
as of August 7, 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 including SCHEDULE
3.1(c), as of August 7, 2000 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 set forth in
SCHEDULE 3.1(c), as of August 7, 2000, 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. 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. 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 Amended and
Restated Certificate of Incorporation, as amended to date and in effect on the
date hereof (the "CHARTER"), and the Company's Amended and Restated Bylaws as in
effect on the date hereof (the "BYLAWS").
(d) ISSUANCE OF SHARES. The Shares to be issued under this Agreement
have been duly authorized by all necessary corporate action and, when paid for
and issued in accordance with the terms hereof, the 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.
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(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not (i) violate any provision of the Company's Charter 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
the Nasdaq National Market 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 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, 1999 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. The Form 10-K for the year ended December 31,
1999 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
documents, and the said 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 comply 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
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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 EFFECT. Since June 30, 2000, the Company has
not experienced or suffered any Material Adverse Effect except continued losses
from operations.
(i) NO UNDISCLOSED LIABILITIES. The Company has no 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 not disclosed in the Commission
Documents, 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. SCHEDULE 3.1(k) sets forth as of June 30, 2000 all
outstanding secured and unsecured Indebtedness of the Company, 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
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$100,000 due under leases required to be capitalized in accordance with GAAP.
Neither the Company or any subsidiary is in default with respect to any
Indebtedness.
(l) TITLE TO ASSETS. Each of the Company and its subsidiary 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 and the Commission Filings or such that could not reasonably be
expected to cause a Material Adverse Effect. All said 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 which questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto or
thereto. There is no action, suit, claim, investigation or proceeding pending
or, to the knowledge of the Company, threatened, against or involving the
Company or any subsidiary, or any of their respective properties or assets
which, if adversely determined, is reasonably likely to result in a Material
Adverse Effect.
(n) COMPLIANCE WITH LAW. The business of the Company has been and is
presently being conducted in accordance with all applicable federal, state and
local governmental laws, rules, regulations and ordinances, except as such that
do not cause a Material Adverse Effect. Each of the Company and its subsidiary
has all franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct of its
business as now being conducted unless the failure to possess such franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals, 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 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 in
connection with the transactions contemplated by this Agreement contain any
untrue statement of a material fact or omits 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 its subsidiary owns or has a
valid right to use all patents, trademarks, service marks, trade names,
copyrights, licenses and authorizations, 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.
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(r) ENVIRONMENTAL COMPLIANCE. Except as disclosed in the Commission
Filings, the Company has 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
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 and this Agreement, the Company is not 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 or applicable form (collectively, "MATERIAL
AGREEMENTS") if the Company was registering securities under the Securities Act.
The Company has in all material respects performed all the obligations required
to be performed to date under the foregoing agreements, has received no notice
of default and, to the best of the Company's knowledge is 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 SCHEDULE
3.1(t) hereto there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or arrangements or other continuing
transactions exceeding $100,000 between (a) the Company, or any of its 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 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
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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 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 through you 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 offering 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, the Company has no collective
bargaining arrangements or agreements covering any of its employees. Except as
set forth on SCHEDULE 3.1(v) attached hereto, as of the date hereof the Company
has no employment contract or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company. As of the date hereof, since December 31,
1998, no officer, consultant or key employee of the Company 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.
(w) USE OF PROCEEDS. The proceeds from the sale of the Shares will be
used by the Company and its subsidiary for general corporate purposes.
(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 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
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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 by any trade or business, whether or not
incorporated, which, together with the Company, 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 AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby makes the following representations and warranties to the
Company:
(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
shall constitute when executed and delivered, 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
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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.
(e) SELLING RESTRICTION. The Purchaser has the right to sell shares of
the Company's Common Stock equal in number to the number of Shares to be
purchased pursuant to this Agreement during the Investment Period. The Purchaser
covenants that prior to and during the Investment 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 the shares of 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, that during the
term of this Agreement:
SECTION 4.1 SECURITIES. The Company shall notify the Commission and
the Nasdaq National Market, 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
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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 within the Company's control reasonably
necessary to continue the listing or trading of its Common Stock and the listing
of the Shares purchased by Purchaser hereunder on the Nasdaq National Market and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Nasdaq National Market.
SECTION 4.3 REGISTRATION STATEMENT. Before the Company shall issue a
Draw Down Notice, the Company shall have caused a sufficient number of shares of
Common Stock to be authorized and registered to cover the Shares to be issued in
connection with this Agreement.
SECTION 4.4 COMPLIANCE WITH LAWS.
(a) The Company shall comply with all applicable laws, rules,
regulations and orders, noncompliance with which could have a Material Adverse
Effect.
(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 more than nineteen and
nine-tenths percent (19.9%) of the issued and outstanding shares of the
Company's Common Stock.
SECTION 4.5 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
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 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 forty-five (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 ninety (90) days after the end of each fiscal
year of the Company.
SECTION 4.7 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 and neither the Purchaser nor any of its affiliates,
officers or agents will solicit any material non-public information from the
Company.
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SECTION 4.8 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 Purchaser promptly and, if
requested by the Purchaser, will confirm such advice in writing, when it
receives notice that the Registration Statement or such post-effective amendment
has become effective.
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. The Company shall file a prospectus
supplement to its Registration Statement on the first business day immediately
following the end of each Draw Down Pricing Period, and will deliver to the
Purchaser, without charge, in such quantities as reasonably requested by the
Purchaser, copies of each form of Prospectus and prospectus supplement on each
Settlement Date. 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
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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 the Commission an appropriate
supplement or amendment thereto, and will expeditiously furnish to the Purchaser
a reasonable number of copies thereof.
SECTION 4.12 OTHER FINANCING. Except for issuances under outstanding
obligations disclosed in SCHEDULE 3.1(c) attached hereto, the Company is
restricted from entering into any other financing agreement during the
Investment Period, the primary purpose of which would be to obtain equity
financing for the Company (an "OTHER FINANCING"), without the prior written
consent of the Purchaser, which consent will not be unreasonably withheld,
conditioned or delayed, except that the Company may (i) enter into a loan,
credit or lease facility with a bank or financing institution (including any
equity component thereof), (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 in connection with the
Company's current option plans (as the same may be amended from time to time),
stock purchase plans, rights plans, currently outstanding warrants or options,
or increase the number of shares available under any such plans (the primary
purpose of which is not to raise equity), and (iv) issue shares of Common Stock
and/or Preferred Stock in connection with the formation and maintenance of
strategic partnerships, alliances or joint ventures and the acquisition of
products, licenses or other assets (each a "Permitted Transaction"). Within two
(2) trading days of receipt of notice of an Other Financing, together with the
terms of the Other Financing, the Purchaser will notify the Company as to
whether it consents to the Other Financing. If the Purchaser consents to the
Company entering into an Other Financing and the Company enters into an Other
Financing during a Draw Down Pricing Period, the Purchaser shall have the
options set forth in Section 6.1(k) hereof. If the Purchaser consents to the
Company entering into an Other Financing and the Company enters into the Other
Financing between Draw Down Pricing Periods, the Purchaser shall have the
option, which option shall be exercised no later than five (5) trading days
after receipt by the Purchaser of the notice of the Other Financing, to purchase
up to the Draw Down Amount that would be applicable under this Agreement based
on the price per share to be paid for the Common Stock in the Other Financing on
the same, absolute terms and conditions contemplated in the Other Financing. If
the Purchaser does not exercise its purchase option in writing before 8:00 p.m.
(eastern time), 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 similar in all material respects to those
provided to the Purchaser prior to the Purchaser giving its consent to such
Other Financing.
SECTION 4.13 NOTICE. The Company shall immediately notify the
Purchaser that (i) a Material Adverse Effect has occurred or (ii) the Company
has entered into an Other Financing (as defined in Section 4.12 hereof).
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ARTICLE V
CONDITIONS TO CLOSING, DRAW DOWNS AND CALL OPTIONS SECTION 5.1
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE A DRAW DOWN
NOTICE OR GRANT A CALL OPTION AND SELL THE SHARES. The obligation hereunder of
the Company to issue a Draw Down Notice or grant a Call Option and sell the
Shares to the Purchaser is subject to the satisfaction or waiver, at or before
each Draw Down or Call Option request (the "DRAW DOWN EXERCISE DATE"), 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 each Draw Down Exercise
Date and each Settlement Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date.
(b) REGISTRATION STATEMENT. The Company shall have Shares registered
under the Registration Statement equal to or in excess of the number of Shares
issuable pursuant to such Draw Down Notice or Call Option. 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 have been suspended by the Commission or the Nasdaq National Market (except
for any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to such Draw Down Exercise Date and
applicable Settlement Date), and, at any time prior to each Draw Down Exercise
Date, trading in securities generally as reported on the Nasdaq National Market
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by the Nasdaq National
Market, 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 of the officers, directors or affiliates of the Company
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. 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) 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) 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 of the officers, directors or affiliates of the Company
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.
SECTION 5.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACCEPT A DRAW DOWN OR CALL OPTION GRANT AND PURCHASE THE SHARES. The obligation
hereunder of the Purchaser to accept a Draw Down or Call Option grant and to
acquire and pay for the Shares on the Settlement Date is subject to the
satisfaction or waiver, at or before each Draw Down Exercise Date and each
Settlement Date, as applicable, 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.
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(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 and Settlement Date, as applicable, as though made at that time, except for
representations and warranties that speak as of a particular date.
(b) REGISTRATION STATEMENT. The Company shall have Shares registered
under the Registration Statement equal to or in excess of the number of Shares
issuable pursuant to such Draw Down Notice or Call Option. 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 Draw Down Exercise
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 Nasdaq National Market (except for
any suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to each Draw Down Exercise Date), and, at
any time prior to such Draw Down Exercise Date, trading in securities generally
as reported by the Nasdaq National Market shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by the Nasdaq National Market, 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.
(d) 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 Draw Down Exercise Date and the
Settlement Date and shall have delivered the Compliance Certificate
substantially in the form attached hereto as Exhibit B.
(e) 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.
(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 of the officers, directors or affiliates of the Company
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
(g) NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect shall have
occurred.
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ARTICLE VI
DRAW DOWN TERMS; CALL OPTION
SECTION 6.1 DRAW 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 a draw down (a "DRAW DOWN") during each Draw Down Pricing Period
of up to $2,500,000 if the Threshold Price is equal to $5.00 and up to and
additional $500,000 for every $1.00 increase in the Threshold Price above $5.00
up to and including $20.00 for a maximum Draw Down Amount during each Draw Down
Pricing Period of up to $10,000,000; PROVIDED, HOWEVER, that for every $1.00
decrease in the Threshold Price below $5.00, down to a minimum Threshold Price
of $3.00, the Draw Down shall be decreased by $500,000, incrementally; PROVIDED,
FURTHER, that the Company may, in its sole discretion, issue a Draw Down Notice
with respect to any Draw Down Amount at any Threshold Price or any Draw Down
Discount Percentage pursuant to terms mutually agreed upon by the Purchaser and
the Company, which Draw Down the Purchaser will be obligated to accept. Prior to
issuing any Draw Down Notice, the Company shall have Shares registered under the
Registration Statement which are valued at an amount equal to or in excess of
the Draw Down Amount.
(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 for which the VWAP equals or exceeds the Threshold
Price) of (x) 1/20th (or such other fraction based on the length of the Draw
Down Pricing Period) of the Draw Down Amount divided by (y) the applicable Draw
Down Discount Percentage multiplied by the VWAP of the Common Stock for such
trading day.
(c) Only one Draw Down shall be allowed in each Draw Down Pricing
Period. Each Draw Down Pricing Period shall consist of two (2) periods of ten
(10) consecutive trading days (each, a "SETTLEMENT 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
Settlement Period (the "SETTLEMENT DATE").
(e) There shall be a minimum of five (5) trading days between Draw
Downs, unless otherwise mutually agreed upon between the Purchaser and the
Company.
(f) There shall be a maximum of twelve (12) monthly Draw Downs during
the term of this Agreement.
(g) Each Draw Down will expire on the end of the last trading day of
each Draw Down Pricing Period.
(h) If the VWAP on a given trading day is less than the Threshold
Price, then the total amount of the Draw Down for the relevant Draw Down Pricing
Period will be reduced by
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1/20th (or such other fraction based on the length of the Draw Down Pricing
Period). Notwithstanding anything in the foregoing to the contrary, 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 purchase
Shares at a price equal to the Threshold Price multiplied by the Draw Down
Discount Percentage at the end of such Draw Down Pricing Period. At no time
shall the Threshold Price be set below $3.00, unless mutually 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 and the Draw Down for the relevant Draw
Down Pricing Period shall be reduced by 1/20th (or such other fraction based on
the length of the Draw Down Pricing Period).
(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"), substantially in the form attached hereto as Exhibit C. 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 to The Depositary Trust Company
("DTC") on the Purchaser's behalf via the Deposit Withdrawal Agent Commission
system ("DWAC"), and upon receipt of the Shares, the Purchaser shall cause
payment therefor to be made to the account designated by the Company by wire
transfer of immediately available funds provided that the Shares are received no
later than 1:00 p.m., eastern time, or next day available funds if the Shares
are received thereafter.
(k) If during any Draw Down Pricing Period the Company shall enter
into an Other Financing (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 Draw Down Amount of shares of Common
Stock and/or exercise Call Options granted during such Draw Down Pricing Period
on the terms at which the Company issued shares of Common Stock in the Other
Financing during such Draw Down Pricing Period, (ii) purchase up to the Draw
Down Amount of shares of Common Stock and/or exercise Call Options granted
during such Draw Down Pricing Period 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 on 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 (1) shall be due and payable
immediately upon demand in immediately available cash funds.
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<PAGE> 23
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.
SECTION 6.2 PURCHASER'S CALL OPTION.
(a) During each Draw Down Pricing Period, the Company at its sole
discretion may grant to the Purchaser the right to exercise multiple call
options of up to the applicable Draw Down Amount (a "CALL OPTION"). The amount
of the Call Option shall be set forth in the Draw Down Notice. For each trading
day during a Draw Down Pricing Period, the Purchaser may exercise a Call Option
by providing notice to the Company of the exercise of a Call Option (the "CALL
OPTION NOTICE"), substantially in the form attached hereto as Exhibit D. The
total amount of Call Options exercised by the Purchaser shall not exceed
$30,000,000.
(b) The number of shares of Common Stock to be issued in connection
with each Call Option shall equal the quotient of (i) the amount of the Call
Option exercised and (ii) the product of the applicable Draw Down Discount
Percentage and the greater of (A) the VWAP for the Common Stock on the day the
Purchaser issues its Call Option Notice and (B) the Threshold Price.
(c) Each Call Option exercised shall be settled on the applicable
Settlement Date.
(d) The Threshold Price designated by the Company in its Draw Down
Notice shall apply to each Call Option.
(e) For each Call Option that the Purchaser exercises pursuant to this
Section 6.2, the Purchaser must issue via facsimile a Call Option Notice to the
Company no later than 8:00 p.m. (eastern time) on the day such Call Option is
exercised. If the Purchaser does not exercise a Call Option by 8:00 p.m.
(eastern time) on the last day of the applicable Draw Down Pricing Period, the
Purchaser's Call Options with respect to that Draw Down Pricing Period shall
terminate.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION BY MUTUAL CONSENT. The term of this Agreement
shall be the earlier of (i) fourteen (14) months from the date of execution of
this Agreement (the "INVESTMENT PERIOD") and (ii) the date that all of the
Shares registered under the Registration Statement have been issued and sold to
and paid for by the Purchaser. This Agreement may be terminated at any time by
mutual consent of the parties.
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<PAGE> 24
SECTION 7.2 OTHER TERMINATION. The Company shall inform the Purchaser,
and the Purchaser shall have the right to terminate this Agreement within the
subsequent thirty (30) days (the "EVENT PERIOD"), if (x) the Company enters into
an Other Financing (excluding a Permitted Transaction) without the Purchaser's
prior consent which provides for (i) the issuance of Common Stock or securities
convertible, exercisable or exchangeable into Common Stock at a discount to the
then current market price of the Common Stock, (ii) a mechanism for the reset of
the purchase price of the Common Stock to below the then current market price of
the Common Stock, or (iii) the issuance of Common Stock with warrants, which
have an exercise price such that together with the price of the Common Stock
would result in the issuance of shares of Common Stock at a per share price
below the then current market price of the Common Stock, or (y) an event
resulting in a Material Adverse Effect has occurred. The Purchaser may terminate
this Agreement upon one (1) day's notice during the Event Period. The Company
may terminate this Agreement upon thirty (30) days' notice; PROVIDED, that such
termination does not occur during a Draw Down Pricing Period or prior to the
Settlement Date for such Draw Down Pricing Period and, if such termination
occurs prior to the tenth (10th) month anniversary of this Agreement and the
Company has not requested Draw Downs in an aggregate amount of $7,500,000, the
Company pays the fee to the Purchaser required under Section 9.1(b) hereof.
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 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
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 relating to Common Stock being sold to the Purchaser
(including the any prospectus supplement filed in connection with the
transactions contemplated hereunder (the "PROSPECTUS SUPPLEMENT") which are a
part of it), 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,
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<PAGE> 25
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
Purchaser 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 Purchaser 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 Purchaser
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 Purchaser 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.
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 any 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 any Prospectus or Prospectus Supplement or any
amendment or supplement to the Prospectus or Prospectus Supplement in reliance
upon, and in conformity with, written information furnished by the Purchaser to
the Company for inclusion in the Prospectus or Prospectus Supplement.
(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
attorneys fees) to which the Company and each director, officer and 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 Prospectus Supplement or any amendment or supplement to it or (ii)
the omission or alleged omission to state in any Prospectus or Prospectus
Supplement or any amendment or supplement to it 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 Prospectus or Prospectus Supplement or an amendment or
supplement to it, and
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<PAGE> 26
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 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
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.
-23-
<PAGE> 27
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 FEES AND EXPENSES.
(a) The Company shall pay 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, inclusive
of disbursements and out-of-pocket expenses, incurred by the Purchaser of up to
$40,000 in connection with the preparation, negotiation, execution and delivery
of this Agreement. In addition, the Company shall pay 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. The Company shall pay all stamp or other similar
taxes and duties levied in connection with issuance of the Shares pursuant
hereto.
(b) If on the tenth (10th) month anniversary of this Agreement, the
Company has not requested Draw Downs in an aggregate amount of $7,500,000, the
Company shall pay the Purchaser, at the option of the Purchaser, a fee equal to
either (x) an amount equal to $225,000 in cash, or (ii) warrants to purchase
112,500 Shares at an exercise price of 110% of the VWAP of the Common Stock on
the date of execution of this Agreement. The Purchaser shall have the right to
demand registration once within twelve (12) months of the date of issuance of
such warrants and piggyback registration rights if the Company files a separate
registration statement.
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
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.
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<PAGE> 28
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: Matritech, Inc.
330 Nevada Street
Newton, Massachusetts 02460
Tel. No.: (617) 928-0820
Fax No.: (617) 928-0821
Attention: Stephen D. Chubb
With copies to: Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
Tel. No: (617) 248-7000
Fax No.: (617) 248-7100
Attention: Rufus C. King, Esq.
If to the Purchaser: Acqua Wellington North American
Equities Fund, Ltd.
c/o Fortis 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, NY 10174
Tel. No: (212) 704-6000
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<PAGE> 29
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 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 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. The
parties hereto may not amend this Agreement or any rights or obligations
hereunder without the prior written consent of the Company and each Purchaser to
be affected by the amendment. 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 and delivery
hereof and the Closing hereunder.
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. The Company shall not 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 without the prior written
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<PAGE> 30
consent of the Purchaser. In the event the Company is required by law, based
upon an opinion of the Company's counsel, that the Company must issue a press
release or otherwise make a public statement or announcement with respect to
this Agreement or the transaction contemplated hereby, the Company shall consult
with the Purchaser on the form and substance of such press release or other
disclosure.
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.
[END OF PAGE]
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<PAGE> 31
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.
MATRITECH, INC.
By: /s/ Stephen D. Chubb
----------------------------------
Name: Stephen D. Chubb
Title: Chief Executive Officer
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By: /s/ Helen A. Forbes
----------------------------------
Name: Helen A. Forbes
Title: Secretary
<PAGE> 32
EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
OPINION OF COUNSEL
[LETTERHEAD OF _______________________]
[FORM OF COMPANY'S COUNSEL OPINION]
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware. The Company has the
requisite corporate power to own and operate its properties and assets, and to
carry on its business as presently conducted. The Company is duly qualified to
do business as a foreign corporation and is in good standing in the Commonwealth
of Massachusetts.
2. The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Purchase Agreement and to issue and
sell the Shares. The execution, delivery and performance of the Purchase
Agreement by the Company and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
Board of Directors or stockholders is required. The Purchase Agreement has been
duly executed and delivered by the Company and the Purchase Agreement
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The Common Stock is not
subject to preemptive rights under the Company's Charter or By-Laws.
3. The Shares have been duly authorized and, when delivered against payment
in full as provided in the Purchase Agreement, will be validly issued, fully
paid and nonassessable.
4. The execution, delivery and performance of and compliance with the terms
of the Purchase Agreement and the consummation by the Company of the
transactions contemplated thereby (i) do not violate any provision of the
Company's Charter or By-Laws, (ii) to our knowledge, 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) to our knowledge, 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 or local statute,
rule, regulation, order, judgment or decree (including federal securities laws
and
<PAGE> 33
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 other than violations pursuant to clause (i)
above and clause (iv) to the extent of federal securities laws and regulation)
for such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect.
5. To our knowledge, there is no action, suit, claim, investigation or
proceeding pending or 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. To our knowledge,
there is no action, suit, claim, investigation or proceeding pending or,
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. No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of the Purchase Agreement, or
the offer, sale or issuance of the Shares or the consummation of any other
transaction contemplated by the Purchase Agreement (other than any filings which
may be required to be made by the Company with the Commission, the Nasdaq Stock
Market).
7. The Registration Statement has become effective under the Securities Act
and, to our knowledge, no stop order suspending its effectiveness has been
issued and no proceedings for that purpose are, to our knowledge, pending before
or contemplated by the Commission.
<PAGE> 34
EXHIBIT B
TO THE COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE
In connection with the issuance of shares of common stock of
Matritech, Inc. (the "Company") pursuant to the Draw Down Notice, dated
___________ delivered by the Company to Acqua Wellington North American Equities
Fund, Ltd. (the "Purchaser") pursuant to Article VI of the Common Stock Purchase
Agreement dated as of August 22, 2000, by and between the Company and Acqua
Wellington North American Equities Fund, Ltd. (the "Agreement"), the undersigned
hereby certifies as follows:
1. The undersigned is the duly elected Chief [Executive/Financial] Officer
of the Company.
2. The representations and warranties of the Company set forth in Section
3.1 of the Agreement are true and correct in all material respects as though
made on and as of the date hereof, except for representations and warranties
that speak as of a particular date.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Draw Down Exercise
Date and the Settlement Date related to the Draw Down Notice and has complied in
all material respects with all obligations and conditions contained in Section
5.3 of the Agreement.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Agreement.
The undersigned has executed this Certificate this _____ day of
_________, 2000.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 35
EXHIBIT C
TO THE COMMON STOCK PURCHASE AGREEMENT
FORM OF DRAW DOWN NOTICE
Reference is made to the Common Stock Purchase Agreement dated as of
August 22, 2000 (the "Purchase Agreement") between Matritech, Inc., a Delaware
corporation (the "Company"), and Acqua Wellington North American Equities Fund,
Ltd. Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement.
In accordance with and pursuant to Section 6.1 of the Purchase
Agreement, the Company hereby issues this Draw Down Notice to exercise a Draw
Down request for the Draw Down Amount indicated below.
Draw Down Amount:
---------------------------------------
Call Option Amount:
--------------------------------------
Draw Down Pricing Period start date:
--------------------------
Draw Down Pricing Period end date:
----------------------------
Settlement Date:
----------------------------------------------
Threshold Price:
----------------------------------------------
Minimum Threshold Price: $3.00
--------------------------------------
Dollar Amount and/or Number of Shares
of Common Stock Currently Unissued
under the Registration Statement:
------------------------------------
Dated:
-----------------------------
--------------------------------
By:
-------------------------------
Name:
Title:
Address:
Facsimile No.:
-----------------------
Wire Instructions:
-------------------
Contact Name:
------------------------
Receipt Acknowledged:
Acqua Wellington North American Equities Fund, Ltd.
By:
-------------------------------
Name:
Title:
<PAGE> 36
EXHIBIT D
TO THE COMMON STOCK PURCHASE AGREEMENT
FORM OF CALL OPTION NOTICE
To: ______________
Fax#:
Reference is made to the Common Stock Purchase Agreement dated as of
August 22, 2000 (the "Purchase Agreement") between Matritech, Inc., a Delaware
corporation (the "Company"), and Acqua Wellington North American Equities Fund,
Ltd. Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement.
In accordance with and pursuant to Section 6.2 of the Purchase
Agreement, the Purchaser hereby issues this Call Option Notice to exercise a
Call Option for the Call Option Amount indicated below.
Call Option Amount Exercised:
----------------------------------
Number of Shares to be purchased:
------------------------------
VWAP on the date hereof:
---------------------------------------
Draw Down Discount Percentage:
---------------------------------
Settlement Date:
-----------------------------------------------
Threshold Price:
-----------------------------------------------
Minimum Threshold Price: $3.00
---------------------------------------
Dated:
--------------------
Acqua Wellington North American Equities Fund, Ltd.
By:
---------------------------------
Name:
Title:
<PAGE> 37
DISCLOSURE SCHEDULES
RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF AUGUST 22, 2000 OF BETWEEN
MATRITECH, 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 DESCRIPTIONS OF AGREEMENTS OR OTHER MATTERS APPEARING HEREIN ARE
SUMMARY IN NATURE AND ARE QUALIFIED BY REFERENCE TO THE COMPLETE DOCUMENTS,
WHICH HAVE BEEN SUPPLIED TO PURCHASER OR WHICH THE COMPANY WILL MAKE AVAILABLE
TO PURCHASER UPON REQUEST.
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> 38
SCHEDULE 3.1(c)
CAPITALIZATION
CAPITAL STOCK: As of August 7, 2000, the Company has a total authorized
capitalization of 44,000,000 shares, consisting of (i) 40,000,000 shares of
common stock, par value $0.01 per share, of which 25,034,563 shares are issued
and outstanding and (ii) 4,000,000 shares of preferred stock, par value $1.00
per share, none of which are issued and outstanding.
OPTIONS TO PURCHASE SHARES OF COMMON STOCK: As of August 7, 2000, there are an
aggregate of 1,301,399 options, issued and outstanding, to purchase shares of
the Company's Common Stock. The options have been issued pursuant to (i) the
Company's 1988 Stock Plan, which provides for the issuance of up to 238,875
shares of Common Stock; (ii) the Company's 1992 Stock Plan, as amended, which
provides for the issuance of up to 2,500,000 shares of Common Stock; and (iii)
the Company's Amended and Restated 1992 Non-Employee Director Stock Plan, as
amended, which provides for the issuance of up to 465,000 shares of Common
Stock.
WARRANTS TO PURCHASE SHARES OF COMMON STOCK: As of August 7, 2000, there are
issued and outstanding warrants to purchase an aggregate of 475,637 shares of
the Company's Common Stock. The warrants have been issued pursuant to (i) a
Warrant Agreement dated as of May 28, 1997, by and between the Company and
Dwight Miller, and the corresponding Warrant Certificate No. SSAW- 9, each as
amended by Amendment No. 1 dated as of October 30, 1999 and (ii) an Investor
Relations Warrant Agreement dated as of July 14, 2000, by and among the Company
and each of the purchasers therein.
OTHER COMMITMENTS TO ISSUE SHARES OF COMMON STOCK: Pursuant to a Purchase
Agreement dated as of June 28, 2000, by and among Petra Urban, on behalf of
Franz Maier, Eva Heidt and Joachim Hevler (collectively, the "ADL Sellers"), the
shareholders of ADL-Vertriebsgesellschaft mbH Gesellschaft fur Allergie,
Diagnostika und Laborkonzepte ("ADL"), and Stephen Schmidt, on behalf of the
Company, the Company agreed to issue to the Sellers, within sixty (60) days
after the completion of a financial audit of ADL for the fiscal year ended
December 31, 2000, additional shares of Common Stock of the Company. The number
of shares of Common Stock to be issued to the ADL Sellers will be equal to the
amount obtained by multiplying 20% by the increase in year 2000 revenues over
year 1999 revenues of DM3,580,000 (the "ADL Consideration") at the rate of
0.0844 shares of Common Stock per DM. If year 2000 revenues exceed DM4,395,000,
the amount of the excess over 4,395,000 will be multiplied by 40%, which amount
shall be added to the ADL Consideration. The Company does not expect the ADL
Consideration to exceed approximately 13,700 shares of Common Stock.
<PAGE> 39
REGISTRATION RIGHTS: Pursuant to a Subscription Agreement dated as of March 10,
1999 (the "Subscription Agreement"), by and among the Company and the purchasers
named therein, the Company agreed to prepare and file a registration statement
on Form S-3 with the Commission covering the resale of the 3,500,000 shares of
Common Stock issued to the purchasers. Pursuant to the Subscription Agreement,
the Company agreed to maintain the effectiveness of such Registration Statement
(File No. 333-76973) until all of the purchasers have disposed of all of their
shares, or such shares have become freely tradable without restriction under
Rule 144(k) of the Securities Act.
Pursuant to Amendment No. 1 dated as of October 30, 1999 to Public Relations
Warrant Agreement (the "Public Relations Warrant Agreement") dated as of April
18, 1997, by and between the Company and Sunrise Financial Group, Inc. and to
the corresponding Warrant Certificate (the "Public Relations Warrant
Certificate", and together with the Public Relations Warrant Agreement, the
"Public Relations Warrant"), the Company agreed to file no later than December
14, 1999, a registration statement on Form S-3 with the Commission covering the
resale of the 150,000 shares of Common Stock underlying the Public Relations
Warrants. The Company filed such registration statement (File No. 333-92719)
with the Commission on December 14, 1999.
Pursuant to Amendment No. 1 dated as of October 30, 1999 to Warrant Agreement
(the "Sunrise Warrant Agreement") dated as of May 28, 1997, by and between the
Company and each of the parties thereto and to the corresponding Warrant
Certificate (the "Sunrise Warrant Certificate, and together with the Sunrise
Warrant Agreement, the "Sunrise Warrant"), the Company agreed to file no later
than December 14, 1999, a registration statement on Form S-3 with the Commission
covering the resale of the 226,936 shares of Common Stock underlying the Sunrise
Warrants. The Company filed such registration statement (File No. 333-92719)
with the Commission on December 14, 1999.
Pursuant to certain Common Stock and Warrant Purchase Agreements, each dated as
of November 15, 1999, by and between the Company and the purchasers thereto, the
Company agreed to prepare and file a registration statement on Form S-3 with the
Commission covering the resale of the 900,670 units issued to the purchasers,
with each unit consisting of two shares of Common Stock and a warrant to
purchase one share of Common Stock. Pursuant to each of these agreements, the
Company agreed to use its best efforts to secure the effectiveness of such
Registration Statement. The Registration Statement (File No. 333-92719) was
declared effective by the Commission on January 7, 2000.
Pursuant to a certain Investor Relations Warrant Agreement dated as of July 14,
2000, by and among the Company and the Warrantholders listed therein (the
"Warrant Agreement"), the Company agreed, at least thirty (30) days prior to
each proposed filing by the Company of a Registration Statement (other than a
registration statement relating solely to securities issued pursuant to an
employee benefit plan, or a registration statement on Form F-4 or S-4), to
notify the Warrantholders in writing of any such proposed filing and to include
in any such registration any Shares (as defined therein) held by the
Warrantholders which the Warrantholders request to be included. In addition, the
Company agreed, upon receipt of a written request from
<PAGE> 40
Warrantholders holding at least 75% of the total number of shares of Common
Stock issuable upon exercise of the warrants issued pursuant to the Warrant
Agreement (the "Registration Request"), to prepare and file, at the
Warrantholders' expense, a Registration Statement sufficient to permit the
public offering of shares covered by the Registration Request. The registration
rights granted pursuant to the Warrant Agreement terminate on July 14, 2005.
<PAGE> 41
SCHEDULE 3.1(g)
SUBSIDIARIES
ARTICLE X State of Incorporation
SUBSIDIARY OR ORGANIZATION OWNERSHIP
---------- --------------- ---------
ARTICLE XI Matritech GmbH Germany Wholly-owned
ARTICLE XII subsidiary of
ARTICLE XIII Matritech, Inc.
<PAGE> 42
SCHEDULE 3.1(k)
INDEBTEDNESS
In connection with the acquisition by the Company of all of the outstanding
capital stock of ADL, the Company assumed $378,000 of long and short term
obligations at June 30, 2000. The outstanding obligations consist of the
following: a $150,000 loan from a bank, due in May 2004 which bears interest at
5.2% and is secured by trade receivables and inventory; a $49,000 third party
demand note which will be repaid by the Company and the Company will be
reimbursed by a key ADL employee; a $19,000 car loan from a bank bearing
interest at 7.50% and due in March 2003; and a $13,000 car loan from a bank
bearing interest at 6.99% and due in November 2002.
The Company has a term note with Phoenix Leasing Incorporated for equipment
purchases. The term note is payable over 48 months, bears interest at 11.75% and
is secured by the underlying equipment. The outstanding balance of this note at
June 30, 2000 is $103,000.
<PAGE> 43
SCHEDULE 3.1(t)
TRANSACTIONS WITH AFFILIATES
In connection with the acquisition of ADL, the Company assumed a loan of
approximately $49,000 from MBG in Germany. Franz Maier, the Managing Director of
ADL, has taken personal responsibility for settling this loan as part of the
purchase agreement. Therefore, a receivable has been established on the
consolidated balance sheet for the amount due from Mr. Maier. The Company will
make loan payments in accordance with the previously determined payment
schedule, and will be reimbursed for such payments by Mr. Maier.
<PAGE> 44
SCHEDULE 3.1(v)
EMPLOYEES
The following are the Company's German employees, who have employment contracts
as required by German law.
Duyan, Ilker Outside Sales/Marketing Rep for Immunoassays
Heidt, Eva Manager - Logistics/Customer Service/Purchasing/Quality Mgmt.
Hevler, Joachim Manager - Sales/Marketing
Maier, Franz Managing Director
Maier, Inge Outside Sales/Marketing for Allergy, Training
Pfefferle, Sandra Management Assistant
Rhode, Michael Controller, Administration, IT Support
Wiemann, Dirk Warehouse/Customer Service/Purchasing
The remainder of the Company's employees do not have employment contracts and
employment is considered "at will".
