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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
November 2, 2000 by and between Calypte Biomedical Corporation, a Delaware
corporation (the "Company"), and Townsbury Investments Limited (the
"Purchaser").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. CERTAIN DEFINITIONS.
(a) "AVERAGE DAILY PRICE" shall be the price based on the VWAP of the
Company on the Principal Market.
(b) "DRAW DOWN" shall have the meaning assigned to such term in
Section 6.1(a) hereof.
(c) "DRAW DOWN PRICING PERIOD" shall mean a period of twenty-two (22)
consecutive Trading Days beginning on the date specified in the Draw Down Notice
(as defined in Section 6.1(e) hereof); PROVIDED, HOWEVER, the Draw Down Pricing
Period shall not begin before the day on which receipt of such notice is
confirmed by the Purchaser.
(d) "EFFECTIVE DATE" shall mean the date the Registration Statement of
the Company covering the Shares being subscribed for hereby is declared
effective.
(e) "INVESTMENT AMOUNT" shall have the meaning assigned to such term
in Section 6.1(e) hereof.
(f) "MATERIAL ADVERSE EFFECT" shall mean any adverse effect on the
business, operations, properties, prospects or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole and/or any condition, circumstance, or situation
that would prohibit or otherwise materially interfere with the ability of the
Company to perform any of its material obligations under this Agreement or the
Registration Rights Agreement or to perform its obligations under any other
material agreement; provided, however, that the following shall not be taken
into account in determining a "Material Adverse Event": (i) any adverse change,
event or effect that is directly attributable to conditions affecting the United
States economy generally unless such conditions adversely affect the Company in
a materially disproportionate manner, and (ii) any adverse change, event or
effect that is directly attributable to conditions affecting the Company's
industry generally, unless such conditions adversely affect the Company in a
materially disproportionate manner.
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(g) "PRINCIPAL MARKET" shall mean initially the Nasdaq Small-Cap
Market and shall include the American Stock Exchange, Nasdaq National Market,
the New York Stock Exchange if the Company is listed and trades on such market
or exchange. Principal Market shall not include the OTC Bulletin Board without
the written consent of the Purchaser.
(h) "PURCHASE PRICE" shall mean with respect to Shares purchased
during each applicable Draw Down Pricing Period (excluding Shares issued upon
the exercise of Warrants) ninety-five percent (95%) (the "Purchase Price
Percentage") of the Average Daily Price on the date in question.
(i) "REGISTRATION STATEMENT" shall mean the registration statement
under the Securities Act of 1933, as amended, to be filed with the Securities
and Exchange Commission for the registration of the Shares pursuant to the
Registration Rights Agreement attached hereto as EXHIBIT A (the "Registration
Rights Agreement).
(j) "SEC DOCUMENTS" shall mean the Company's latest Form 10-K or
10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K filed
thereafter, and the Proxy Statement for its latest fiscal year as of the time in
question until such time as the Company no longer has an obligation to maintain
the effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.
(k) "SETTLEMENT PERIOD" shall have the meaning assigned to such term
in Section 6.1(b).
(l) "SHARES" shall mean, collectively, the shares of Common Stock of
the Company being subscribed for hereunder and those shares of Common Stock
issuable to the Purchaser upon exercise of the Warrants.
(m) "THRESHOLD PRICE" is the lowest Average Daily Price during any
Draw Down Pricing Period at which the Company will sell its Common Stock with
respect to this Agreement.
(n) "TRADING DAY" shall mean any day on which the Principal Market is
open for business.
(o) "VWAP" shall mean the daily volume weighted average price of the
Company's Common Stock on the Principal Market as reported by Bloomberg
Financial L.P. (based on a trading day from 9:30 am EST to 4:00 pm EST) using
the VAP function.
(p) "WARRANTS" shall mean both the Draw Down Warrants and the Term
Warrants as those terms are defined in Section 5.2(f) hereof.
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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 may issue and sell to the Purchaser
and the Purchaser shall purchase from the Company up to twenty-five million
dollars ($25,000,000) of the Company's Common Stock (the "Commitment Amount"),
$0.001 par value per share (the "Common Stock"), and the Warrants, based on Draw
Downs of up to six million dollars ($6,000,000.00) per Draw Down.
Section 2.2. THE SHARES. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of stockholders, a sufficient number of its authorized but
unissued shares of its Common Stock to cover the Shares to be issued in
connection with all Draw Downs requested under this Agreement. Anything in this
Agreement to the contrary notwithstanding and not including the the shares of
Common Stock underlying the Warrants, (i) at no time will the Company request a
Draw Down which would result in the issuance of an aggregate number of shares of
Common Stock pursuant to this Agreement which exceeds 19.9% of the number of
shares of Common Stock issued and outstanding on the Initial Closing Date
without obtaining stockholder approval of such excess issuance, and (ii) the
Company may not make a Draw Down to the extent that, after such purchase by the
Purchaser, the sum of the number of shares of Common Stock beneficially owned by
the Purchaser and its affiliates would result in beneficial ownership by the
Purchaser and its affiliates of more than 9.9% of the then outstanding shares of
Common Stock. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act").
Section 2.3. PURCHASE PRICE AND INITIAL 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 delivery of executed documents
under this Agreement and the other agreements referred to herein and the payment
of the fees set forth in Article II of the Escrow Agreement, attached as EXHIBIT
B hereto, (the "Initial Closing") shall take place at the offices of Epstein
Becker & Green, P.C., 250 Park Avenue, New York, New York 10177 within fifteen
(15) days from the date hereof, or (ii) such other time and place or on such
date as the Purchaser and the Company may agree upon (the "Initial 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 Initial Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. REPRESENTATION AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly incorporated validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate authority to own,
lease and operate its properties and assets and to carry on its business as now
being conducted. The Company does not have any subsidiaries and does not own
more than fifty percent (50%) of or control any other business entity except as
set forth in the SEC Documents. The Company is duly qualified to do business and
is in good standing as a foreign corporation in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not have a Material Adverse Effect on the Company's financial condition.
(b) AUTHORIZATION, ENFORCEMENT. (i) The Company has the requisite
corporate power and corporate authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement, the Escrow
Agreement and to issue the Draw Down Shares pursuant to their respective terms,
(ii) the execution, issuance and delivery of this Agreement, the Registration
Rights Agreement and the Escrow Agreement by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required, and (iii) this
Agreement, the Registration Rights Agreement and the Escrow Agreement have been
duly executed and delivered by the Company and at the Initial Closing shall
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their 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, creditors' rights and remedies or by
other equitable principles of general application. The Company has duly and
validly authorized and reserved for issuance shares of Common Stock sufficient
in number for the issuance of the Draw Down Shares.
(c) CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock of which 25,238,037 shares are
issued and outstanding and 5,000,000 shares of preferred stock, par value
$0.001, of which none are issued and outstanding. 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 the SEC Documents. Except
as set forth in this Agreement and the Registration Rights Agreement and as set
forth in the SEC Documents, or on SCHEDULE 3.1(c) hereto, 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, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
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except as set forth in this Agreement and as set forth in the SEC Documents or
on SCHEDULE 3.1(c), 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 as set forth in
SCHEDULE 3.1(c), the Company is not a party to any agreement granting
registration rights to any person with respect to any of its equity or debt
securities. Except as set forth in SCHEDULE 3.1(c), the Company is not a party
to, and it has no knowledge of, any agreement restricting the voting or transfer
of any shares of the capital stock of the Company. Except as set forth in the
SEC Documents or on SCHEDULE 3.1(c) hereto, the offer and sale of all capital
stock, convertible securities, rights, warrants, or options of the Company
issued prior to the Initial 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 on the Company's
financial condition or operating results. The Company has made available to the
Purchaser true and correct copies of the Company's Charter as in effect on the
date hereof (the "Charter"), and the Company's Bylaws as in effect on the date
hereof (the "Bylaws"). The Company has not received any notice from the
Principal Market questioning or threatening the continued inclusion of the
Common Stock on such market.
(d) ISSUANCE OF SHARES. Except as set forth on Schedule 3.1(c), the
Shares to be issued under this Agreement have been duly authorized by all
necessary corporate action and, when paid for or issued in accordance with the
terms hereof, the Shares shall be validly issued and outstanding, fully paid and
non-assessable, and the Purchaser shall be entitled to all rights accorded to a
holder of Common Stock.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not and will 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 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 other foreign statute, rule, regulation, order, judgment or
decree (including any federal or 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, termination, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations which
singularly or in the aggregate do not and will not have a Material Adverse
Effect. The Company is not required under any 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
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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 Securities and Exchange Commission (the "SEC") or state
securities administrators subsequent to the Initial 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) SEC DOCUMENTS, FINANCIAL STATEMENTS. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and, except as disclosed in the SEC
Documents or on SCHEDULE 3.1(f) hereto, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 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 "SEC Documents"). The Company has delivered or made
available to the Purchaser true and complete copies of the SEC Documents filed
with the SEC since December 31, 1998. 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. As of their respective filing dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to such documents,
and, as of their respective filing dates, none of the SEC Documents 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. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements), and fairly present
in all material respects the financial position of the Company and its
subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(g) SUBSIDIARIES. The SEC Documents or Schedule 3.1(g) hereto sets
forth each subsidiary of the Company, 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
interests 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. All of the outstanding shares of capital stock of
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each subsidiary have been duly authorized and validly issued, and are fully paid
and non-assessable. There are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon any
subsidiary for the purchase or acquisition of any shares of capital stock of any
subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any subsidiary is a party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
subsidiary.
(h) NO MATERIAL ADVERSE EFFECT. Since June 30, 2000 no Material
Adverse Effect has occurred or exists with respect to the Company, except as
disclosed in the SEC Documents or on SCHEDULE 3.1(h) hereof.
(i) NO UNDISCLOSED LIABILITIES. Except as disclosed in the SEC
Documents or on SCHEDULE 3.1(i) hereto, neither the Company nor any of its
subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any subsidiary (including the notes thereto) in conformity with GAAP
which are not disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company's or its subsidiaries' respective businesses
since such date and which, individually or in the aggregate, do not or would not
have a Material Adverse Effect on the Company or its subsidiaries.
(j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since June 30, 2000, no
event or circumstance has occurred or exists with respect to the Company or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
(k) INDEBTEDNESS. The SEC Documents or SCHEDULE 3.1(k) hereto sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any subsidiary, or for which the Company or any subsidiary has
commitments. For the purposes of this Agreement, "Indebtedness" shall mean (A)
any liabilities for borrowed money or amounts owed in excess of $250,000 (other
than trade accounts payable incurred in the ordinary course of business), (B)
all guaranties, endorsements and 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 $250,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.
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(l) TITLE TO ASSETS. Each of the Company and the subsidiaries has good
and marketable title to all of its real and personal property reflected in the
SEC Documents, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except for those indicated in the SEC Documents
or on SCHEDULE 3.1(l) hereto or such that do not cause a Material Adverse Effect
on the Company's financial condition or operating results. All said leases of
the Company and each of its subsidiaries are valid and subsisting and in full
force and effect.
(m) ACTIONS PENDING. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as set forth in the SEC Documents or on SCHEDULE
3.1(m) hereto, there is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened, against or involving
the Company, any subsidiary or any of their respective properties or assets.
There are no outstanding orders, judgments, injunctions, awards or decrees of
any court, arbitrator or governmental or regulatory body against the Company or
any subsidiary.
(n) COMPLIANCE WITH LAW. The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the SEC Documents or on SCHEDULE 3.1(n)
hereto or such that do not cause a Material Adverse Effect. The Company and each
of its subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of their respective businesses as now being conducted by them 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) TAXES. The Company and each subsidiary has filed all Tax Returns
which it is required to file under applicable laws; all such Tax Returns are
true and accurate and have been prepared in compliance with all applicable laws;
the Company has paid all Taxes due and owing by it or any subsidiary (whether or
not such Taxes are required to be shown on a Tax Return) and have withheld and
paid over to the appropriate taxing authorities all Taxes which it is required
to withhold from amounts paid or owing to any employee, stockholder, creditor or
other third parties; and since December 31, 1999, the charges, accruals and
reserves for Taxes with respect to the Company (including any provisions for
deferred income taxes) reflected on the books of the Company are adequate to
cover any Tax liabilities of the Company if its current tax year were treated as
ending on the date hereof.
No claim has been made by a taxing authority in a jurisdiction where the
Company does not file tax returns that the Company or any subsidiary is or may
be subject to taxation by that jurisdiction. There are no foreign, federal,
state or local tax audits or administrative or judicial proceedings pending or
being conducted with respect to the Company or any subsidiary; no information
related to Tax matters has been requested by any foreign,
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federal, state or local taxing authority; and, except as disclosed above, no
written notice indicating an intent to open an audit or other review has been
received by the Company or any subsidiary from any foreign, federal, state or
local taxing authority. There are no material unresolved questions or claims
concerning the Company's Tax liability. The Company (A) has not executed or
entered into a closing agreement pursuant to SECTION 7121 of the Internal
Revenue Code or any predecessor provision thereof or any similar provision of
state, local or foreign law; and (B) has not agreed to or is required to make
any adjustments pursuant to SECTION 481 (a) of the Internal Revenue Code or
any similar provision of state, local or foreign law by reason of a change in
accounting method initiated by the Company or any of its subsidiaries or has
any knowledge that the IRS has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to
the business or operations of the Company. The Company has not been a United
States real property holding corporation within the meaning of SECTION
897(c)(2) of the Internal Revenue Code during the applicable period specified
in SECTION 897(c)(1)(A)(ii) of the Internal Revenue Code.
The Company has not made an election under SECTION 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another
person that is not a subsidiary of the Company under (A) Treas. Reg. SECTION
1.1502-6 (or comparable provisions of state, local or foreign law), (B) as a
transferee or successor, (C) by contract or indemnity or (D) otherwise. The
Company is not a party to any tax sharing agreement. The Company has not made
any payments, is not obligated to make payments nor is it a party to an
agreement that could obligate it to make any payments that would not be
deductible under SECTION 280G of the Internal Revenue Code.
For purposes of this Section 3.1(o):
"IRS" means the United States Internal Revenue Service.
"TAX" or "TAXES" means federal, state, county, local, foreign, or other
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"TAX RETURN" means any return, information report or filing with respect to
Taxes, including any schedules attached thereto and including any amendment
thereof.
(p) CERTAIN FEES. Except as set forth on SCHEDULE 3.1(p) hereto, no
brokers, finders or financial advisory fees or commissions will be payable by
the Company or any subsidiary with respect to the transactions contemplated by
this Agreement.
(q) DISCLOSURE. To the best of the Company's knowledge, neither this
Agreement or the Schedules hereto nor any other documents, certificates or
instruments
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furnished to the Purchaser by or on behalf of the Company or any subsidiary in
connection with the transactions contemplated by this Agreement contain any
untrue statement of a material fact 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.
(r) OPERATION OF BUSINESS. The Company and each of the subsidiaries
owns or possesses all patents, trademarks, service marks, trade names,
copyrights, licenses and authorizations as set forth in the SEC Documents or on
SCHEDULE 3.1(r) hereto, and all rights with respect to the foregoing, which are
necessary for the conduct of its business as now conducted without any conflict
with the rights of others.
(s) REGULATORY COMPLIANCE. The Company has all necessary licenses,
registrations and permits to conduct its business as now being conducted in all
states where the Company conducts its business.
(t) BOOKS AND RECORDS. The records and documents of the Company and
its subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any subsidiary.
(u) MATERIAL AGREEMENTS. Except as set forth in the SEC Documents, or
on SCHEDULE 3.1(u) hereto, neither the Company nor any subsidiary is a party to
any written or oral contract, instrument, agreement, commitment, obligation,
plan or arrangement, a copy of which would be required to be filed with the SEC
as an exhibit to a registration statement on Form S-1 or other applicable form
(collectively, "Material Agreements") if the Company or any subsidiary were
registering securities under the Securities Act of 1933, as amended (the
"Securities Act"). Except as set forth in Schedule 3.1(u), the Company and each
of its subsidiaries has in all material respects performed all the obligations
required to be performed by them to date under the foregoing agreements, have
received no notice of default and, to the best of the Company's knowledge are
not in default under any Material Agreement now in effect, the result of which
could cause a Material Adverse Effect. No written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement of the Company or of any
subsidiary limits or shall limit the payment of dividends on the Company's
Common Stock.
(v) TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC
Documents or on SCHEDULE 3.1(v) 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, any
subsidiary or any of their respective customers or suppliers on the one hand,
and (B) on the other hand, any officer, employee, consultant or director of the
Company, or any of its subsidiaries, or any person owning any capital stock of
the Company or any subsidiary or any member of the immediate family of such
officer, employee, consultant, director or stockholder or any corporation or
other entity controlled by such officer, employee, consultant, director or
stockholder, or a member of the immediate family of such officer, employee,
consultant, director or stockholder.
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(w) SECURITIES LAWS. The Company has complied and will comply with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Shares hereunder. Neither the Company nor anyone acting
on its behalf, directly or indirectly, has or will sell, offer to sell or
solicit offers to buy the Shares or similar securities to, or solicit offers
with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the Purchaser), so as
to bring the issuance and sale of the Shares and/or Warrants under the
registration provisions of the Securities Act and applicable state securities
laws. Neither the Company nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Shares.
(x) EMPLOYEES. Neither the Company nor any subsidiary has any
collective bargaining arrangements or agreements covering any of its employees,
except as set forth in the SEC Documents or on SCHEDULE 3.1(x) hereto. Except as
set forth in the SEC Documents or on SCHEDULE 3.1(x) hereto, neither the Company
nor any subsidiary is in breach of any employment contract, agreement regarding
proprietary information, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, 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 or such subsidiary. Since the date of the
December 31, 2000 Form 10-K, no officer, consultant or key employee of the
Company or any subsidiary whose termination, either individually or in the
aggregate, could have a Material Adverse Effect, has terminated or, to the
knowledge of the Company, has any present intention of terminating his or her
employment or engagement with the Company or any subsidiary.
(y) ABSENCE OF CERTAIN DEVELOPMENTS. Except as provided in SEC
Documents or in SCHEDULE 3.1(y) hereto, since June 30, 2000, neither the Company
nor any subsidiary has:
(i) issued any stock, bonds or other corporate securities or
any rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such subsidiary's business;
(iii) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current liabilities
paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or
other property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of its
capital stock;
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(v) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business;
(vi) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchaser or its representatives;
(vii) suffered any substantial losses or waived any rights of
material value, whether or not in the ordinary course of business, or suffered
the loss of any material amount of prospective business;
(viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(ix) made capital expenditures or commitments therefor that
aggregate in excess of $500,000;
(x) entered into any other material transaction, whether or not
in the ordinary course of business;
(xi) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(xii) experienced any material problems with labor or management
in connection with the terms and conditions of their employment; or
(xiii) effected any two or more events of the foregoing kind which
in the aggregate would be material to the Company or its subsidiaries.
(z) GOVERNMENTAL APPROVALS. Except as set forth in the SEC Documents
or on SCHEDULE 3.1(z) hereto, and except for the filing of any notice prior or
subsequent to the Closing that may be required under applicable federal or state
securities laws (which if required, shall be filed on a timely basis), including
the filing of a registration statement or statements pursuant to this Agreement,
no authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution or delivery of the Shares, or for the
performance by the Company of its obligations under this Agreement.
(aa) USE OF PROCEEDS. The proceeds from the sale of the Shares will be
used by the Company and its subsidiaries for general corporate purposes.
(bb) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF SHARES. Company
acknowledges and agrees that Purchaser is acting solely in the capacity of arm's
length purchaser with respect to this Agreement and the transactions
contemplated hereunder. The
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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. 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 by the Company and its own
representatives and counsel.
Section 3.2. REPRESENTATIONS 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
corporation duly incorporated, validly existing and in good standing under the
laws of the British Virgin Islands.
(b) AUTHORIZATION AND POWER. The Purchaser has the requisite power and
authority to enter into and perform this Agreement and to purchase the Shares
being sold to it hereunder. 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.
(c) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby 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 agreement, indenture or instrument to which
the Purchaser is a party, or 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, have a
Material Adverse Effect on Purchaser). 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) FINANCIAL RISKS. The Purchaser acknowledges that it is able to
bear the financial risks associated with an investment in the Shares and that it
has been given full access to such records of the Company and the subsidiaries
and to the officers of the Company and the subsidiaries as it has deemed
necessary or appropriate to conduct its due diligence investigation. The
Purchaser is capable of evaluating the risks and merits of an investment in the
Shares by virtue of its experience as an investor and its knowledge, experience,
and sophistication in financial and business matters and the Purchaser is
capable of bearing the entire loss of its investment in the Shares.
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(e) ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act.
(f) COMPLIANCE WITH LAW. The Purchaser's trading and distribution
activities with respect to the Shares will be in compliance with all applicable
state and federal securities laws, rules and regulations and the rules and
regulations of the Principal Market.
(g) GENERAL. The Purchaser understands that the Company is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the suitability of the Purchaser to acquire the Shares.
ARTICLE IV
COVENANTS
The Company covenants with the Purchaser as follows:
Section 4.1. SECURITIES COMPLIANCE.
If applicable, the Company shall notify the Principal Market, 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 and the Warrants to the Purchaser or subsequent
holders.
Section 4.2. REGISTRATION AND LISTING. The Company will 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, will comply with all requirements related to any registration
statement filed pursuant to this Agreement, and will not take any action or file
any document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the
Principal Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market
and shall provide the Purchasers with copies of any correspondence to or from
such Principal Market which questions or threatens delisting of the Common
Stock, within three (3) Trading Days of the Company's receipt thereof, until the
Purchasers have disposed of all of their Registrable Securities.
Section 4.3. REGISTRATION STATEMENT. The Company shall cause to be filed
the Registration Statement, which Registration Statement shall provide for the
resale of the Shares by the Purchaser to the public in accordance with this
Agreement. The Company shall cause
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such Registration Statement to be declared effective by the SEC as expeditiously
as practicable. Before the Purchaser shall be obligated to accept a Draw Down
request from the Company, the Company shall have caused a sufficient number of
shares of Common Stock to be registered to cover the Shares to be issued in
connection with such Draw Down.
Section 4.4. ESCROW ARRANGEMENT. The Company and the Purchaser shall enter
into an escrow arrangement with Epstein Becker & Green, P.C. (the "Escrow
Agent") in the Form of EXHIBIT B hereto respecting payment against delivery of
the Shares.
Section 4.5. REGISTRATION RIGHTS AGREEMENT. The Company and the purchaser
shall enter into the Registration Rights Agreement in the Form of EXHIBIT A
hereto.
Section 4.6. COMPLIANCE WITH LAWS. The Company shall comply, and cause each
subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could have a Material Adverse Effect.
Section 4.7. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
Section 4.8. OTHER AGREEMENTS. The Company shall not enter into any
agreement the terms of which such agreement would restrict or impair the ability
of the Company or any subsidiary to perform under this Agreement.
Section 4.9. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF
RIGHT TO REQUEST A DRAW DOWN. The Company will immediately notify the Purchaser
upon the occurrence of any of the following events in respect of the
Registration Statement or related prospectus in respect of the Shares: (i)
receipt of any request for additional information from the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement the response to which would require any amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; (iv) the happening
of any event that makes any statement made in the Registration Statement or
related prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in the Registration Statement, related prospectus or documents so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to
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make the statements therein, in the light of the circumstances under which they
were made, not misleading; and (v) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate; and
the Company will promptly make available to the Purchaser any such supplement or
amendment to the related prospectus. The Company shall not deliver to the
Purchaser any Draw Down Notice during the continuation of any of the foregoing
events.
Section 4.10. CONSOLIDATION; MERGER. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument or by
operation of law the obligation to deliver to the Purchaser such shares of stock
and/or securities as the Purchaser is entitled to receive pursuant to this
Agreement.
Section 4.11. LIMITATION ON FUTURE FINANCING. The Company agrees that,
except as set forth below, it will not enter into any sale of its securities
for cash at a discount to the current market price until the earlier of (i)
12 months from the effective date of the Registration Statement or (ii) sixty
(60) days after the entire $25,000,000 of Common Stock has been purchased by
the Purchaser. The foregoing shall not prevent or limit the Company from
engaging in any sale of securities (i) in a registered public offering by the
Company which is underwritten by one or more established investment banks
(not including an equity line type of financing), (ii) in one or more private
placements where the purchasers do not have registration rights, (iii)
pursuant to any presently existing or future employee benefit plan which plan
has been or is approved by the Company's stockholders, (iv) pursuant to any
compensatory plan for a full-time employee or key consultant, (v) in
connection with a strategic partnership or other business transaction, the
principal purpose of which is not simply to raise money, (vi) in one or more
private placements with registration rights, provided that for each such
private placement, the Company has drawn down the maximum amount allowed
pursuant to the terms of this Agreement during the two (2) consecutive months
immediately prior to the month during which any such financing is entered
into, (vii) pursuant to a private placement of equity securities of up to
five million dollars ($5,000,000) with registration rights arranged through
Ladenburg Thalmann & Co. Inc., (viii) pursuant to the exercise of any
presently issued and outstanding options or warrants, or (ix) to which
Purchaser gives its prior written consent. In the event that the Company
enters into a subsequent transaction in the case of (vi) above, the Company
hereby agrees and shall be obligated to Draw Down the maximum amount allowed
pursuant to the terms of this Agreement during each month thereafter until
the aggregate amount Drawn Down equals or exceeds the total dollar amount of
such subsequent transaction less, (i) as to any Draw Downs after such
subsequent transaction, any dollar amounts by which the Company's right to
Draw Down $6,000,000 per Draw Down is limited by the formula set forth in
Section 6.1(c) hereof, and (ii) the dollar amount, if any, of the Purchaser's
investment in such subsequent transaction pursuant to its right of first
refusal below. Further, the Purchaser shall have a right of first refusal, to
elect to participate, in such subsequent transaction in the case of (i),
(ii), (vi) and (ix) above. Such right of first refusal must be exercised in
writing within seven (7) Trading Days of the Purchaser's receipt of notice of
the proposed terms of such financing.
The Purchaser covenants with the Company as follows:
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Section 4.12. COMPLIANCE WITH LAW. The Purchaser's trading activities with
respect to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed. Without limiting the generality of the foregoing, the Purchaser agrees
that it will, whenever required by federal securities laws, deliver the
prospectus included in the Registration Statement to any purchaser of Shares
from the Purchaser.
ARTICLE V
CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS
Section 5.1. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL
THE SHARES. The obligation hereunder of the Company to issue and sell the Shares
to the Purchaser is subject to the satisfaction or waiver, at or before the
Initial Closing, and as of each Settlement 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 the Initial Closing and as
of each Settlement Date as though made at that time, except for representations
and warranties that speak as of a particular date.
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have performed,
satisfied and complied in all material respects with all material covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchaser at or prior to the Initial Closing and as of
each Settlement Date.
(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.
Section 5.2. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
CLOSE. The obligation hereunder of the Purchaser to perform its obligations
under this Agreement and to purchase the Shares is subject to the satisfaction
or waiver, at or before the Initial 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) 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 Initial Closing as
though made at that time (except for representations and warranties that speak
as of a particular date).
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(b) PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all 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 Initial Closing.
(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 Purchaser or the Company or any subsidiary, or any of the officers,
directors or affiliates of the Company or any subsidiary seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.
(e) OPINION OF COUNSEL, ETC. At the Initial Closing, the Purchaser
shall have received an opinion of counsel to the Company, dated the date of the
Initial Closing, in the form of EXHIBIT C hereto, and such other certificates as
the Purchaser deems necessary.
(f) WARRANTS. The Purchaser shall receive, on each Settlement Date,
a warrant certificate to purchase up to a number of shares of Common Stock
equal to six percent (6%) of the shares purchased on such Settlement Date
(the "Draw Down Warrants"). Each Warrant shall have a term from its date of
issuance of three (3) years. The exercise price of the each Warrant shall be
115% of the Average Daily Price on the Trading Day immediately prior to the
Settlement Date on which the Warrant is issued; provided, however, that if
such price is below the Threshold Price, then the exercise price of each
Warrant shall be 115% of the Threshold Price. In the event that the Company
does not make Draw Downs, in the aggregate, of at least the lesser of
$15,000,000 and the "Maximum Draw Down," as defined below, under this
Agreement prior to the earlier of (i) the last day of the Commitment Period,
or (ii) the date on which this Agreement is terminated pursuant to Section
7.2(a) (the "Warrant Date"), the Company shall issue to the Purchaser, within
three (3) Trading Days of the Warrant Date, a warrant certificate to purchase
up to a number of Shares equal to 6% of (x) the difference between (A) the
lesser of $15,000,000 and the Maximum Draw Down, and (B) the amount actually
drawn down by the Company under this Agreement, (y) divided by the Average
Daily Price on the Warrant Date (the "Term Warrant") (the Draw Down Warrants
and the Term Warrant collectively referred to as the "Warrants"). The Term
Warrant shall have an exercise price equal to 115% of the Average Daily Price
on the Warrant Date and a term from its date of issuance of three (3) years.
In lieu of issuing the Term Warrant, the Company may pay the Investor in
cash, within three (3) Trading Days of the Warrant Date, an amount equal to
5% of the difference between (A) the lesser of $15,000,000 and the Maximum
Draw Down, and (B) the amount actually drawn down by the Company under this
Agreement. The Common Stock underlying the Warrants will be registered in the
Registration Statement referred to in Section 4.3 hereof. The Warrants shall
be in the form of EXHIBIT E hereto.
The "Maximum Draw Down" shall equal the amount that the Company
could have drawn down had the Company issued a Draw Down Notice for the
maximum amount permitted (as limited by the formula in Section 6.1(c) of this
Agreement and the further limitations on the number of shares issuable in any
Draw Down contained in Section 2.1(ii) of this Agreement) on the first
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Trading Day following the Effective Date and on the first Trading Day
following each successive monthly anniversary of the Effective Date during
the term of this Agreement.
Section 5.3. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACCEPT A DRAW DOWN AND PURCHASE THE SHARES. The obligation hereunder of the
Purchaser to accept a Draw Down request and to acquire and pay for the Shares is
subject to the satisfaction at or before each Settlement Date, of each of the
conditions set forth below.
(a) SATISFACTION OF CONDITIONS TO INITIAL CLOSING. The Company shall
have satisfied, or the Purchaser shall have waived at the Initial Closing, the
conditions set forth in Section 5.2 hereof.
(b) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
registering the Shares shall have been declared effective by the SEC and shall
remain effective on each Settlement Date.
(c) NO SUSPENSION. Trading in the Company's Common Stock shall not
have been suspended by the SEC or the Principal Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the delivery of each Draw Down Notice),
and, at any time prior to such Draw Down Notice, trading in securities generally
as reported on the Principal Market shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose trades are
reported on the Principal Market unless the general suspension or limitation
shall have been terminated prior to the delivery of such Draw Down Notice.
(d) MATERIAL ADVERSE EFFECT. No Material Adverse Effect and no
Consolidation Event where the successor entity has not agreed to perform the
Company's obligations shall have occurred.
(e) OPINION OF COUNSEL. The Purchaser shall have received a
"down-to-date" letter from the Company's counsel, confirming that there is no
change from the counsel's previously delivered opinion, or else specifying with
particularity the reason for any change and an opinion as to the additional
items specified in EXHIBIT C hereto.
(f) FUTURE FINANCING. The Company shall have not completed any
financing prohibited by Section 4.11 unless, prior to the Company delivering
the first Draw Down Notice after any such financing, the Company pays the
Purchaser as a condition to accepting such draw down and not as liquidated
damages, the sum of $100,000.
ARTICLE VI
DRAW DOWN TERMS
Section 6.1. DRAW DOWN TERMS. Subject to the satisfaction of the conditions
set forth in this Agreement, the parties agree as follows:
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(a) The Company, may, in its sole discretion, issue and exercise a
draw down (a "Draw Down") during each Draw Down Pricing Period, which Draw Down
the Purchaser will be obligated to accept for a period of 12 months commencing
immediately after the Effective Date (the "Commitment Period").
(b) Only one Draw Down shall be allowed in each Draw Down Pricing
Period. The number of shares of Common Stock purchased by the Purchaser with
respect to each Draw Down shall be determined as set forth in Section 6.1(d)
herein and settled on, (i) as to the 1st through the 11th Trading Days after a
Draw Down Pricing Period commences (the "First Settlement Period"), on the 13th
Trading Day after a Draw Down Pricing Period commences and (ii) as to the 12th
through the 22nd Trading Days after a Draw Down Pricing Period commences (the
"Second Settlement Period"), the 24th Trading Day after a Draw Down Pricing
Period. (each, a "Settlement Date" and the First and Second Settlement Periods
collectively referred to as "Settlement Periods"). In connection with each Draw
Down Pricing Period, the Company may set the Threshold Price. If the Average
Daily Price on any day within the Draw Down Pricing Period is less than the
Threshold Price, the Company shall not sell and the Purchaser shall not be
obligated to purchase the Shares otherwise to be purchased for such day.
(c) The minimum Investment Amount shall be $100,000 and the maximum
Investment Amount shall be $6,000,000; PROVIDED, HOWEVER, the maximum Investment
Amount during any Draw Down Pricing Period shall be limited pursuant to the
following formula: 4.5% of the weighted average price for the Common Stock for
the three (3) month period immediately prior to the Commencement Date (defined
below) multiplied by the total trading volume in respect of the Common Stock for
the three (3) month period immediately prior to the Commencement Date.
(d) The number of Shares of Common Stock to be issued on each
Settlement Date shall be a number of shares equal to the sum of the quotients
(for each trading day within the Settlement Period) of (x) 1/22nd of the
Investment Amount and (y) the Purchase Price on each Trading Day within the
Settlement Period, subject to the following adjustments:
(i) if the Average Daily Price on a given Trading Day is less
than the Threshold Price, then the Investment Amount will be reduced by 1/22nd
and that day shall be withdrawn from the Settlement Period; and
(ii) trading of the Common Stock on the Principal Market is
suspended for more than three (3) hours, in the aggregate, on any Trading Day
during the Settlement Period, the Investment Amount shall be reduced by 1/22nd
and that day shall be withdrawn from the applicable Settlement Period.
(e) The Company must inform the Purchaser by delivering a draw down
notice, in the form of EXHIBIT D hereto (the "Draw Down Notice"), via facsimile
transmission in accordance with Section 9.4 as to the amount of the Draw Down
(the "Investment Amount") the Company wishes to exercise before the first day of
the Draw Down Pricing Period (the "Commencement Date"). If the Commencement Date
is to be the date of the
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Draw Down Notice, the Draw Down Notice must be delivered to and receipt
confirmed by the Purchaser at least one hour before trading commences on such
date. At no time shall the Purchaser be required to purchase more than the
maximum Draw Down amount for a given Draw Down Pricing Period so that if the
Company chooses not to exercise the maximum permitted Draw Down in a given Draw
Down Pricing Period the Purchaser is not obligated to and shall not purchase
more than the scheduled maximum amount in a subsequent Draw Down Pricing Period.
(f) On or before each Settlement Date, the Shares purchased by the
Purchaser shall be electronically delivered to The Depository Trust Company
("DTC") on the Purchaser's behalf. Upon the Company electronically delivering
whole shares of Common Stock to the Purchaser or its designees via DWAC by 1:00
pm EST, the Purchaser shall wire transfer immediately available funds to the
Company's designated account on such day. Upon the Company electronically
delivering whole shares of Common Stock to the Purchaser or its designees via
DWAC after 1:00 pm EST, the Purchaser shall wire transfer next day available
funds to the Company's designated account on such day. In the event the
Purchaser elects to use the Escrow Agent, the Shares shall be credited by the
Company to the DTC account designated by the Purchaser upon receipt by the
Escrow Agent of payment for the Draw Down into the Escrow Agent's trust account
as provided in the Escrow Agreement. The Escrow Agent shall be directed to pay
the purchase price to the Company, net of One Thousand Five Hundred Dollars
($1,500) as escrow expenses to the Escrow Agent and any brokerage or placement
agent fees as set forth in the Escrow Agreement. The delivery of the Shares into
the Purchaser's DTC account in exchange for payment therefor shall be referred
to herein as "Settlement".
ARTICLE VII
TERMINATION
Section 7.1. TERMINATION. The term of this Agreement shall be twelve (12)
months from the Effective Date.
Section 7.2. OTHER TERMINATION.
(a) The Purchaser may terminate this Agreement upon one (1) Trading
Day's notice if (i) an event resulting in a Material Adverse Effect has occurred
and has not been cured for a period of 60 days, (ii) the Common Stock is
de-listed from the Principal Market unless such de-listing is in connection with
the listing of the Common Stock on the Nasdaq National Market, Nasdaq SmallCap
Market, the American Stock Exchange or the New York Stock Exchange or (iii) the
Company files for protection from creditors under any applicable law.
(b) The Company may terminate this Agreement upon one (1) Trading
Day's notice if the Purchaser shall fail to fund a properly noticed Draw Down
within three (3) Trading Days of a Settlement Date.
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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 for Sections 9.1 and 9.2, and
Article VIII herein. 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. The Company agrees to indemnify and hold
harmless the Purchaser (and its directors, officers, affiliates, agents,
successors and assigns) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without limitation,
reasonable attorney's fees, charges and disbursements) incurred by the Purchaser
as a result of any inaccuracy in or breach of the representations, warranties or
covenants made by the Company herein. The Purchaser agrees to indemnify and hold
harmless the Company and its directors, officers, affiliates, agents, successors
and assigns from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation, reasonable attorneys
fees, charges and disbursements) incurred by the Company as result of any
inaccuracy in or breach of the representations, warranties or covenants made by
the Purchaser herein. Notwithstanding anything to the contrary herein, the
Purchaser shall be liable under this Section 8.1 for only that amount as does
not exceed the net proceeds to such Purchaser as a result of the sale of Shares
pursuant to the Registration Statement.
Section 8.2. INDEMNIFICATION PROCEDURE. Any party entitled to
indemnification under this Article VIII (an "Indemnified Party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
Indemnified Party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of counsel to the Indemnified Party a conflict of interest
between it and the indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. In the event that the indemnifying party
advises an Indemnified Party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of any
indemnification notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it commences
such defense), then the Indemnified Party may, at its option, defend, settle or
22
<PAGE>
otherwise compromise or pay such action or claim. In any event, unless and until
the indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the Indemnified Party's costs
and expenses arising out of the defense, settlement or compromise of any such
action, claim or proceeding shall be losses subject to indemnification
hereunder. The Indemnified Party shall cooperate fully with the indemnifying
party in connection with any settlement negotiations or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party, which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party fully apprised at all times as to the status of the defense or
any settlement negotiations with respect thereto. If the indemnifying party
elects to defend any such action or claim, then the Indemnified Party shall be
entitled to participate in such defense with counsel of its choice at its sole
cost and expense. The indemnifying party shall not be liable for any settlement
of any action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article VIII to the contrary, the indemnifying
party shall not, without the Indemnified Party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the Indemnified Party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect of
such claim. The indemnification required by this Article VIII shall be made by
periodic payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred, within ten (10) Trading Days of written notice thereof to the
indemnifying party so long as the Indemnified Party irrevocably agrees to refund
such moneys if it is ultimately determined by a court of competent jurisdiction
that such party was not entitled to indemnification. The indemnity agreements
contained herein shall be in addition to (a) any cause of action or similar
rights of the Indemnified Party against the indemnifying party or others, and
(b) any liabilities the indemnifying party may be subject to.
ARTICLE IX
MISCELLANEOUS
Section 9.1. FEES AND EXPENSES. The Company shall pay all fees and expenses
related to the transactions contemplated by this Agreement; provided, that the
Company shall pay, at the Initial Closing, all attorneys and escrow fees and
expenses inclusive of disbursements and out-of-pocket expenses) incurred by the
Purchaser of $35,000 in connection with the preparation, negotiation, execution
and delivery of this Agreement and the transactions contemplated hereunder. In
addition, the Company shall pay all reasonable fees and expenses incurred by the
Purchaser in connection with any subsequent amendments, modifications or waivers
of this Agreement, the Escrow Agreement or the Registration Rights Agreement or
incurred in connection with the enforcement of this Agreement, the Escrow
Agreement and the Registration Rights Agreement, including, without limitation,
all reasonable attorneys fees and expenses if such subsequent amendment,
modification or waiver is at the request of the Company. The Company shall pay
all stamp or other similar taxes and duties levied in connection with issuance
of the Shares pursuant hereto.
23
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Section 9.2. SPECIFIC ENFORCEMENT. 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.
Section 9.3. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
Registration Rights Agreement and the Escrow 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 and no condition to closing any Draw Down in favor
of the Purchaser may be waived by the Purchaser.
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 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: 1265 Harbor Bay Parkway
Alameda, CA 94502
Attn: Nancy Katz
Tel: (510) 749-5100
Fax: (510) 526-5381
With copies to: Heller Ehrman White & McAuliffe LLP
notice): 525 University Avenue
Palo Alto, CA 94301
Attn: Bruce W. Jenett
Tel: (650) 324-7000
Fax: (650) 324-0638
If to Purchaser: c/o Michon de Reya Solicitors
21 Southhampton Row
London WC1B5HS England
Attn: Kevin Gold
Fax: 011-441-171-4045982
24
<PAGE>
with copies to: Epstein Becker & Green P.C.
250 Park Avenue
New York, NY 10177-1211
Tel: (212) 351-3771
Fax: (212) 661-0989
Attn: Robert F. Charron
Any party hereto may from time to time change its address for notices by
giving written notice of such changed address to the other party hereto in
accordance herewith.
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. 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 Initial 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. 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.
Section 9.9. GOVERNING LAW/ARBITRATION. 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. Any dispute under this
Agreement or any Exhibit attached hereto shall be submitted to arbitration under
the American Arbitration Association (the "AAA") in New York City, New York, and
shall be finally and conclusively determined by the decision of a board of
arbitration consisting of three (3) members (hereinafter referred to as the
"Board of Arbitration") selected as according to the rules governing the AAA.
The Board of Arbitration shall meet on consecutive business days in New York
City, New York, and shall reach and render a decision in writing (concurred in
by a majority of the members of the Board of Arbitration) with respect to the
amount, if any, which the losing party is required to pay to the other party in
respect of a claim filed. In connection with rendering its decisions, the Board
of Arbitration shall adopt and follow the laws of the State of New York. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. The Board of Arbitration shall
be authorized and is
25
<PAGE>
directed to enter a default judgment against any party refusing to participate
in the arbitration proceeding within thirty days of any deadline for such
participation. Any decision made by the Board of Arbitration (either prior to or
after the expiration of such thirty (30) calendar day period) shall be final,
binding and conclusive on the parties to the dispute, and entitled to be
enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The prevailing party shall be awarded its costs,
including attorneys' fees, from the non-prevailing party as part of the
arbitration award. Any party shall have the right to seek injunctive relief from
any court of competent jurisdiction in any case where such relief is available.
The prevailing party in such injunctive action shall be awarded its costs,
including attorney's fees, from the non-prevailing party.
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. Execution may be made by delivery by
facsimile.
Section 9.11. PUBLICITY. Prior to the Initial Closing, neither the Company
nor the Purchaser shall issue any press release or otherwise make any public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby or the existence of this Agreement. After the Initial
Closing, the Company may issue a press release or otherwise make a public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby or the existence of this Agreement; provided, however, that
prior to issuing any such press release, making any such public statement or
announcement, the Company obtains the prior consent of the Purchaser, which
consent shall not be unreasonably withheld or delayed.
Section 9.12. SEVERABILITY. The provisions of this Agreement are severable
and, in the event that any court or officials of any regulatory agency 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, so long as such
construction does not materially adversely effect the economic rights of either
party hereto.
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 instruments, 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.
26
<PAGE>
Section 9.14. EFFECTIVENESS OF AGREEMENT. This Agreement shall become
effective only upon satisfaction of the conditions precedent to the Initial
Closing set forth in Article I of the Escrow Agreement.
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officer as of this 2nd day of
November 2000.
CALYPTE BIOMEDICAL CORPORATION
By: /s/ NANCY KATZ
--------------------------------------
Nancy Katz, President & CEO
TOWNSBURY INVESTMENTS LIMITED
By: /s/ HANS GASSNER
--------------------------------------
Name: Hans Gassner
Title: Director
28
<PAGE>
EXHIBIT C
FORM OF OPINION FOR INITIAL CLOSING
____________, 2000
Townsbury Investments Limited
Ladies and Gentlemen:
We have acted as counsel to Calypte Biomedical Corp., a Delaware
corporation (the "COMPANY"), in connection with the issuance and sale by the
Company of up to $25,000,000 of Common Stock (the "COMMON SHARES") and warrants
(the "WARRANTS") to purchase shares of Common Stock (the "WARRANT SHARES") under
a Purchase Agreement between Townsbury Investments Limited (the "PURCHASER") and
the Company dated as of _________, 2000 (the "AGREEMENT"), the Registration
Rights Agreement between the Purchaser and the Company, dated as of _________,
2000 (the "RIGHTS AGREEMENT"), and the Escrow Agreement between the Purchaser,
the Company and Epstein Becker & Green, P.C., dated as of ___________, 2000,
(the "ESCROW AGREEMENT", and together with the Agreement and the Rights
Agreement, the "TRANSACTIONAL AGREEMENTS"). Capitalized terms used without
definition in this opinion have the meanings given to them in the Agreement
(including the schedules thereto). The Common Shares and the Warrant Shares are
collectively referred to as the "SHARES".
I.
In connection with this opinion, we have assumed the authenticity of
all records, documents, and instruments submitted to us as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all records, documents, and instruments submitted
to us as copies. We have also assumed that there are no facts or circumstances
relating to you that might prevent you from enforcing any of the rights to which
our opinion relates (for example, lack of due incorporation, regulatory
prohibitions, or failure to qualify to do business in the State of California).
We have based our opinion upon our review of the following records, documents
and instruments:
(a) The Amended and Restated Certificate of Incorporation of the
Company, as amended to date, (the "CERTIFICATE") certified by
the Delaware Secretary of State as of _____________, 2000 and
certified to us by an officer of the Company as being complete
and in full force and effect as of the date of this opinion;
<PAGE>
HellerEhrman To: Townsbury Investments Limited
Attorneys ____________, 2000
Page 2
(b) The Bylaws of the Company, as amended to date, certified to us
by an officer of the Company as being complete and in full force
and effect as of the date of this opinion;
(c) Records certified to us by an officer of the Company as
constituting all records of proceedings and actions of the Board
of Directors and the shareholders of the Company relating (i) to
the transactions contemplated by the Transactional Agreements
and (ii) to the issuance of all of the issued and outstanding
shares of the Company's capital stock;
(d) The Agreement;
(e) The Rights Agreement;
(f) The Escrow Agreement;
(g) The Warrants;
(h) A Certificate of Good Standing relating to the Company issued by
the Secretary of State of the State of Delaware as of
____________, 2000.
(i) A Certificate of Status-Foreign Corporation relating to the
Company issued by the Secretary of State of the State of
California dated ____________, 2000;
(j) A letter from the Franchise Tax Board of the State of California
dated _________, 2000 stating that the Company is in good
standing with that agency;
(k) A Certificate of the President and the Secretary of the Company
as to the material agreements, material instruments, judgments,
and decrees to which the Company is a party or by which the
Company's properties or assets are bound and as to certain
factual matters (the "OFFICER'S CERTIFICATE");
(l) The agreements and instruments identified in the Officer's
Certificate;
(m) A Certificate of _________________________, the transfer agent
of the Company, as to the number of shares of common stock of
the Company outstanding as of ____________, 2000; and
(n) The stock certificates representing the shares being purchased
by you (the "SHARES").
With your consent, we have based our opinion expressed in paragraph 1
below as to the good standing of the Company under the laws of the States of
Delaware and California solely upon the documents enumerated in (h), (i) and (j)
above. In addition, we have, with your consent, (i) based our opinion expressed
in paragraph 7 below that the issued and outstanding shares of the Company's
capital stock are fully paid and nonassessable solely upon the statement
<PAGE>
HellerEhrman To: Townsbury Investments Limited
Attorneys ____________, 2000
Page 3
in the Officer's Certificate that the Company has received the consideration
recited in the applicable agreements and resolutions of the Company's Board of
Directors, (ii) based our opinion expressed in paragraph 7 below regarding the
capitalization of the Company solely upon our review of the records identified
as items (a), (c) and (m) above, (iii) relied upon the Officer's Certificate
with respect to factual matters relevant to this opinion and (iv) based our
opinion expressed in paragraph 8 below that the Shares will be duly authorized
and validly issued on the assumption that the number of Shares issued to
Townsbury Investments Limited under the Agreement does not exceed the number of
authorized but unissued and unreserved shares of Common Stock.
In connection with our opinion relating to the agreements and
instruments identified in the Officer's Certificate, we have not reviewed, and
express no opinion on, (i) financial covenants or similar provisions requiring
financial calculations or determinations to ascertain compliance, (ii)
provisions relating to the occurrence of a "material adverse event" or words of
similar import, or (iii) parol evidence bearing on interpretation or
construction. Moreover, to the extent that any of the Transactional Agreements
or any of the agreements and instruments identified in item (l) above is
governed by the laws of any jurisdiction other than the federal laws of the
United States or the laws of the State of California, our opinion relating to
those agreements and instruments is based solely upon the plain meaning of their
language without regard to interpretation or construction that might be
indicated by the laws governing those agreements or instruments.
Where our opinion relates to our "knowledge", such knowledge is based
upon our examination of the records, documents, instruments, and certificates
enumerated or described above and the actual knowledge of attorneys in this firm
who are currently involved in substantive legal representation of the Company.
With your consent, we have not examined any records of any court, administrative
tribunal or other similar entity in connection with our opinion expressed in
paragraph 6 below.
II.
We express no opinion as to any anti-fraud provisions of applicable
federal or state securities laws, any tax, anti-trust, land use, export, safety,
environmental or hazardous materials laws, rules or regulations.
This opinion is limited to the federal laws of the United States of
America and the laws of the State of California. We disclaim any opinion as to
the laws of any other jurisdiction and we further disclaim any opinion as to any
statute, rule, regulation, ordinance, order or other promulgation of any
regional or local governmental body.
III.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of this opinion, and
subject to the limitations and qualifications expressed below, it is our opinion
that:
<PAGE>
HellerEhrman To: Townsbury Investments Limited
Attorneys ____________, 2000
Page 4
1. The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware.
The Company is duly qualified to do business and is in good
standing in the State of California.
2. The Company has all requisite corporate power and corporate
authority to enter into and perform the Transactional
Agreements, to own its properties, and to carry on its business
as, to our knowledge, it is now conducted and proposed to be
conducted as contemplated by the Transactional Agreements.
3. Each of the Transactional Agreements has been duly authorized by
all necessary corporate action on the part of the Company, and
has been duly executed and delivered on behalf of the Company.
4. Each of the Transactional Agreements is a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject, as to enforcement, (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium,
and other laws of general applicability relating to or affecting
creditors' rights, (ii) to general principles of equity, whether
such enforcement is considered in a proceeding in equity or at
law, and (iii) to limitations imposed by applicable law or
public policy on the enforceability of the indemnification
provisions of the Rights Agreement.
5. The execution and delivery of the Transactional Agreements on
behalf of the Company does not (i) conflict with any provision
of the Amended and Restated Certificate of Incorporation or
Bylaws of the Company, (ii) violate any law applicable to the
Company, or (iii) result in a breach or violation of, or
constitute a default under, any term of any agreements,
instruments, judgments, or decrees identified in the Officer's
Certificate.
6. To our knowledge, there are no pending or threatened actions,
suits, proceedings, or governmental investigations against the
Company.
7. The authorized capital stock of the Company consists of ________
shares of Common Stock and _________ shares of Preferred Stock.
Immediately prior to the Closing, the stock records of the
Company indicate that ___________ shares of Common Stock were
issued and outstanding. All such issued and outstanding shares
of the Company's capital stock have been duly authorized and
validly issued and are fully paid and nonassessable. To our
knowledge, except as disclosed in the Agreement, the Rights
Agreement, or the Schedule of Exceptions to the Agreement, and
except as set forth in the Amended and Restated Certificate of
Incorporation, there are no options, warrants, conversion
privileges, preemptive rights, or other rights outstanding
granted by the Company to purchase or otherwise acquire any
authorized but unissued shares of capital stock or other
securities of the Company.
<PAGE>
HellerEhrman To: Townsbury Investments Limited
Attorneys ____________, 2000
Page 5
8. The Shares, when issued in compliance with the Agreement, or the
Warrants as the case may be, will be duly authorized, validly
issued, fully paid, and non-assessable and free of preemptive
rights set forth in the Certificate, Bylaws, or of which we have
knowledge; PROVIDED, HOWEVER, that the Shares may be subject to
restrictions on transfer under state and federal securities
laws. Upon delivery by the Company to you of certificates for
the Shares being sold by the Company and payment therefor as
provided in the Agreement or the Warrants, respectively, you
will own such Shares free of any adverse claims, assuming that
you are a protected purchaser within the meaning of Section 8303
of Article 8 of the California Uniform Commercial Code. The
Warrant Shares issuable upon exercise of the Warrants has been
duly and validly reserved as of the date hereof, and when issued
and paid for in compliance with the provisions of the Agreement,
will be validly issued, fully paid, and nonassessable; PROVIDED,
HOWEVER, that the Warrant Shares issuable upon exercise of the
Warrants may be subject to restrictions on transfer under state
and federal securities laws as set forth in the Agreement.
IV.
We further advise you that:
A. As noted, the enforceability of the Transactional Agreements is
subject to the effect of general principles of equity. These
principles include, without limitation, concepts of commercial
reasonableness, materiality and good faith and fair dealing. As
applied to the Transactional Agreements, these principles will
require you to act reasonably, in good faith and in a manner
that is not arbitrary or capricious in the administration and
enforcement of the Transactional Agreements and will preclude
you from invoking penalties for defaults that bear no reasonable
relation to the damage suffered or that would otherwise work a
forfeiture. In addition, the enforceability of the Transactional
Agreements is subject to the effect of Section 1670.5 of the
California Civil Code, which provides that a court may refuse to
enforce, or may limit the enforcement of, a contract or clause
of a contract that the court finds as a matter of law to have
been unconscionable at the time it was made.
B. The effectiveness of indemnities, rights of contribution,
exculpatory provisions and waivers of the benefits of statutory
provisions may be limited on public policy grounds.
C. Section 1717 of the California Civil Code provides that, in any
action on a contract where the contract specifically provides
that attorneys' fees and costs incurred to enforce that contract
shall be awarded either to one of the parties or to the
prevailing party, then the party who is determined to be the
party prevailing in the action, whether that party is the party
specified in the contract or not, shall be entitled to
reasonable attorneys' fees in addition to other costs.
<PAGE>
HellerEhrman To: Townsbury Investments Limited
Attorneys ____________, 2000
Page 6
D. Any provisions of the Transactional Agreements requiring that
waivers must be in writing may not be binding or enforceable if
a non-executory oral agreement has been created modifying any
such provision or an implied agreement by trade practice or
course of conduct has given rise to a waiver.
This opinion is rendered to you in connection with the Agreement and is
solely for your benefit. This opinion may not be relied upon by you for any
other purpose, or relied upon by any other person, firm, corporation, or other
entity for any purpose, without our prior written consent. We disclaim any
obligation to advise you of any developments in areas covered by this opinion
that occur after the date of this opinion.
Very truly yours,
<PAGE>
HellerEhrman To: Townsbury Investments Limited
Attorneys ____________, 2000
Page 7
FORM OF OPINION FOR DOWN-TO-DATE OPINION
Our opinion in Paragraph 1 of Part III below is based solely upon
telephone communications between an attorney of this firm and a member of the
Commission staff, at _____ __.m. on [_________], 2000, confirming that that the
Registration Statement has become effective under the Act and communications
between an attorney of this firm and a member of the Commission staff, at _____
__.m. on [_________], 2000, confirming that no stop order has been issued or is
threatened with respect to the Registration Statement.
1. The Registration Statement has become effective under the
Securities Act, no stop order suspending its effectiveness has
been issued and, to our knowledge, no proceedings for that
purpose are pending before or contemplated by the Commission;
and the Prospectus was filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations in the manner and
within the time period required by Rule 424(b).
In connection with the registration of the Stock, we advised the
Company as to the requirements of the Securities Act and the applicable Rules
and Regulations under the Securities Act and rendered other legal advice and
assistance in the course and preparation of the Registration Statement and
Prospectus. We also participated in conferences with your representatives and
those of the Company, your counsel and the Company's accountants, at which the
contents of the Registration Statement and Prospectus and related matters were
discussed and reviewed. On the basis of the information which was developed in
the course of the performance of the services referred to above, considered in
the light of our understanding of the Securities Act and the Rules and
Regulation thereunder, we advise you that (i) the Registration Statement and the
Prospectus (other than the financial statements and related notes and related
schedules therein, as to which we express no belief) comply as to form in all
material respects with the requirements of the Securities Act and the Rules and
Regulations thereunder and (ii) nothing has come to our attention that would
lead us to believe that, as of its effective date, the Registration Statement
and the Prospectus (other than the financial statements and related notes and
related schedules therein, as to which we express no belief) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that, as of their dates, the Prospectus (other than the financial statements and
related notes and related schedules therein, as to which we express no belief)
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and we do not know of any amendment
to the Registration Statement required to be filed or of any contracts or
documents of a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or the
Prospectus which are not filed or described as required. The limitations
inherent in the determinations involved in the registration process are such,
however, that we do not assume any responsibility for the accuracy, completeness
or fairness of the statements
<PAGE>
HellerEhrman To: Townsbury Investments Limited
Attorneys ____________, 2000
Page 8
contained in the Registration Statement and the Prospectuses except for those
referred to in Paragraphs __ and __ of Part III.
<PAGE>
EXHIBIT D
DRAW DOWN NOTICE/COMPLIANCE CERTIFICATE
Calypte Biomedical Corporation
The undersigned hereby certifies, with respect to shares of Common Stock of
Calypte Biomedical Corporation (the "Company") issuable in connection with this
Draw Down Notice and Compliance Certificate dated _____________ (the "Notice"),
delivered pursuant to the Common Stock Purchase Agreement dated as of November
2, 2000 (the "Agreement"), as follows:
1. The undersigned is the duly appointed Chief Executive Officer of the
Company.
2. The representations and warranties of the Company set forth in the
Agreement are true and correct in all material respects as though made on and as
of the date hereof and all SEC Documents are as represented in Section 3.1(f) of
the Agreement.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the date of this Draw
Down Notice and has complied in all material respects with all obligations and
conditions contained in the Agreement.
4. The Investment Amount is $___________.
5. The Threshold Price, if any, is $__________.
6. The Draw Down Pricing Period shall commence on ____________.
The undersigned has executed this Certificate this ____ day of ________,
_____.
CALYPTE BIOMEDICAL CORPORATION
-----------------------------------------
Name:
Title:
