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EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
Between
GERON CORPORATION
and
RGC INTERNATIONAL INVESTORS, LDC
Dated as of June 29, 2000
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is dated
as of June 29, 2000, between Geron Corporation, a Delaware corporation (the
"COMPANY") and RGC INTERNATIONAL INVESTORS, LDC, a Cayman Islands limited
duration company (together with its affiliates to which rights hereunder may be
transferred pursuant to Section 5.6 hereof and any other assignee or transferee
of its rights hereunder in accordance with Section 5.6 hereof, the "PURCHASER").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to acquire from the Company, an aggregate of Twenty-Five
Million Dollars ($25,000,000) in principal amount of Series D Zero Coupon
Convertible Debentures, in the form attached hereto as EXHIBIT "A" (the
"DEBENTURES"), and, warrants, in the form attached hereto as EXHIBIT "B" (the
"WARRANTS"), to purchase up to Eight Hundred Thirty Four Thousand Eight Hundred
Thirty Six (834,836) shares of the Company's common stock, par value $.001 per
share (the "COMMON STOCK").
WHEREAS, contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as EXHIBIT "C" (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended (the
"SECURITIES ACT") and the rules and regulations promulgated thereunder, and
applicable state securities laws.
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and each Purchaser agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE DEBENTURES AND WARRANTS
1.1 PURCHASE AND SALE. Subject to the terms and conditions set forth
herein, the Company shall issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company on the Closing Date (as defined below), the
Debentures and the Warrants for an aggregate purchase price of $25,000,000 (the
"PURCHASE PRICE").
1.2 THE CLOSING. The closing of the purchase and sale of the Debentures
and Warrants (the "CLOSING") shall take place at the offices of Akerman,
Senterfitt & Eidson, One Southeast Third Avenue, 28th Floor, Miami, Florida
33131-1714, immediately following the execution hereof or such later date or
different location as the parties shall agree, but not prior to the date that
the conditions set forth in Section 4.1 have been satisfied or waived by the
appropriate party (the "CLOSING DATE"). At the Closing Date:
(a) The Purchaser shall deliver to the Company the Purchase
Price in United States dollars in immediately available funds to an account
designated in writing by the Company;
(b) The Company shall deliver to the Purchaser the Debentures;
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(c) The Company shall deliver to the Purchaser the Warrants;
(d) The parties shall execute and deliver each of the
documents referred to in Section 4.1 hereof; and
(e) The Company shall reimburse Rose Glen Capital Management,
L.P. ("ROSE GLEN") for all expenses reasonably incurred by it in connection with
the negotiation, preparation, execution, delivery and performance of this
Agreement and the other agreements to be executed in connection herewith,
including, without limitation, attorneys' and consultants' fees and expenses and
travel expenses. The Company's obligation to reimburse Rose Glen's expenses
under this Section 1.2(e) shall be limited to Twenty-Five Thousand Dollars
($25,000).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with the requisite corporate power and authority
to own, lease, use and operate its properties and assets and to carry on its
business as currently conducted. Except as set forth on Schedule 2.1(a) (which,
with the other schedules referenced herein, have been delivered separately to
the Purchaser), the Company has no subsidiaries (collectively, the
"SUBSIDIARIES" (as defined below)). Each of the Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the full corporate power and authority
to own, lease, use and operate its properties and assets and to carry on its
business as currently conducted. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not have a Material
Adverse Effect (as defined below). "MATERIAL ADVERSE EFFECT" means any material
adverse effect on (i) the Securities (as defined below), (ii) the business,
operations, assets, financial condition or prospects of the Company and its
Subsidiaries, if any, taken as a whole, (iii) on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection
herewith, or (iv) the authority or the ability of the Company to perform its
obligation under this Agreement, the Registration Rights Agreement, the
Debentures or the Warrants. "SUBSIDIARIES" means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns,
directly or indirectly, any equity or other ownership interest and which would
be deemed to be a "significant subsidiary" (as such term is defined in Rule
1-02(w) of Regulation S-X promulgated under the Securities Act).
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Debentures, the Warrants and the
Registration Rights Agreement (collectively,
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the "TRANSACTION DOCUMENTS"), and otherwise to carry out its obligations
hereunder and thereunder including issuance of the Securities (as defined in
Section 2(d) below). The execution and delivery of each of this Agreement and
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the
issuance of the Debentures and the Warrants and the issuance and reservation for
issuance of the Debenture Shares (as defined in Section 2(d) below) issuable
upon conversion of or otherwise pursuant to the Debentures and the Warrant
Shares (as defined in Section 2(d) below) issuable upon exercise of or otherwise
pursuant to the Warrants) have been duly authorized by all necessary corporate
action and no further action is required by the Company, its Board of Directors
or its stockholders. Each of this Agreement and the Transaction Documents has
been duly executed by the Company and when delivered in accordance with the
terms hereof will constitute the 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 or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
(c) CAPITALIZATION. As of the date hereof and immediately
prior to the Closing Date, the authorized and outstanding capital stock and all
shares of capital stock reserved for issuance pursuant to securities (other than
the Debentures and the Warrants) exercisable for, or convertible into or
exchangeable for shares of any of the capital stock of the Company is, and will
be, as set forth on Schedule 2.1(c). The issuance and sale of all interests in
such capital stock have been in compliance with all applicable federal and state
securities laws. No shares of capital stock are entitled to preemptive or
similar rights, nor is any holder of the capital stock entitled to preemptive or
similar rights arising out of any agreement or understanding with the Company by
virtue of any of this Agreement or the Transaction Documents. Except as
disclosed on Schedule 2.1(c), other than the Debentures and the Warrants, there
are no outstanding options, warrants, scrip, rights to subscribe to, calls, puts
or commitments of any character whatsoever relating to securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire any shares of capital stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of capital stock,
or securities or rights convertible or exchangeable into shares of capital
stock. No anti-dilution or similar adjustment provision of securities of the
Company will be triggered by the issuance of the Debentures, the Warrants, the
Debenture Shares or the Warrant Shares except as described on Schedule 2.1(c).
The Company is not subject (contingent or otherwise) to repurchase or otherwise
acquire or retire any units of its capital stock or any security convertible
into or exchangeable for any of its capital stock. Except as specifically
disclosed in the SEC Documents (as defined below), to the Company's best
knowledge, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT")) or has the right to acquire by
agreement with or by obligation binding upon the Company beneficial ownership of
in excess of 5% of the Common Stock. "PERSON" means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
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(d) AUTHORIZATION AND VALIDITY; ISSUANCE OF SHARES. All of the
Debentures and the Warrants have been duly authorized, and when delivered
against payment therefor as contemplated hereby, will be validly issued, fully
paid and non-assessable, free and clear of all liens, encumbrances and Company
rights of first refusal, other than liens and encumbrances created by the
Purchaser (collectively, "LIENS") and will not be subject to any preemptive or
similar rights. The shares of Common Stock issuable upon conversion of or
otherwise pursuant to the Debentures (including, without limitation, such
additional shares of Common Stock, if any, as are issuable as a result of the
events described in Section 2(c) of the Registration Rights Agreement) (such
shares of Common Stock being collectively referred to herein as the "DEBENTURE
SHARES") and the shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants (the "WARRANT SHARES" and, collectively with the
Debenture Shares, the "UNDERLYING SHARES") are and will at all times hereafter
continue to be duly authorized and reserved for issuance and the shares of
Common Stock, when issued upon conversion of or otherwise pursuant to the
Debentures and upon exercise of or otherwise pursuant to the Warrants in
accordance with their respective terms, will be validly issued, fully paid and
non-assessable, free and clear of all Liens. The Debentures, Warrants, Debenture
Shares and Warrant Shares are collectively referred to herein as the
"SECURITIES."
(e) ACKNOWLEDGMENT OF DILUTION. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon issuance
of the Debenture Shares upon conversion of or otherwise pursuant to the
Debentures and upon issuance of the Warrant Shares upon exercise of or otherwise
pursuant to the Warrants. The Company's directors and executive officers have
studied and fully understand the nature of the Securities being sold hereunder.
The Company further acknowledges that its obligation to issue Debenture Shares
and Warrant Shares upon conversion of the Debentures or exercise of the Warrants
in accordance with this Agreement, the Debentures and the Warrants is absolute
and unconditional regardless of the dilutive effect that such issuance may have
on the ownership interests of other stockholders of the Company. Taking the
foregoing into account, the Company's Board of Directors has determined, in its
good faith business judgement, that the issuance of the Securities hereunder and
the consummation of the transactions contemplated hereby and thereby in the best
interests of the Company and its stockholders.
(f) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including,
without limitation, the issuance and reservation for issuance of the Debenture
Shares and Warrant Shares) do not and will not (i) conflict with or violate any
provision of the certificate of incorporation, bylaws or other charter documents
of the Company or any of the Subsidiaries, (ii) subject to obtaining the
consents referred to in Section 2.1(g), violate or 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 agreement, indenture, patent, license or
instrument (evidencing a Company or Subsidiary debt or otherwise) to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or any
Subsidiary is subject (including Federal and state securities laws and
regulations and regulations of any self-regulatory
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organizations to which the Company or its securities are subject), or by which
any material property or asset of the Company or any Subsidiary is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations or cancellations that are not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect).
(g) CONSENTS AND APPROVALS. Except as specifically set forth
on Schedule 2.1(g), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, regulatory agency, self-regulatory organization or stock
market or other person in connection with the execution, delivery and
performance by the Company of this Agreement or the Transaction Documents or to
issue and sell the Debentures and Warrants in accordance with the terms hereof
and to issue the Debenture Shares upon conversion of or otherwise pursuant to
the Debentures and the Warrant Shares upon exercise of or otherwise pursuant to
the Warrants, other than (i) the filing of a registration statement with the
Securities and Exchange Commission (the "COMMISSION"), which shall be filed in
accordance with and in the time periods set forth in the Registration Rights
Agreement, (ii) the notification(s) or any letter(s) acceptable to the Nasdaq
Stock Market ("NASDAQ") for the listing of the Underlying Shares on the Nasdaq
National Market (and with any other national securities exchange or market on
which the Common Stock is then listed), and (iii) any filings, notices or
registrations under applicable state securities laws (together with the
consents, waivers, authorizations, orders, notices and filings referred to on
Schedule 2.1(g), the "REQUIRED APPROVALS"). The Company is not in violation of
the listing requirements of the Nasdaq and does not reasonably anticipate that
the Common Stock will be delisted by the Nasdaq in the foreseeable future. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.
(h) LITIGATION; PROCEEDINGS. Except as specifically set forth
on Schedule 2.1(h), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of this Agreement or the Transaction Documents or (ii) would individually or in
the aggregate, have a Material Adverse Effect. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to any of the
foregoing. Schedule 2.1(h) contains a complete list and summary description of
any pending or, to the knowledge of the Company, threatened proceeding against
or affecting the Company or any of its Subsidiaries, without regard to whether
it would have a Material Adverse Effect.
(i) NO DEFAULT OR VIOLATION. Neither the Company nor any of
its Subsidiaries is in violation of its Certificate of Incorporation or bylaws
and neither the Company nor any of its Subsidiaries is in default (and, to the
Company's knowledge, no event has occurred which with notice or lapse of time or
both could put the Company or any of its Subsidiaries in default) under, and
neither the Company nor any of its Subsidiaries has taken any action or failed
to take any action that would give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party or by
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which any property or assets of the Company or any of its Subsidiaries is bound
or affected, except for such defaults and events as would not, individually or
in the aggregate, have a Material Adverse Effect. The businesses of the Company
and its Subsidiaries, if any, are not being conducted, and shall not be
conducted so long as the Purchaser owns any of the Securities, in violation of
any law, ordinance or regulation of any governmental entity where such violation
would cause a Material Adverse Effect.
(j) DISCLOSURE; ABSENCE OF CERTAIN CHANGES. Neither this
Agreement, the Schedules to this Agreement, the Transaction Documents or any
other information provided to the Purchaser by the Company in connection with
the transactions contemplated hereby contain, nor did the SEC Documents (as
defined below), when filed, or if amended, when amended, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made herein and therein, in light of the
circumstances under which they were made, not misleading. Except as disclosed on
Schedule 2.1(j) or the SEC Documents filed on EDGAR at least five business days
prior to the date hereof, since December 31, 1999 there has been no material
adverse change and no material adverse development in the business, properties,
operations, financial condition, liabilities or results of operations or,
insofar as can reasonably be foreseen, prospects of the Company or the
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings. No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective businesses, properties, operations or financial condition or, insofar
as can reasonably be foreseen, prospects, which has not been publicly announced
or disclosed but under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed (assuming for this purpose that the Company's reports
filed under the Exchange Act are being incorporated into an effective
registration statement filed by the Company under the Securities Act.)
(k) PRIVATE OFFERING. Except as specifically set forth in
Schedule 2.1(k), neither Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales of any security or solicited any offers to buy any security under
circumstances that would require registration under the Securities Act of the
issuance of the Securities to the Purchaser. The issuance of the Securities to
the Purchaser will not be integrated with any other issuance of the Company's
securities (past, current or future) for purposes of any stockholder approval
provisions applicable to the Company or its securities.
(l) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Exchange Act. The
Company has filed all reports schedules, forms, statements and other documents
required to be filed by it under the Exchange Act, including pursuant to Section
13, 14 or 15(d) thereof (all of the foregoing filed prior to the date hereof and
all exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by reference
therein, being collectively referred to herein as the "SEC DOCUMENTS"), on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any
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such extension. The Company has made available to each Purchaser true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the statements
made in any such SEC Documents is, or has been, required to be amended or
updated under applicable law (except for such statements as have been amended or
updated in subsequent filings prior to the date hereof). All material agreements
to which the Company or any Subsidiary is a party or to which the property or
assets of the Company or any Subsidiary are subject have been filed as exhibits
to the SEC Documents to the extent required; neither the Company nor any of its
Subsidiaries is in breach of any agreement where such breach, individually or in
the aggregate, would have a Material Adverse Effect. The financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Company as of and for 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. Except as
set forth in the financial statements of the Company included in the SEC
Documents, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to
December 31, 1999 and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
(m) INVESTMENT COMPANY. The Company is not, and is not
controlled by or under common control with an affiliate (as defined in Rule 144
promulgated under the Securities Act (or a successor rule ("RULE 144") (an
"AFFILIATE") of an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(n) BROKER'S FEES. No fees or commissions or similar payments
with respect to the transactions contemplated by this Agreement or the
Transaction Documents have been paid or will be payable by the Company to any
broker, financial advisor, finder, investment banker, or bank. The Purchaser
shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
Section 2.1(n) that may be due in connection with the transactions contemplated
by this Agreement and the Transaction Documents.
(o) FORM S-3 ELIGIBILITY. The Company is, and at the Closing
Date will be, eligible to register securities (including the Underlying Shares)
for resale with the Commission on Form S-3 (or any successor form) promulgated
under the Securities Act.
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(p) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The
principal market on which the Common Stock is currently traded is the Nasdaq
National Market. Except as disclosed on Schedule 2.1(p), the Company has not in
the three years preceding the date hereof received notice (written or oral) from
Nasdaq (or any stock exchange, market or trading facility on which the Common
Stock is or has been listed (or on which it has been quoted)) to the effect that
the Company is not in compliance with the listing or maintenance requirements of
such market or exchange. The Company is not aware of any facts which would
reasonably lead to delisting or suspension of the Common Stock by Nasdaq. After
giving effect to the transactions contemplated by this Agreement and the
Transaction Documents, the Company believes that it is and will be in compliance
with all such maintenance requirements.
(q) PATENTS AND TRADEMARKS, ETC. To the Company's best
knowledge, the Company or its Subsidiaries has, or has rights to use, all
patents, patent applications, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names, copyrights,
licenses and rights (collectively, the "INTELLECTUAL PROPERTY RIGHTS") which are
necessary for use in connection with its business, as currently conducted and as
described in the SEC Documents. To the best knowledge of the Company, there is
no existing infringement by another Person of any of the Intellectual Property
Rights which are necessary for use in connection with the Company's business
which would, individually or in the aggregate, have a Material Adverse Effect,
and the Company is not infringing on any other person's Intellectual Property
Rights. The Company and each of its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of their Intellectual
Property Rights.
(r) EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. Neither the
Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that relations with
their employees are good. Except as set forth on Schedule 2.1(r), no executive
officer (as defined in Rule 501(f) of the Securities Act) has notified the
Company that such officer intends to leave the Company or otherwise terminate
such officer's employment with the Company.
(s) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
described on Schedule 2.1(s) hereto, (i) the Company has not granted or agreed
to grant to any Person any rights (including "piggy-back" registration rights)
to have any securities of the Company registered with the Commission or any
other governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction Document.
(t) TITLE. Except as disclosed on Schedule 2.1(t), the Company
and the Subsidiaries have good and marketable title in fee simple to all real
property and personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all Liens,
except for Liens that do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries. Any real property and facilities held under lease
by the Company and the
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Subsidiaries are held by them under valid, subsisting and, to the Company's best
knowledge, enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property and
buildings by the Company and the Subsidiaries.
(u) PERMITS. The Company and the Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals, orders
and permits necessary to own, lease and operate their respective properties and
to conduct their respective businesses as currently conducted except where the
failure to possess such permits would not, individually or in the aggregate,
have a Material Adverse Effect ("MATERIAL PERMITS"), and there is no proceeding
pending, or, to the knowledge of the Company, threatened relating to the
revocation, modification, suspension or cancellation of any Material Permit.
Neither the Company nor any of the Subsidiaries is in conflict with or default
or violation of any Material Permit.
(v) INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverages as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business.
(w) INTERNAL ACCOUNTING CONTROLS. The Company and each of the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(x) TAX STATUS; FIRPTA. The Company and each of the
Subsidiaries has made or filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on it books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company is not a "United States real property holding corporation"
within the meaning of Section 847(c)(2) of the Internal Revenue Code of 1986, as
amended.
(y) TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 2.1(c) or Schedule 2.1(y), none of the officers, directors, or
employees of the Company is presently a party
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to any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
(z) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF
SECURITIES. 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 hereby. 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 hereby and that any statement made by the Purchaser or any of its
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchaser's purchase of the Securities and has not been relied
upon by the Company, its officers or directors in any way. The Company further
represents to the Purchaser that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives and the representations and warranties of the Purchaser set
forth herein.
(aa) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permits, licenses or other approvals except where the
failure of any of the foregoing would not result in a Material Adverse Effect.
(bb) FOREIGN CORRUPT PRACTICES. To the Company's best
knowledge, neither the Company, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the Company or any
of its Subsidiaries has, in the course of its actions for, or on behalf of, the
Company used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee form corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
(cc) SOLICITATION MATERIALS. The Company has not (i)
distributed any offering materials in connection with the offering and sale of
the Debentures or the Warrants, other than the SEC Documents, the Schedules to
this Agreement, any amendments and supplements thereto and the materials listed
on Schedule 2.1(cc), or (ii) solicited any offer to buy or sell the Debentures
or the Warrants by means of any form of general solicitation or advertising.
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(dd) SOLVENCY. The Company (both before and after giving
effect to the transactions contemplated by this Agreement) is solvent (i.e., its
assets have a fair market value in excess of the amount required to pay its
probable liabilities on its existing debts as they become absolute and matured)
and currently the Company has no information that would lead it to reasonably
conclude that the Company would not have the ability to, nor does it intend to
take any action that would impair its ability to, pay its debts from time to
time incurred in connection therewith as such debts mature. The Company did not
receive a qualified opinion from its auditors with respect to its most recent
fiscal year end and does not anticipate or know of any basis upon which its
auditors might issue a qualified opinion in respect of its current fiscal year.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company as follows:
(a) ORGANIZATION; AUTHORITY. The Purchaser is a limited
duration company duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formation with the requisite power and
authority, corporate or otherwise, to enter into and to consummate the
transactions contemplated hereby and by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The purchase by the
Purchaser of the Debentures and the Warrants hereunder has been duly authorized
by all necessary action on the part of the Purchaser. Each of this Agreement and
the Registration Rights Agreement has been duly executed and delivered by the
Purchaser and constitutes the valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
(b) INVESTMENT INTENT. As of the date hereof, the Purchaser is
acquiring the Debentures and the Warrants for its own account and not with a
present view to or for distributing or reselling the Debentures, the Warrants,
the Debentures Shares or the Warrant Shares or any part thereof or interest
therein except pursuant to sales registered or exempted from registration under
the Securities Act; provided however, that by making the representations herein,
Purchaser does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act.
(c) PURCHASER STATUS. At the time the Purchaser was offered
the Debentures and the Warrants, and at the Closing Date, it was and will be an
"accredited investor" as defined in Rule 501 under the Securities Act.
(d) RELIANCE. The Purchaser understands and acknowledges that
(i) the Debentures and the Warrants are being offered and sold to the Purchaser
without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under Section 4(2)
of the Securities Act or Regulation D promulgated thereunder and (ii) the
availability of such exemption, depends in part on, and the Company will rely
upon the accuracy and truthfulness of, the representations set forth in this
Section 2.2, and the Purchaser hereby consents to such reliance.
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(e) 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
Debentures and Warrants which have been requested by the Purchaser or its
advisors. The Purchaser and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and receive responses to such
questions. Neither such inquiries nor any other due diligence investigation
conducted by the Purchaser or any of its advisors or representatives shall
modify, amend or affect the Purchaser's right to rely on the Company's
representations and warranties contained in Section 2.1 above. The Purchaser
understands that its investment in the Debentures and Warrants involves a
significant degree of risk.
(f) GOVERNMENTAL REVIEW. The Purchaser understands that no
United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Debentures or Warrants.
(g) RESIDENCY. The Purchaser is a resident of the jurisdiction
set forth immediately below the Purchaser's name on the signature pages hereto.
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE 3
OTHER AGREEMENTS
3.1 TRANSFER RESTRICTIONS.
(a) If the Purchaser should decide to dispose of the
Debentures, the Warrants, the Debentures Shares or the Warrant Shares held by
it, the Purchaser understands and agrees that it may do so only (i) pursuant to
an effective registration statement under the Securities Act, (ii) to the
Company, (iii) pursuant to an available exemption from the registration
requirements of the Securities Act, or (iv) pursuant to Rule 144. In connection
with any transfer of any Debentures, Warrants, Debenture Shares or Warrant
Shares pursuant to clause (iii) of the preceding sentence, the Company may
require the transferor thereof to provide to the Company a written opinion of
counsel experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be customary for
opinions of counsel in comparable transactions, to the effect that such transfer
does not require registration of such transferred securities under the
Securities Act. Notwithstanding the foregoing, the Company hereby consents to
and agrees to register any transfer by the Purchaser to an Affiliate of the
Purchaser, provided that the transferee certifies to the Company that it is an
"accredited investor" as defined in Rule 501(a) under the Securities Act and
agrees to be bound by the terms of this Agreement and the Registration Rights
Agreement. Such transferee shall have the rights and obligations of the
Purchaser under this Agreement and the Registration Rights Agreement.
Notwithstanding the foregoing or anything else contained herein to the contrary,
the Securities may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement; provided, however, that upon
execution on
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any such pledge, the pledgee shall be subject to the restrictions on transfer of
the Securities contained in this Agreement.
(b) The Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Debentures, the
Warrants, the Debenture Shares and the Warrant Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE ACT.
Neither the Debentures, the Warrants, the Debenture Shares,
nor the Warrant Shares shall contain the legend set forth above if (i) the
issuance of any of such Securities occurs at any time while a Registration
Statement (as defined in the Registration Rights Agreement) covering such
Securities is effective under the Securities Act, (ii) in the written opinion of
counsel to the Company experienced in the area of United States securities laws
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission), (iii) such holder provides the Company with reasonable
assurances that such security can be sold pursuant to Rule 144 and such security
is sold pursuant to Rule 144, or (iv) such Debentures, Warrants, Debenture
Shares or Warrant Shares may be sold pursuant to Rule 144(k). The Company agrees
that it will provide each Purchaser, upon request, with a certificate or
certificates representing Debentures, Warrants, Debenture Shares or Warrant
Shares, free from such legend at such time as such legend is no longer required
hereunder. Purchaser agrees to sell all Debentures, Warrants and Underlying
Shares, including those from which the legend set forth in this Section 3.1(b)
has been removed, in compliance with all applicable prospectus delivery
requirements under the Securities Act pursuant to Rule 144 or pursuant to
another available exemption under the Securities Act.
3.2 STOP TRANSFER INSTRUCTION. The Company may make notations on its
records or give instructions to any transfer agent with regard to the
restrictions on transfer set forth in Section 3.1; provided, however, the
Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions on transfer set
forth in Section 3.1.
3.3 FURNISHING OF INFORMATION; ELIGIBILITY TO USE FORM S-3. As long as
the Purchaser owns the Debentures, the Warrants, the Debenture Shares or the
Warrant Shares, the Company will cause the Common Stock to continue at all times
to be registered under 12(g) of the Exchange Act, will timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
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all reports required to be filed by the Company after the date hereof pursuant
to Section 13, 14 or 15(d) of the Exchange Act and will not take any action or
file any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such reporting and filing obligations. The
Company further covenants that it will take such further action as any holder of
the Debentures, the Warrants, the Debenture Shares or the Warrant Shares may
reasonably request, all to the extent required from time to time to enable such
Person to sell the Debentures, the Warrants, the Debenture Shares, or the
Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act. The Company will take all necessary action to continue to meet,
the "registrant eligibility" requirements set forth in the general instructions
to Form S-3.
3.4 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall qualify the Debentures Shares and the Warrant
Shares under the securities or Blue Sky laws of such jurisdictions as the
Purchasers may request and shall continue such qualification at all times while
the Purchaser owns any such Debenture Shares or Warrant Shares.
3.5 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Debentures, the Warrants, the Debenture Shares or the Warrant Shares (i)
in a manner that would require the registration under the Securities Act of the
sale of the Debentures, the Warrants, the Debenture Shares or the Warrant Shares
to any Purchaser or (ii) so as to require approval of the Company's stockholders
for the issuance of the Securities.
3.6 LISTING AND RESERVATION OF DEBENTURE SHARES AND WARRANT SHARES.
(a) The Company shall promptly prepare and file with Nasdaq
(as well as any other national securities exchange or market on which the Common
Stock is then listed) a Notification Form(s) for Listing of Additional Shares or
a letter(s) acceptable to Nasdaq covering and listing a number of shares of
Common Stock which is at least equal to the aggregate amount of Underlying
Shares sold or to be sold hereunder, (ii) take all steps necessary to cause the
Underlying Shares to be approved for listing on Nasdaq (as well as on any other
national securities exchange or market on which the Common Stock is then listed)
as soon as possible thereafter and (iii) provide to the Purchaser evidence of
such filing(s). So long as any Purchaser owns any of the Securities, the Company
shall maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Debenture Shares and Warrant Shares from time to time
issuable upon conversion of the Debentures or exercise of the Warrants. Neither
the Company nor any of its Subsidiaries shall take any action which may result
in the delisting or suspension of the Common Stock on Nasdaq. The Company will
obtain and, so long as any Purchaser owns any of the Securities, maintain the
listing and trading of its Common Stock on Nasdaq, the Nasdaq SmallCap Market
("NASDAQ SMALLCAP"), the New York Stock Exchange ("NYSE"), or the American Stock
Exchange ("AMEX") and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers ("NASD") and such exchanges, as applicable.
The Company shall promptly provide to the Purchaser copies of any notices it
receives from Nasdaq regarding the continued eligibility of the Common Stock for
listing on such automated quotation system.
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(b) The Company shall reserve 125% of the number of shares of
its authorized but unissued Common Stock which would be issuable upon full
conversion of the Debentures and full exercise of the Warrants. Shares of Common
Stock reserved for issuance upon conversion of the Debentures and exercise of
the Warrants shall be allocated pro rata to each Purchaser in accordance with
the amount of Debentures and Warrants held by such Purchaser. The Company shall
not reduce the number of shares of Common Stock reserved for issuance upon
conversion of or otherwise pursuant to the Debentures and exercise of or
otherwise pursuant to the Warrants without the consent of each such Purchaser.
If at any time after the Closing Date the number of shares of Common Stock
authorized and reserved for issuance is below 125% of the sum of (x) the number
of Debenture Shares issuable upon conversion of or otherwise pursuant to the
Debentures (based on the Conversion Price (as defined in the Debentures) in
effect from time to time) and (y) the aggregate number of Warrant Shares issued
and issuable upon exercise of or otherwise pursuant to the Warrants (based on
the Exercise Price (as defined in the Warrants) of the Warrants in effect from
time to time), the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company's obligations under this Section 3.6(b), in the case
of an insufficient number of authorized shares, and using its best efforts to
obtain stockholder approval of an increase in such authorized number of shares.
3.7 NOTICE OF BREACHES.
(a) The Company and the Purchaser shall give prompt written
notice to the other of any breach by it of any representation, warranty or other
agreement contained in this Agreement or in the Registration Rights Agreement,
as well as any events or occurrences arising after the date hereof and prior to
the Closing Date which would reasonably be likely to cause any representation or
warranty or other agreement of such party, as the case may be, contained herein
to be incorrect or breached as of such Closing Date provided such notice will
not constitute material non-public information. However, no disclosure by either
party pursuant to this Section 3.7 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Registration Rights Agreement.
(b) Notwithstanding the generality of Section 3.7(a), the
Company shall promptly notify, provided such notification will not constitute
material non-public information, each Purchaser of any notice or claim (written
or oral) that it receives from any lender of the Company or any Subsidiary to
the effect that the consummation of the transactions contemplated hereby and by
the Registration Rights Agreement violates or would violate any written
agreement or understanding between such lender and the Company or any
Subsidiary, and the Company shall promptly furnish by facsimile to the
Purchasers a copy of any written statement in support of or relating to such
claim or notice.
3.8 FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with
respect to the Debentures and Warrants as required by Rule 506 under Regulation
D and to provide a copy thereof to the Purchaser promptly after such filing. The
Company shall, at or before the Closing, take such action as the Company shall
reasonably determine is necessary to qualify the Debentures and Warrants for
sale to the Purchaser pursuant to this Agreement under applicable securities or
"blue
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sky" laws of the states of the United States (or to obtain an exemption from
such qualification), and shall provide evidence of any such action so taken to
each Purchaser at or prior to the Closing.
3.9 FUTURE FINANCINGS. Except for (i) issuance of the Underlying
Shares; (ii) the issuance of securities upon exercise or conversion of the
Company's options, warrants or other convertible securities outstanding as of
the date hereof and listed on Schedule 2(c); (iii) the grant of additional
options or warrants, or the issuance of additional securities, under any Company
stock or compensation plan pursuant to which Common Stock may be issued to any
employee, officer, director or consultant of the Company which is either (a)
approved by the stockholders of the Company or (b) approved by the compensation
committee of the Company's Board of Directors for legitimate compensation
purposes which provides for the purchase of the Common Stock at a purchase price
of no less than 85% of the market price of the Common Stock on the date of
issuance of such option, warrant, or other security; (iv) shares of Common Stock
issued or deemed to have been issued in a Strategic Venture (as defined below);
(v) shares of Common Stock issued or deemed to have been issued as consideration
for an acquisition by the Company of a division, assets or business (or stock
constituting any portion thereof) from another person; (vi) securities sold by
the Company in a firm commitment underwritten public offering excluding a
continuous offering pursuant to Rule 415 under the Securities Act; (vii) the
issuance of Common Stock pursuant to an equity line of credit arrangement (an
"EQUITY LINE"); provided that the Company does not exercise its option to make
draw downs under the Equity Line until at least thirty (30) days following the
effectiveness of the Registration Statement (as defined herein); or (viii) the
issuance by any Subsidiary of its capital stock or securities convertible into
its capital stock ("Subsidiary Securities"); provided that the Subsidiary
Securities are not convertible into, or otherwise exchangeable for, Common
Stock, the Company will not, without the prior written consent of Rose Glen,
negotiate or contract with any party to obtain additional equity financing
(including debt financing with an equity component) that involves (A) the
issuance of Common Stock (whether upon conversion or exercise of a security
convertible into or exercisable for Common Stock ("CONVERTIBLE SECURITIES") or
otherwise) at a discount to the market price of the Common Stock on the date of
issuance thereof or, in the case of Convertible Securities, the date of issuance
of such Convertible Securities (in each case taking into account the value of
any warrants or options to acquire Common Stock issued in connection therewith)
or where the issuance price of such Common Stock is subject to reduction in the
future or (B) the issuance of Convertible Securities that are convertible into
an indeterminate number of shares of Common Stock or where the issuance price of
the Common Stock upon conversion or exercise of such Convertible Securities
(including, based upon any conversion, exchange or reset formula) changes at any
time after the date of issuance of such Convertible Securities, during the
period (the "LOCK-UP PERIOD") beginning on the Closing Date and ending one
hundred eighty (180) days from the date the Registration Statement (as defined
in the Registration Rights Agreement) is declared effective (plus any days after
the Registration Statement is initially declared effective in which sales cannot
be made thereunder). In addition, subject to the exceptions described in clauses
(i) through (vii) of the first sentence of this Section 3.9, the Company will
not conduct any equity financing (including debt with an equity component)
("FUTURE OFFERINGS") during the period beginning on the Closing Date and ending
one hundred eighty-five (185) days after the end of the Lock-up Period (plus any
days after the Registration Statement is initially declared effective in which
sales cannot be made thereunder) unless it shall have first delivered to Rose
Glen, at least fifteen (15) business days prior to the closing of such Future
Offering, written notice
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describing the proposed Future Offering, including the terms and conditions
thereof and proposed definitive documentation to be entered into in connection
therewith, and providing Rose Glen an option during the ten (10) day period
following delivery of such notice to purchase up to Fifty percent (50%) of the
securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this
sentence and the preceding sentence are collectively referred to as the "CAPITAL
RAISING LIMITATIONS"). In the event the terms and conditions of a proposed
Future Offering are amended in any respect after delivery of the notice to Rose
Glen concerning the proposed Future Offering, the Company shall deliver a new
notice to Rose Glen describing the amended terms and conditions of the proposed
Future Offering and Rose Glen thereafter shall have an option during the ten
(10) day period following delivery of such new notice to purchase up to Fifty
percent (50%) of the securities being offered on the same terms as contemplated
by such proposed Future Offering, as amended. The foregoing sentence shall apply
to successive amendments to the terms and conditions of any proposed Future
Offering. "STRATEGIC VENTURE" shall mean a venture between the Company and a
pharmaceutical or biotechnology company or an Affiliate thereof, the primary
purpose of which is not to raise capital in the form of equity (including
without limitation through the issuance of warrants, convertible securities,
phantom stock rights, stock appreciation rights or other rights with equity
features) and pursuant to which the Company contributes or issues securities of
the Company valued at less than 50% of the entire contribution of the Company.
3.10 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Debentures and the exercise of the Warrants for general corporate
purposes and shall not, directly or indirectly, other than in connection with a
strategic or research collaboration, use such proceeds for any loan to or
investment in any other corporation, partnership, enterprise or other Person.
3.11 REIMBURSEMENT. In the event that the Purchaser, other than by
reason of its gross negligence or willful misconduct, becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
person, including any Purchaser or stockholders of the Company, in connection
with or as a result of (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in this Agreement or the Transaction Documents or any other certificate,
instrument or document hereby or thereby, or (c) any cause of action, suit or
claim brought or made against the Purchaser and arising out of or resulting from
the execution, delivery, performance or enforcement of this Agreement or the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, the Company will reimburse such Purchaser for
its legal and other actual out-of-pocket expenses (including the cost of any
investigation and preparation) incurred in connection therewith. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliate of the Purchaser and
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of the Purchaser and any such affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchaser and any such affiliate and any
such Person. The Company also agrees that neither the Purchaser or any such
Affiliates, partners, directors, agents, employees or controlling persons shall
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have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
this Agreement or any of the Transaction Documents except to the extent that any
losses, claims, damages, liabilities or expenses incurred by the Company result
from the gross negligence or willful misconduct of the Purchaser or entity in
connection with the transactions contemplated by this Agreement or the
Registration Rights Agreement. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of its obligations
hereunder which is permissible under applicable law.
3.12 [RESERVED].
3.13 TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates, registered in the name of the Purchaser or its nominee(s), for the
Debenture Shares and the Warrant Shares in such amounts as specified from time
to time by each Purchaser to the Company in a form acceptable to the Purchaser
(the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to registration of the
Debenture Shares and Warrant Shares under the Securities Act or the date on
which the Debenture Shares and Warrant Shares may be sold without limitation or
restriction as to volume pursuant to Rule 144(k), all such certificates shall
bear the restrictive legend specified in Section 3.1(b) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.13, and stop transfer instructions to
give effect to Section 3.1 hereof, prior to registration of the Debenture Shares
and the Warrant Shares under the Securities Act or the date on which the
Debenture Shares and Warrant shares may be sold without limitation or
restriction as to volume pursuant to Rule 144(k), will be given by the Company
to its transfer agent and that the Debenture Shares and the Warrant Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 3.13 shall affect the Purchaser's obligation and
agreement set forth in Section 3.1(b). If the Purchaser provides the Company
with an opinion of counsel, in form and substance customary for opinions in
comparable transactions, to the effect that a public sale, assignment or
transfer of the Debentures, the Debenture Shares, the Warrants and the Warrant
Shares may be made without registration under the Securities Act or the
Purchaser provides the Company with reasonable assurances that the Debentures,
Warrants, the Debenture Shares and the Warrant Shares can be sold without
limitation or restriction as to volume pursuant to Rule 144(k), the Company
shall permit the transfer, and, in the case of the Debenture Shares and the
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by the
Purchaser and without any restrictive legend. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Purchasers by violating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.13 will be inadequate and agrees,
in the event of a beach or threatened breach by the Company of the provisions of
this Section 3.13, that the Purchaser shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
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3.14 FILING OF FORM 8-K. On or before the fourth business day following
the Closing Date, the Company shall file a Form 8-K with the Commission
describing the terms of the transaction contemplated by this Agreement and the
Transaction Documents in the form required by the Exchange Act.
3.15 FINANCIAL INFORMATION. The Company agrees to send the following
reports to each Purchaser until such Purchaser transfers, assigns, or sells all
of the Securities: (i) within one (1) day after release, copies of all press
releases issued by the Company or any of its Subsidiaries; and (ii)
contemporaneously with the making available or giving to the stockholders of the
Company, copies of any notices or other information the Company makes available
or gives to such stockholders. In addition, the Company agrees to make available
to each Purchaser, until such Purchaser transfers, assigns, or sells all of the
Securities, within ten (10) days after the filing with the SEC, a copy of its
Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current
Reports on Form 8-K.
3.16 CORPORATE EXISTENCE. So long as a Purchaser beneficially owns any
Debentures or Warrants, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company's assets, except in the
event of a merger or consolidation or sale of all or substantially all of the
Company's assets, where the successor or acquiring entity and, if an entity
different from the successor or acquiring entity, the entity whose capital stock
or assets the holders of the Common Stock are entitled to receive as a result of
such transaction, in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith (including, but not limited to, the Debentures, the Warrants and the
Registration Rights Agreement) and (ii) is a publicly traded corporation whose
Common Stock is listed for trading on Nasdaq, Nasdaq SmallCap, NYSE or AMEX.
ARTICLE 4
CONDITIONS
4.1
(a) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL THE DEBENTURES AND WARRANTS. The obligation of the Company to sell the
Debentures and Warrants hereunder is subject to the satisfaction or waiver (with
prior written notice to the Purchaser) by the Company, at or before the Closing,
of each of the following conditions:
(i) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Purchaser in this
Agreement shall be true and correct in all material respects as of the
date when made and as of the Closing Date;
(ii) 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 the Closing; and
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(iii) NO INJUNCTION. No litigation, 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 or any self-regulatory
organization having authority over the matters contemplated hereby
which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Transaction Documents.
(b) CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
PURCHASE THE DEBENTURES AND WARRANTS. The obligation of the Purchaser hereunder
to acquire and pay for the Debentures and Warrants is subject to the
satisfaction or waiver (with prior written notice to the Company) by the
Purchaser, at or before the Closing, of each of the following conditions:
(i) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company set forth
in this Agreement shall be true and correct in all material respects as
of the date when made and as of the Closing Date;
(ii) 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;
(iii) NO INJUNCTION. No litigation, 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 or any self-regulatory
organization having authority over the matters contemplated hereby
which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(iv) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The
trading in the Common Stock shall not have been suspended by the
Commission or on Nasdaq which suspension shall remain in effect;
(v) LISTING OF COMMON STOCK. The Common Stock shall
have been at all times since the date hereof, and on the Closing Date
shall be, listed for trading on Nasdaq;
(vi) REQUIRED APPROVALS. All Required Approvals
shall have been obtained;
(vii) SHARES OF COMMON STOCK. The Company shall
have duly reserved the number of Underlying Shares required by this
Agreement and the Transaction Documents to be reserved for issuance
upon conversion of the Debentures and the exercise of the Warrants;
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(viii) CHANGE OF CONTROL. No Change of Control
shall have occurred between the date hereof and the Closing Date.
"CHANGE OF CONTROL" means the occurrence of any of (i) an acquisition
after the date hereof by an individual or legal entity or "group" (as
described in Rule 13d-5(b)(1) promulgated under the Exchange Act),
other than the Purchaser or any of its Affiliates, of in excess of 50%
of the voting securities of the Company, (ii) a replacement of more
than one-half of the members of the Company's Board of Directors which
is not approved by those individuals who are members of the Board of
Directors on the date hereof in one or a series of related
transactions, (iii) the merger of the Company with or into another
entity, consolidation or sale of all or substantially all of the assets
of the Company in one or a series of related transactions or (iv) the
execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii); and
(ix) TRANSFER AGENT INSTRUCTIONS. The Irrevocable
Transfer Agent Instructions, in a form acceptable to the Purchaser,
shall have been delivered to and acknowledged in writing by the
Company's transfer agent.
(c) DOCUMENTS AND CERTIFICATES. At the Closing, the Company
shall have delivered to the Purchaser the following in form and substance
reasonably satisfactory to the purchasers:
(i) OPINION. An opinion of the Company's legal
counsel in the form attached hereto as EXHIBIT "D" dated as of the
Closing Date;
(ii) DEBENTURE. A Debenture(s) representing the
principal amount of Debentures purchased by the Purchaser, registered
in the name of such Purchaser, each in form satisfactory to the
Purchaser;
(iii) STOCK PURCHASE WARRANT. A Warrant(s)
representing the Warrants purchased by the Purchaser, registered in the
name of the Purchaser;
(iv) REGISTRATION RIGHTS AGREEMENT. The Company
shall have executed and delivered the Registration Rights Agreement;
(v) OFFICER'S CERTIFICATE. An Officer's Certificate
dated the Closing Date and signed by an executive officer of the
Company confirming the accuracy of the Company's representations,
warranties and covenants as of such Closing Date and confirming the
compliance by the Company with the conditions precedent set forth in
this Section 4.1 as of the Closing Date.
(vi) SECRETARY'S CERTIFICATE. A Secretary's
Certificate dated the Closing Date and signed by the Secretary or
Assistant Secretary of the Company certifying (A) that attached thereto
is a true and complete copy of the Certificate of Incorporation of the
Company, as in effect on the Closing Date, (B) that attached thereto is
a true and complete copy of the by-laws of the Company, as in effect on
the Closing Date and (C) that attached
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thereto is a true and complete copy of the resolutions duly adopted by
the Board of Directors of the Company authorizing the execution,
delivery and performance this Agreement and of the Transaction
Documents, and that such resolutions have not been modified, rescinded
or revoked.
ARTICLE 5
MISCELLANEOUS
5.1 FEES AND EXPENSES. Except as set forth in the Registration Rights
Agreement and as otherwise set forth in this Agreement, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Debenture Shares and the Warrant Shares pursuant hereto.
5.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the
Exhibits and Schedules hereto and the Transaction Documents contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
5.3 NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 8:00 p.m. EST
where such notice is to be received), or on the first business day following
such delivery (if delivered on a business day after 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 are (i) if to the Company to Geron
Corporation, 230 Constitution Drive, Menlo Park, California 94025 attention:
David Greenwood, fax no. (650) 473-7701 with copies to Latham & Watkins, 135
Commonwealth Drive, Menlo Park, California 94025, Attention: Alan C. Mendelson,
Esq., fax no. (650) 463-2600, and (ii) if to the Purchaser to the address as set
forth on Schedule II hereto with copies to Akerman, Senterfitt & Eidson, P.A.,
One Southeast Third Avenue, 28th Floor, Miami, Florida 33131-1714 attention:
Bradley D. Houser, Esq., fax no. (305) 374-5095, or such other address as may be
designated in writing hereafter, in the same manner, by such Person.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and a majority-in-interest of the Purchasers or, in the case
of a waiver, by the party against whom enforcement of any such waiver is sought.
No waiver 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 provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right
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accruing to it thereafter. Notwithstanding the foregoing, no such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Securities. The Company shall not offer or pay any consideration to any
Purchaser for consenting to such an amendment or waiver unless the same
consideration is offered to each Purchaser and the same consideration is paid to
each Purchaser which consents to such amendment or waiver.
5.5 HEADINGS; INTERPRETIVE MATTERS. The headings herein are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof. No provision of this
Agreement will be interpreted in favor of, or against, any of the parties hereto
by reason of the extent to which any such party or its counsel participated in
the drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. The Purchaser may assign
this Agreement or any rights or obligations hereunder to any Affiliate thereof
without the prior written consent of the Company. All assignees must make the
representations and warranties set forth in Section 2.2 and otherwise comply
with the terms of this Agreement otherwise applicable to its assignor. This
provision shall not limit the Purchaser's right to transfer the Securities in
accordance with all of the terms of this Agreement or under the Registration
Rights Agreement.
5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
5.8 GOVERNING LAW. This Agreement and the Transaction Documents shall
be governed by and interpreted in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed in the State of
Delaware (without regard to principles of conflict laws). Both parties
irrevocably consent to the jurisdiction of the United States federal courts and
the state courts located in Delaware with respect to any suit or proceeding
based on or arising under this Agreement, the Transaction Documents, the
agreements entered into in connection herewith and therewith and the
transactions contemplated hereby or thereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
Both parties irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Both parties further agree that service
of process upon a party mailed by first class mail shall be deemed in every
respect effective service of process upon the party in any such suit or
proceeding. Nothing herein shall affect either party's right to serve process in
any other manner permitted by law. Both parties agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgement or in any other
lawful manner.
5.9 SURVIVAL. The agreements, covenants, representations, warranties
and provisions contained in this Agreement shall survive the delivery of the
Debentures and the Warrants pursuant
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to this Agreement and the Closing hereunder and any conversion of the Debentures
or exercise of the Warrants.
5.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
5.11 PUBLICITY. The Company and the Purchaser shall consult with each
other in issuing any press releases, filings with the SEC, NASD or any stock
exchange or interdealer quotation system or otherwise making public statements
with respect to the transactions contemplated hereby and neither party shall
issue any such press release, filings with the SEC, NASD or any stock exchange
or interdealer quotation system or otherwise make any such public statement
without the prior written consent of the other, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law, rule or regulation, in which such case
the disclosing party shall provide the other party with prior notice of such
public statement. The Company shall not otherwise publicly disclose the names of
any of the Purchaser without the Purchaser's prior written consent.
5.12 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
5.13 REMEDIES. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to each Purchaser by vitiating
the intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for breach of its obligations
hereunder will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of any of the provisions hereunder, that each Purchaser
shall be entitled, in addition to all other available remedies in law or in
equity, 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, without the necessity of showing economic loss and without
any bond or other security being required.
5.14 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to the Purchaser hereunder or pursuant to the Registration Rights
Agreement or the Purchaser enforces or exercises their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared fraudulent
or preferential, set aside, recovered from, disgorged by or are required to be
refunded, repaid or otherwise restored to the Company, a trustee, receiver or
any other Person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable
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cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
5.15 FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request to the extent necessary to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
5.16 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
GERON CORPORATION
By: /s/ DAVID L. GREENWOOD
----------------------------------------
David L. Greenwood
Senior Vice President, Corporate
Development and Chief Financial Officer
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P.,
Investment Manager
By: RGC General Partner Corp., as
General Partner
By: /s/ WAYNE D. BLOCH
------------------------------------
Name: Wayne D. Bloch
Title: Managing Director
Residence: Grand Cayman, Cayman Islands
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EXHIBIT A
TO SECURITIES PURCHASE AGREEMENT
FORM OF CONVERTIBLE DEBENTURES
SEE TAB #2
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EXHIBIT B
TO SECURITIES PURCHASE AGREEMENT
FORM OF WARRANT
SEE TAB #3
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EXHIBIT C
TO SECURITIES PURCHASE AGREEMENT
FORM OF REGISTRATION RIGHTS AGREEMENT
SEE TAB #4
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EXHIBIT D
TO SECURITIES PURCHASE AGREEMENT
OPINION OF LATHAM & WATKINS
SEE TAB #9
30
