SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 25, 2002
-----------------------------------------------------------
(Date of Report)
GENUS, INC.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 000-17139 94-2790804
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1139 Karlstad Drive
Sunnyvale, CA 94089
---------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 747-7120
--------------
N/A
-------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 5. Other Events
On January 25, 2002, the Registrant completed a $8.7 million private
placement of shares of common stock and warrants. In connection with the
private placement, the Registrant issued approximately 3.8 million shares of
common stock and warrants to purchase up to approximately 581,005 additional
shares of common stock. The purchase price of $2.25 per share was based on a
discount to the trailing five-day average closing bid price and the warrants
have an exercise price of $3.23 per share. The Registrant has agreed to file a
registration statement covering the resale of these shares and shares issuable
upon exercise of the warrants.
The foregoing matters are further described in the press release issued by
the Registrant on January 25, 2002, a copy of which is filed herewith as Exhibit
99.1 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press release of Genus, Inc. dated January 25, 2002.
99.2 Securities Purchase Agreement dated as of January 17, 2002 by and
between Genus, Inc. and each of the undersigned Investors.
99.3 Form of Genus, Inc. Stock Purchase Warrant issued to each of the
Investors.
99.4 Form of Genus, Inc. Registration Rights Agreement issued to each
of the Investors.
99.5 Form of Genus, Inc. Amendment to Registration Rights Agreement
issued to each of the Investors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 25, 2002 GENUS, INC.
By: /s/ Shum Mukherjee
-----------------------------
Shum Mukherjee
Chief Financial Officer
INDEX TO EXHIBITS
Exhibits
99.1 Press release of Genus, Inc. dated January 25, 2002.
99.2 Common Stock and Warrant Purchase Agreement dated as of January 17, 2002 by
and between Genus, Inc. and each of the undersigned Investors.
99.3 Form of Genus, Inc. Stock Purchase Warrant issued to each of the Investors.
99.4 Form of Genus, Inc. Registration Rights Agreement issued to each of the
Investors.
99.5 Form of Genus, Inc. Amendment to Registration Rights Agreement issued to
each of the Investors.
COMPANY CONTACT: PRESS CONTACT:
Shum Mukherjee Dave Richardson
Genus, Inc. Positio
Tel: (408) 747-7140 Ext. 1311 Tel: (650) 815 1006 Ext. 108
Email: smukherjee@genus.com Email: dave@positiopr.com
-----------
GENUS COMPLETES PRIVATE PLACEMENT
SUNNYVALE, CALIF.-JANUARY 25, 2002- Genus, Inc. (Nasdaq: GGNS) announced that
it has completed a private placement of approximately 3.8 million shares of its
common stock. The purchase price for the shares was based on a discount to the
trailing five-day average closing bid price. In connection with the private
placement, the company also issued warrants to purchase up to 581 thousand
additional shares. The offering resulted in gross proceeds to the company,
prior to the exercise of the warrants, of approximately $8.7 million. The
warrants have a five-year term.
The company stated that it expects to use the net proceeds of the offering for
working capital and general corporate purposes. Hoefer & Arnett, Incorporated
acted as the placement agent to Genus for this private placement and Cardinal
Capital acted as a sales agent.
This press release does not constitute an offer to sell or the solicitation of
an offer to buy any security. The shares and warrants have not been registered
under the Securities Act of 1933 or applicable state securities laws and may not
be offered or sold in the United States absent registration under the Securities
Act and applicable state securities laws or an applicable exemption from
registration requirements. Genus has agreed to file a registration statement
covering the resale of the shares and the shares issuable upon exercise of the
warrants.
FORWARD LOOKING STATEMENT
Except for the historical information contained herein, the matters set forth in
this press release, including the expected use of proceeds of the offering, are
forward-looking statements within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks and uncertainties that may cause actual results
to differ materially, including the effect of the offering on Genus' share
price, changing customer requirements, and the effects of technological advances
and competition. For a discussion of additional factors that may cause results
to differ, see Genus' SEC reports, including its Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001 and Form 10-K for the year ended
December 31, 2000. These forward-looking statements speak only as of the date
hereof. Genus disclaims any intent or obligation to update these
forward-looking statements.
19
SECURITIES PURCHASE AGREEMENT
-------------------------------
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January 17,
2002, by and among GENUS, INC., a corporation organized under the laws of the
State of California (the "COMPANY"), and the purchasers (the "PURCHASERS") set
forth on the execution pages hereof (the "EXECUTION PAGES").
WHEREAS:
A. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Rule 506 and Regulation D ("REGULATION D"), as promulgated
by the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
B. Each Purchaser desires to purchase, severally and not jointly,
subject to the terms and conditions stated in this Agreement, (i) shares of the
Company's common stock, no par value (the "COMMON STOCK"), and (ii) warrants in
the form attached hereto as Exhibit A (including any warrants issued in
----------
replacement thereof, the "WARRANTS"), to acquire shares of Common Stock. The
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as the "WARRANT SHARES."
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit B (the "REGISTRATION RIGHTS AGREEMENT"),
---------
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. CERTAIN DEFINITIONS.
--------------------
For purposes of this Agreement, the following terms shall have the meanings
ascribed to them as provided below:
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York or California are authorized or required by law or other government
action to close.
"CLOSING PRICE" shall mean for the Common Stock as of any date, the closing bid
price of such security on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by the
Research Service of Nasdaq Trading and Market Services (or a comparable
reporting service of national reputation selected by the Purchasers as provided
in Section 8(n) hereof, and reasonably acceptable to the Company if the Research
Service of Nasdaq Trading and Market Services is not then reporting closing bid
prices of such security) (collectively, "NTMS"), or if the foregoing does not
apply, the last reported sale price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by NTMS,
or, if no sale price is reported for such security by NTMS, the average of the
bid prices of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.), in
each case for such date or, if such date was not a Trading Day (as defined
below) for such security, on the next preceding day which was a Trading Day. If
the Closing Price cannot be calculated for a share of Common Stock on any of the
foregoing bases, the Closing Price of such security shall be the fair market
value as determined by an investment banking firm selected by the Company and
reasonably acceptable to the Purchasers, with the costs of such appraisal to be
borne by the Company.
"INVESTMENT AMOUNT" shall mean the dollar amount to be invested in the
Company at the Closing pursuant to this Agreement by a Purchaser, as set forth
on the Execution Page hereto executed by such Purchaser.
"MARKET PRICE" shall mean, with respect to any date of determination, the
Closing Price on the Trading Day immediately preceding such date of
determination, appropriately adjusted to reflect any stock dividend, stock split
or similar transaction during either such relevant period.
"MATERIAL ADVERSE EFFECT" means any one or more material adverse effects
which, individually or in the aggregate: (i) adversely affect the legality,
validity or enforceability of any Transaction Document, (ii) have or result in a
material adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any Transaction
Document (it being understood that any of (i), (ii) or (iii), constitute a
"Material Adverse Effect").
----------------------
"PLACEMENT AGENT" shall mean Hoefer & Arnett, Inc.
"PRO RATA PERCENTAGE" shall mean, with respect to any Purchaser, a
percentage computed by dividing such Purchaser's Investment Amount by the
aggregate Investment Amounts of all Purchasers.
"SECURITIES" shall mean the Shares, the Warrants and the Warrant Shares.
"SHARES" means the shares of Common Stock to be issued and sold by the
Company and purchased by the Purchasers at the Closing.
"TRADING DAY" shall mean a Business Day on which at least 10,000 shares of
Common Stock are traded on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by NTMS.
"TRANSACTION DOCUMENTS" means this Agreement, the Registration Rights Agreement,
the Transfer Agent Instructions (attached as Exhibit C hereto), and the Stock
---------
Purchase Warrant (and the exhibits and schedules thereto).
2. PURCHASE AND SALE OF SHARES AND WARRANTS.
----------------------------------------------
a. Generally. Except as otherwise provided in this Section 2 and
---------
subject to the satisfaction (or waiver) of the conditions set forth in Section 6
and Section 7 below, each Purchaser shall purchase the number of Shares and
Warrants determined as provided in this Section 2, and the Company shall issue
and sell such number of Shares and Warrants to each Purchaser for such
Purchaser's Investment Amount as provided below. The Company's agreement with
each of the Purchasers is a separate agreement, and the sale of the Securities
to each of the Purchasers is a separate sale.
b. Number of Closing Shares and Warrants; Form of Payment; Closing
--------------------------------------------------------------------
Date.
i. On the Closing Date (as defined below), the Company shall sell and
each Purchaser shall buy (A) the number of Shares as is equal to the quotient of
(I) such Purchaser's Investment Amount divided by (II) $2.25 and (B) Warrants
exercisable for a number of shares of Common Stock equal to 15% of the number of
Shares referred to in subclause (A) above. On the Closing Date, each Purchaser
shall pay the Company an amount equal to such Purchaser's Investment Amount.
ii. On the Closing Date, each Purchaser shall pay its Investment Amount
by wire transfer to the Company, in accordance with the Company's written wiring
instructions against delivery of certificates representing the Shares and duly
executed Warrants being purchased by such Purchaser, and the Company shall
deliver such Shares and Warrants against delivery of such Purchaser's Investment
Amount.
iii. Subject to the satisfaction (or waiver) of the conditions thereto
set forth in Section 6 and Section 7 below, the date and time of the sale of the
Shares and the Warrants pursuant to this Agreement (the "CLOSING") shall be
10:00 a.m. California time on January 17, 2002 or such other date or time as the
Purchasers and the Company may mutually agree ("CLOSING DATE"). The Closing
shall occur at the Palo Alto offices of Wilson Sonsini Goodrich & Rosati
("WSGR"), or at such other place as the Placement Agent and the Company may
otherwise mutually agree.
3. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
--------------------------------------------------
Each Purchaser, severally and not jointly, represents and warrants to the
Company as to itself and for no other Purchaser as follows:
a. Purchase for Own Account. Such Purchaser is purchasing the
---------------------------
Securities for such Purchaser's own account and not with a present view towards
the distribution thereof. Such Purchaser understands that such Purchaser must
bear the economic risk of this investment indefinitely, unless the Securities
are registered pursuant to the Securities Act and any applicable state
securities or blue sky laws or an exemption from such registration is available,
and that the Company has no present intention of registering any such Securities
other than as contemplated by the Registration Rights Agreement.
Notwithstanding anything in this Section 3(a) to the contrary, by making the
foregoing representation, such Purchaser does not agree to hold the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption from registration under the Securities Act and any
applicable state securities laws. Purchaser has no agreement or understanding,
directly or indirectly, with any person to distribute any of the Sercurities.
b. Information. Such Purchaser has been furnished all materials
-----------
(excluding any material nonpublic information) relating to the business,
finances and operations of the Company and its subsidiaries and materials
relating to the offer and sale of the Securities that have been requested by
such Purchaser. Such Purchaser has been afforded the opportunity to ask
questions of the Company and has received what such Purchaser believes to be
satisfactory answers to any such inquiries. Such Purchaser understands that its
investment in the Securities involves a high degree of risk. Neither such
inquiries nor any other due diligence investigation conducted by such Purchaser
or its counsel or any of its representatives shall modify, amend or affect such
Purchaser's right to rely on the Company's representations and warranties
contained in Section 4 below.
c. Governmental Review. Such Purchaser understands that no United
--------------------
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
d. Authorization; Enforcement. Such Purchaser has the requisite power
---------------------------
and authority to enter into and perform its obligations under this Agreement and
to purchase the Shares and the Warrants in accordance with the terms hereof.
This Agreement has been duly and validly authorized, executed and delivered on
behalf of such Purchaser and is a valid and binding agreement of such Purchaser
enforceable against such Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity).
e. Transfer or Resale. Such Purchaser understands that (i) except as
--------------------
provided in the Registration Rights Agreement and this Agreement, the Securities
have not been and are not being registered under the Securities Act or any state
securities laws, and may not be transferred unless (a) subsequently registered
thereunder, or (b) such Purchaser shall have delivered to the Company an opinion
of counsel reasonably acceptable to the Company (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred under an exemption from such registration, and (ii) neither
the Company nor any other person is under any obligation to register such
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder, in each case, other
than pursuant to the Registration Rights Agreement.
f. Investor Status. Purchaser is an "ACCREDITED INVESTOR" within the
----------------
meaning of Rule 501 Regulation D under the Securities Act. In the normal course
of its business, it invests in or purchases securities similar to the Securities
and it has such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of purchasing the Securities.
Such Purchaser has not been formed solely for the purpose of acquiring the
Securities. Such Purchaser is not a registered broker-dealer under Section 15
of the Exchange Act.
g. Representation by Non-United States Persons. If a Purchaser is not a
-----------------------------------------------
United States person, such Person hereby represents that such Purchaser is
satisfied as to the full observance of the laws of such Purchaser's jurisdiction
in connection with any invitation to subscribe for the Shares and Warrant Shares
or any use of the Transaction Documents, including (i) the legal requirements
within such Purchaser's jurisdiction for the purchase of such securities, (ii)
any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of such securities. Such Purchaser's
subscription and payment for, and such Purchaser's continued beneficial
ownership of, the Shares and Warrant Shares will not violate any applicable
securities or other laws of such Purchaser's jurisdiction.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
--------------------------------------------------
The Company represents and warrants to each Purchaser as follows:
a. Organization and Qualification. Each of the Company and its
--------------------------------
subsidiaries is a corporation duly organized, in good standing, and validly
existing under the laws of the jurisdiction in which it is incorporated, and has
the requisite corporate power to own its properties and to carry on its business
as now being conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary and where the failure so to qualify would have a
Material Adverse Effect. Schedule 4(a) sets forth the Company's jurisdiction of
-------------
incorporation and the name of each of the Company's subsidiaries and its
jurisdiction of incorporation. Neither the Company nor any of its subsidiaries
is in violation of any provision of its organizational or charter documents.
b. Authorization; Enforcement. (i) The Company has the requisite corporate
---------------------------
power and authority to enter into and perform its obligations under the
Transaction Documents, to issue and sell the Shares and the Warrants in
accordance with the terms hereof and to issue the Warrant Shares upon exercise
of the Warrants in accordance with the terms of the Warrants; (ii) the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance of the
Shares and the issuance of the Warrants and the reservation for issuance and
issuance of the Warrant Shares) have been duly authorized by the Company's Board
of Directors and no further consent or authorization of the Company, its Board
of Directors or its shareholders is required; (iii) this Agreement has been duly
executed and delivered by the Company; and (iv) this Agreement constitutes, and,
upon execution and delivery by the Company and the other parties thereto to the
extent required of the Registration Rights Agreement and the Warrants, such
agreements will constitute, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
c. Capitalization. The capitalization of the Company and each of its
--------------
subsidiaries as of the date hereof is set forth on Schedule 4(c), including the
-------------
authorized capital stock, the number of shares issued and outstanding, the
number of shares issuable and reserved for issuance pursuant to the Company's
stock option plans, the number of shares issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of capital stock. All of such outstanding shares of the Company's
capital stock have been, or upon issuance will be, validly issued, fully paid
and nonassessable. Except as set forth on Schedule 4(c), no shares of capital
-------------
stock of the Company (including the Shares and the Warrant Shares) or any of the
subsidiaries are subject to preemptive rights or any other similar rights of the
shareholders of the Company or any liens or encumbrances. Except for the
Securities and as disclosed in Schedule 4(c), as of the date of this Agreement,
-------------
(i) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever to which the Company or any of
the subsidiaries is a party relating to the issuance by the Company or any of
its subsidiaries of securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or such subsidiaries, and (ii) there are no agreements or arrangements under
which the Company or any of its subsidiaries is obligated to register the sale
of any of its or their securities under the Securities Act (except for the
Registration Rights Agreement). Except as set forth on Schedule 4(c), there are
-------------
no securities or instruments containing antidilution or similar provisions that
may be triggered by the issuance of the Securities in accordance with the terms
of this Agreement, the Warrants or the Registration Rights Agreement and the
holders of the securities and instruments listed on such Schedule 4(c) have
-------------
waived any rights they may have under such antidilution or similar provisions in
connection with the issuance of the Securities in accordance with the terms of
this Agreement, the Warrants or the Registration Rights Agreement. The Company
has made available to each Purchaser true and correct copies of the Company's
Articles of Incorporation as in effect on the date hereof ("ARTICLES OF
INCORPORATION"), the Company's By-laws as in effect on the date hereof (the
"BY-LAWS") and all other instruments and agreements governing securities
convertible into or exercisable or exchangeable for capital stock of the
Company, except for stock options granted under any benefit plan of the Company.
d. Issuance of Securities. The Shares are duly authorized and when
------------------------
issued and paid for in accordance with the terms hereof, will be validly issued,
fully paid and non-assessable, and free from all taxes, liens, claims and
encumbrances (other than those imposed through acts or omissions of any
Purchaser), and will not be subject to preemptive rights or other similar rights
of shareholders of the Company and will not impose personal liability upon the
holder thereof. The Warrant Shares are duly authorized and reserved for
issuance, and, upon exercise of the Warrants in accordance with the terms
thereof, will be validly issued, fully paid and non-assessable and free from all
taxes and liens, claims and encumbrances (other than those imposed through acts
or omissions of any Purchaser), and will not be subject to preemptive rights or
other similar rights of shareholders of the Company and will not impose personal
liability upon the holder thereof.
e. No Conflicts. The execution, delivery and performance of this
-------------
Agreement, the Registration Rights Agreement and the Warrants by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Shares and the Warrant Shares and the issuance of the Warrants)
will not (i) conflict with or result in a violation of the Articles of
Incorporation or By-laws (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 Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including (assuming the accuracy of the
representations and warranties of the Purchasers set forth in Section 3(a) and
3(f) hereof) the United States federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affected (except, with respect to clause (ii), for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect), or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Nasdaq Stock Market) or by which any property or asset of the
Company or any of its subsidiaries is bound or affected.
Neither the Company nor any of its subsidiaries is in violation of its
Articles of Incorporation, By-laws and other organizational documents and
neither the Company nor any of its subsidiaries is in default (and no event has
occurred which, with notice or lapse of time or both, would put the Company or
any of its subsidiaries in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, except
for actual or possible violations, defaults or rights as would not, individually
or in the aggregate, have a Material Adverse Effect. The businesses of the
Company and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for actual or
possible violations, if any, the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the Securities Act and any
applicable state securities laws, the Company is not required to obtain any
consent, approval, authorization or order of, or make any filing or registration
with, any court or governmental agency or any regulatory or self regulatory
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement (including without limitation the issuance and sale of the
Shares and Warrants as provided hereby), the Warrants (including without
limitation the issuance of the Warrant Shares) or the Registration Rights
Agreement, in each case in accordance with the terms hereof or thereof. The
Company is not in violation of the listing requirements of The Nasdaq Stock
Market and does not reasonably anticipate that the Common Stock will be delisted
by The Nasdaq Stock Market in the foreseeable future based on its rules (and
interpretations thereof) as currently in effect.
f. SEC Documents; Financial Statements. Since January 1, 2000, 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 Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and has filed all
registration statements and other documents required to be filed by it with the
SEC pursuant to the Securities Act (all of the foregoing filed prior to the date
hereof, and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to herein as the "SEC DOCUMENTS"). The Company has made available to
each Purchaser true and complete copies of the SEC Documents, except for the
exhibits and schedules thereto and the documents incorporated therein. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act or the Securities Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, 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. Any statements made in any such SEC Documents that are or
were required to be updated or amended under applicable law have been so updated
or amended. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC applicable with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, 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 consolidated financial position of the Company and
its subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit adjustments). Except as set
forth in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to the date of such SEC Documents and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
SEC Documents, which liabilities and obligations referred to in clauses (i) and
(ii), individually or in the aggregate, would not have a Material Adverse
Effect.
g. Absence of Certain Changes. Except as disclosed in the SEC
-----------------------------
Documents and the Schedules hereto, since December 31, 2001, there has been no
change or development which individually or in the aggregate has had or could
have a Material Adverse Effect or which adverse change or developments affects
or challenges the legality or enforceability of any of the Transaction
Documents.
h. Absence of Litigation. Except as disclosed in Schedule 5(h) or the
----------------------
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, or any of its subsidiaries, or any of their
directors or officers in their capacities as such which would have a Material
Adverse Effect.
i. Intellectual Property. The Company and each of its subsidiaries
----------------------
owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) and other similar rights and proprietary knowledge (collectively,
"INTANGIBLES") necessary for the conduct of its business as now being conducted
and as proposed to be conducted. Neither the Company nor any of its
subsidiaries has received written notice that it is infringing upon or in
conflict with any third party Intangibles. Neither the Company nor any of its
subsidiaries has entered into any consent, indemnification, forbearance to sue
or settlement agreements with respect to the validity of the Company's or such
subsidiary's ownership or right to use its Intangibles. The Intangibles are
valid and enforceable, and no registration relating thereto has lapsed, expired
or been abandoned or canceled or is the subject of cancellation or other
adversarial proceedings, and all applications therefor are pending and in good
standing. The Company has complied with its contractual obligations relating to
the protection of the Intangibles used pursuant to licenses. To the Company's
knowledge, no person is infringing on or violating the Intangibles owned or used
by the Company.
j. Environment. Except as disclosed in the SEC Documents (i) there is no
-----------
environmental liability, nor factors likely to give rise to any environmental
liability, affecting any of the properties of the Company or any of its
subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect and (ii) neither the Company nor any of the subsidiaries has
violated any environmental law applicable to it now or previously in effect,
other than such violations or infringements that, individually or in the
aggregate, have not had and will not have a Material Adverse Effect.
k. Title. The Company and each of its subsidiaries has good title in
-----
fee simple to all real property and good title to all personal property owned by
it which is material to its business, free and clear of all liens, encumbrances
and defects except for such defects in title that, individually or in the
aggregate, could not have a Material Adverse Effect. Any real property and
facilities held under lease by the Company or any of its subsidiaries are held
by the Company or such subsidiary under valid, subsisting and enforceable leases
with such exceptions which have not had and will not have a Material Adverse
Effect.
l. Insurance. The Company and its subsidiaries maintain such insurance
---------
relating to their business, operations, assets, key-employees and officers and
directors as is appropriate to their business, assets and operations, in such
amounts and against such risks as are customarily carried and insured against by
owners of comparable businesses, assets and operations, and such insurance
coverages will be continued in full force and effect to and including the
Closing Date other than those insurance coverages in respect of which the
failure to continue in full force and effect could not reasonably be expected to
have a Material Adverse Effect.
m. Acknowledgment Regarding the Purchasers' Purchase of the Securities.
-------------------------------------------------------------------
The Company acknowledges and agrees that no Purchaser is acting as a financial
advisor or is acting as a fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, and the
relationship between the Company and the Purchasers is "arms length" and that
any statement made by any Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is merely incidental to such Purchaser's purchase
of Securities and has not been relied upon by the Company, its officers or
directors in any way. The Company further represents to the Purchaser that the
Company's decision to enter into this Agreement has been based solely on an
independent evaluation by the Company and its representatives.
n. No Brokers. Except for the Placement Agent, the Company has not
-----------
engaged any person to which or to whom brokerage commissions, finder's fees,
financial advisory fees or similar payments are or will become due in connection
with this Agreement or the transactions contemplated hereby. The Purchasers
shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by this
Agreement.
o. Tax Status. The Company and each of its subsidiaries has made or
-----------
filed all material federal, state and local income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company or the applicable subsidiary has
set aside on its books provisions adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no material unpaid taxes claimed to be due by the
taxing authority of any jurisdiction. The Company has not executed a waiver
with respect to any statute of limitations relating to the assessment or
collection of any federal, state or local tax. None of the Company's tax
returns have been or is being audited by any taxing authority.
p. No General Solicitation. Neither the Company nor any person
-------------------------
participating on the Company's behalf in the transactions contemplated hereby
has conducted any "general solicitation" or "general advertising" as such terms
are used in Regulation D, with respect to any of the Securities being offered
hereby.
q. Securities Laws. Neither the Company, nor any of its affiliates,
----------------
nor any person acting on its or their behalf, has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security
under circumstances that would require registration of the Securities being
offered hereby under the Securities Act or cause this offering of Securities to
be integrated with any prior offering of securities of the Company for purposes
of the Securities Act. Assuming the truth and accuracy of the representations
and warranties of the Purchasers set forth in Section 3(a) and 3(f) of this
Agreement, the offer, sale and delivery of the Shares and Warrants as well as
the issuance of Warrant Shares upon exercise of the Warrants will be exempt from
the registration requirements of Section 5 of the Securities Act. Assuming the
truth and accuracy of the representations and warranties of the Purchasers set
forth in Section 3(a) and 3(f) of this Agreement, the Purchasers will not be
statutory underwriters within the meaning of Section 2(a) 11 of the Securities
Act.
r. Form S-3 Eligibility. The Company is currently eligible to register
--------------------
the resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act. There exist no facts or circumstances (including without
limitation any required approvals or waivers of any circumstances that may delay
or prevent the obtaining of accountant's consents) that would prohibit or delay
the preparation and filing of a registration statement on Form S-3 with respect
to the Registrable Securities (as defined in the Registration Rights Agreement).
s. Disclosure. All information relating to or concerning the Company
----------
and its subsidiaries set forth in this Agreement or provided to any Purchaser
pursuant to Section 3(b) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or its subsidiaries or their businesses,
properties, operations, prospects or financial conditions, which has not been
publicly disclosed but, under applicable law, rule or regulation, would be
required to be disclosed by the Company in a registration statement filed on the
date hereof by the Company under the Securities Act with respect to a primary
issuance of the Company's securities. The Company has not disclosed or
provided, and without such Purchaser's consent thereto, will not hereafter
disclose or provide to any Purchaser, any material non-public information
5. COVENANTS.
---------
a. Form D; Blue Sky Laws. The Company agrees to file a Form D with
-------------------------
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to such Purchasers
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to each Purchaser on or prior to the
Closing Date.
b. Reporting Status. So long as a Purchaser beneficially owns any
-----------------
Securities or has the right to acquire any Securities pursuant to this
Agreement, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and shall not terminate its status as an
issuer required to file reports under the Exchange Act even if the Exchange Act
or the rules and regulations thereunder would permit such termination.
c. Use of Proceeds. The Company shall use the net proceeds from the
-----------------
sale of the Shares and the Warrants for the purposes set forth on Schedule 5(c),
-------------
but in no event shall the Company use such net proceeds to repurchase any
outstanding securities of the Company.
d. Financial Information. For a period of three (3) years following
----------------------
the Closing, the Company agrees to send to each Purchaser (i) within ten days
after the filing with the SEC, to the extent not available through the SEC's
EDGAR system, a copy of its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q, its proxy and information statements and any Current Reports on Form
8-K and (ii) within one day after release, copies of all press releases issued
by the Company or any of its subsidiaries, if any.
e. Reservation of Shares. The Company has and shall at all times have
----------------------
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the issuance of the Shares as provided in
Section 2 hereof, and the full exercise of the Warrants and the issuance of the
Warrant Shares in connection therewith and as otherwise required hereby and by
the Warrants. The Company shall not reduce the number of shares of Common Stock
reserved for issuance under this Agreement (except as a result of the issuance
of the Shares hereunder), the Warrants (except as a result of the issuance of
the Warrant Shares upon the exercise of the Warrants) or the Registration Rights
Agreement, without the consent of the Purchasers.
f. Listing. On the Closing Date, the Company shall have applied for
-------
the listing of the Shares and Warrant Shares, in each case, upon each national
securities exchange and automated quotation system, if any, upon which shares of
Common Stock are then listed or quoted and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Shares from time
to time issuable hereunder and all Warrant Shares from time to time issuable
upon exercise of the Warrants. The Company shall use its best efforts to
include the Shares and Warrant Shares in The Nasdaq Stock Market at the earliest
practical date and, in any event, by the date the first registration statement
covering the resale of the Shares is declared effective by the Securities and
Exchange Commission and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of The Nasdaq
Stock Market.
g. Additional Equity Capital. The Company agrees that during the
---------------------------
period beginning on the date hereof and ending on the date which is one hundred
eighty (180) days following the Closing Date and for the ninety (90) day period
following any Automatic Mandatory Exercise Date under any Warrant (each a
"LOCK-UP PERIOD"), the Company will not, without the prior written consent of
the Purchasers or their designees, contract with any party to obtain additional
financing in which any equity or equity-linked securities or convertible are
issued (including any debt financing with an equity component) (an "EQUITY
FINANCING") at a price per share or an exercise or conversion price per share
less than $2.25 pursuant to any offering exempt from the registration
requirements of the Securities Act which grants any registration rights and such
registration rights may be exercised within one year of the Closing Date. The
Company will not conduct any Equity Financing during the period beginning on the
Closing Date and ending one hundred eighty (180) days following the expiration
of a Lock-Up Period unless it shall have first delivered to the Purchaser, at
least ten (10) Business Days prior to the closing of such Equity Financing,
written notice describing the proposed Equity Financing, including the terms and
conditions thereof, and providing the Purchasers and their affiliates an option
during the ten (10) Business Day period following receipt of such notice to
purchase any or all of the securities being offered in the Equity Financing on
the same terms as contemplated by such Equity Financing. Such option shall be
exercised by each applicable Purchaser giving written notice to the Company
within such period of its agreement to buy a specified amount of the offered
securities. Closing of such sale shall be contemporaneous with the closing of
the offering with investors other than the Purchasers (or, if there are no other
such investors, on a date specified by the Company), provided that the Company
shall provide written notice to each applicable Purchaser at least five (5)
Business Days prior to any such closing. To the extent that the Purchasers, in
the aggregate, elect to purchase more than all of such securities, the amount
that each Purchaser shall be entitled to purchase shall be pro rated based on
the Purchaser's Pro Rata Percentage. Each Purchaser can buy its own pro-rata
amount unless a Purchaser no longer owns Securities in which event its amount
shall be allocated pro rata among the Purchaser still holding Securities. To
the extent that the terms of an additional Equity Financing are changed in a
manner that is at least partially favorable to prospective investors, the
Company shall notify the Purchasers of all changes in such terms and the
Purchasers shall have another ten (10) Business Day option to purchase on the
revised terms and otherwise in accordance with the provisions hereof. The
limitations referred to in this Section 5(i) shall not apply to (i) any
transaction involving issuances of securities as consideration in a merger,
consolidation or acquisition of assets, or in connection with any strategic
partnership, collaboration or joint venture (the primary purpose of which is not
to raise equity capital), or as consideration for the acquisition of a business,
product or license by the Company, (ii) the issuance of securities pursuant to
widely distributed underwritten public offering, (iii) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof as set forth in
Schedule 4(c), or (iv) the grant of additional options or warrants, or the
- ---------------
issuance of additional securities, under any duly authorized Company stock
----
option, stock purchase or restricted stock plan for the benefit of the Company's
- -----
employees, consultants or directors.
h. No Integrated Offerings. The Company shall not make any offers or
--------------------------
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause this offering of Securities to be integrated with any
other offering of securities by the Company for any purposes, including for
purposes of any shareholder approval provision applicable to the Company or its
securities.
i. Legends. Each Purchaser understands that the Shares and the Warrants
-------
and, until such time as the Shares and Warrant Shares have been registered under
the Securities Act as contemplated by the Registration Rights Agreement or
otherwise may be sold by the Purchaser under Rule 144, the certificates for the
Shares and Warrant Shares may bear a restrictive legend in substantially the
following form:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SHARES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SHARES.
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of the Securities other than
pursuant to an effective registration statement, to the Company, to an affiliate
of a Purchaser who is an "accredited investor" as defined in Rule 501(a) under
the Securities Act or in connection with a pledge as contemplated pursuant to
the terms hereof, the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement or grant a security interest in
some or all of the Securities and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured or Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no notice shall be
required of such pledge. At the appropriate Purchaser's expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or
transfer of the Securities including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
Selling Stockholders thereunder.
Certificates evidencing Shares and Warrant Shares shall not contain any
legend (including the legend set forth herein): (i) while a registration
statement (including the Registration Statement) covering the resale of such
security is effective under the Securities Act, or (ii) following any sale of
such Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or
Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission). The Company shall cause its counsel to issue the legal opinion and
transfer agent instructions to the Company's transfer agent on the date the
Registration Statement is declared effective by the SEC. The Company agrees that
following the date the Registration Statement is declared effective by the SEC,
or at such time as such legend is no longer required under this Section 5, it
will, no later than three Trading Days following the delivery by a Purchaser to
the Company or the Company's transfer agent of a certificate representing Shares
or Warrant Shares issued with a restrictive legend, deliver or cause to be
delivered to such Purchaser a certificate representing such Shares or Warrant
Shares that is free from all restrictive and other legends. The Company may not
make any notation on its records or give instructions to any transfer agent of
the Company that enlarge the restrictions on transfer set forth in this Section.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------------
The obligation of the Company hereunder to issue and sell Shares and
Warrants to a Purchaser at the Closing hereunder is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions thereto;
provided, however, that these conditions are for the Company's sole benefit and
---- -------
may be waived by the Company at any time in its sole discretion.
a. The applicable Purchaser shall have executed the signature page to
this Agreement and the Registration Rights Agreement, and delivered the same to
the Company.
b. The applicable Purchaser shall have delivered such Purchaser's
Investment Amount in accordance with Section 2(b) above.
c. The representations and warranties of the applicable Purchaser shall
be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which representations and warranties shall be true and
correct as of such date), and the applicable Purchaser shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the applicable Purchaser at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE SHARES AND
------------------------------------------------------------------------
WARRANTS.
- ---------
The obligation of each Purchaser hereunder to purchase Shares and Warrants
to be purchased by it hereunder is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
--------
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in such Purchaser's sole discretion:
a. The Company shall have executed the signature pages to this
Agreement and the Registration Rights Agreement, and delivered the same to the
Purchaser.
b. The Company shall have delivered to the Purchaser duly executed
certificates representing the number of Shares and duly executed Warrants as
provided in Section 2(b) above.
c. The Shares shall be authorized for quotation on The Nasdaq Stock
Market and trading in the Common Stock or The Nasdaq Stock Market generally
shall not have been suspended or be under threat of suspension by the SEC or any
governing body of The Nasdaq Stock Market.
d. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. The Purchaser shall have received a certificate, executed
on behalf of the Company by its Chief Financial Officer, dated as of the Closing
Date, to the foregoing effect and attaching true and correct copies of the
resolutions adopted by the Company's Board of Directors authorizing the
execution, delivery and performance by the Company of its obligations under this
Agreement, the Warrants and the Registration Rights Agreement.
e. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
f. The Purchaser shall have received an opinion of the Company's
counsel, dated as of the Closing Date, relating to the matters set forth in
Exhibit C attached hereto.
- ---------
g. From the date of this Agreement through the Closing Date, there
shall not have occurred any Material Adverse Effect.
h. The Company shall have provided advance notice to The Nasdaq Stock
Market of the issuance of the Shares if so required by the rules applicable
thereto.
8. GOVERNING LAW MISCELLANEOUS.
-----------------------------
a. Governing Law; Jurisdiction. All questions concerning the
-----------------------------
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York, Borough of Manhattan. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of the any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is improper. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a proceeding to enforce any provisions of a Transaction
Document, then the prevailing party in such proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such proceeding.
b. Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof.
c. Headings. The headings of this Agreement are for convenience of
--------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
------------
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments; Waiver. This Agreement and the
---------------------------------------
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchasers
make any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the Company and, by the Purchasers as
provided in Section 8(n) hereof. Any waiver by the Purchasers, on the one hand,
or the Company, on the other hand, of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision of or any breach of any other provision of this
Agreement. The failure of the Purchasers, on the one hand, or the Company, on
the other hand to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
f. Notices. Any notices required or permitted to be given under the
-------
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
Genus, Inc.
1139 Karlstad Drive
Sunnyvale, CA 94089
Telephone No.: (408) 747-7140 (x1311)
Facsimile No.: (408) 747-7198
Attention: Mr. Shum Mukherjee
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
Attention: Mark Casillas, Esq.
If to the Purchaser, to the address set forth under the Purchaser's name on
the Execution Page hereto executed by such Purchaser.
Each party hereto may from time to time change its address or facsimile number
for notices under this Section 8 by giving at least ten (10) days' prior written
notice of such changed address or facsimile number, in the case of the
Purchasers to the Company, and in the case of the Company to all of the
Purchasers.
g. Successors and Assigns. This Agreement shall be binding upon and
------------------------
inure to the benefit of the parties and their successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers.
h. Third Party Beneficiaries. This Agreement is intended for the
---------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by any other person.
i. Survival. The representations and warranties of the Company and the
--------
agreements and covenants of the Company shall survive the Closing
notwithstanding any due diligence investigation conducted by or on behalf of the
Purchasers. Moreover, none of the representations and warranties made by the
Company herein shall act as a waiver of any rights or remedies a Purchaser may
have under applicable federal or state securities laws. The Company agrees to
indemnify and hold harmless each Purchaser and each of such Purchaser's
officers, directors, employees, partners, members, agents and affiliates for
loss or damage relating to the Securities purchased hereunder arising as a
result of or related to any breach by the Company of any of its representations
or covenants set forth herein, including advancement of expenses as they are
incurred.
j. Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. Joint Participation in Drafting. Each party to this Agreement has
---------------------------------
participated in the negotiation and drafting of this Agreement, the Registration
Rights Agreement and the Warrants. As such, the language used herein and therein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party to this Agreement, the Registration Rights Agreement or the Warrants.
l. Equitable Relief. Each party acknowledges that a breach by it of
-----------------
its obligations hereunder will cause irreparable harm to the other parties by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, each party acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach or
threatened breach by such party of the provisions of this Agreement, that the
other parties shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required.
m. Independent Nature of Purchasers' Obligations and Rights. The
--------------------------------------------------------
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
n. Determinations. Except as otherwise expressly provided herein, all
--------------
consents, approvals and other determinations to be made by the Purchasers
pursuant to this Agreement and all waivers and amendments to or of any
provisions in this Agreement prior to the Closing Date to be binding upon a
Purchaser shall be made by such Purchaser and except as otherwise expressly
provided herein, all consents, approvals and other determinations (other than
amendments to the terms and provisions of this Agreement) to be made by the
Purchasers pursuant to this Agreement and all waivers and amendments to or of
any provisions in this Agreement after the Closing Date shall be made by
Purchasers (excluding Purchasers who are affiliates of the Company) that have
invested more than fifty percent (50%) of the aggregate Investment Amounts
invested by all Purchasers (excluding Purchasers who are affiliates of the
Company), except Sections 2, 5, and 8 which require consent and approval of each
Purchaser to be binding on that Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
EXHIBIT A
TO SECURITIES PURCHASE AGREEMENT
-----------------------------------
VOID AFTER 5:00 P.M., CALIFORNIA TIME,
ON JANUARY 17, 2007
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SHARES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SHARES.
Date: January 17, 2002
GENUS, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, __________________ or its
registered assigns (the "Holder"), is entitled to purchase from GENUS, INC., a
corporation organized under the laws of the State of California (the "COMPANY"),
at any time or from time to time during the period specified in Section 2
hereof, _______ fully paid and nonassessable shares of the Company's common
stock, no par value (the "COMMON STOCK"), at an exercise price per share (the
"EXERCISE PRICE") of $3.23. The number of shares of Common Stock purchasable
hereunder (the "WARRANT SHARES") and the Exercise Price are subject to
adjustment as provided in Section 5 hereof. The term "WARRANTS" means this
Warrant and the other Warrants of the Company issued pursuant to that certain
Securities Purchase Agreement, dated as of January 17, 2002, by and among the
Company and the other signatories thereto (the "SECURITIES PURCHASE
AGREEMENT"). Terms used and not defined herein that are defined in the
Securities Purchase Agreement shall have the meaning ascribed to them in the
Securities Purchase Agreement.
This Warrant is subject to the following terms, provisions and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
------------------------------------------------------------------------
Subject to the provisions hereof, including, without limitation, the limitations
contained in Sections 8 and 12 hereof, this Warrant may be exercised at any
time during the Exercise Period (as defined below) by the Holder hereof, in
whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the "EXERCISE AGREEMENT"), to
the Company by 5 p.m. California time on any Business Day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the Holder hereof) and upon (i) payment to the
Company in cash, by certified or official bank check or by wire transfer for the
account of the Company, of the applicable Exercise Price for the Warrant Shares
specified in the Exercise Agreement or (ii) delivery to the Company of written
notice of an election to effect a Cashless Exercise (as defined in Section 13(c)
hereof) for the Warrant Shares specified in the Exercise Agreement. The Warrant
Shares so purchased shall be deemed to be issued to the Holder hereof or such
Holder's designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been surrendered and the
completed Exercise Agreement shall have been delivered and payment shall have
been made for such shares as set forth above or, if such day is not a Business
Day, on the next succeeding Business Day. The Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the Holder hereof within a reasonable time, in any case
not exceeding three Business Days after this Warrant shall have been so
exercised (the "DELIVERY PERIOD"). If the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, and so long as the certificates therefor do not bear a legend
and the Holder is not obligated to return such certificate for the placement of
a legend thereon, the Company shall cause its transfer agent to electronically
transmit the Warrant Shares so purchased to the Holder by crediting the account
of the Holder or its nominee with DTC through its Deposit Withdrawal Agent
Commission system ("DTC TRANSFER"). If the aforementioned conditions to a DTC
Transfer are not satisfied, the Company shall deliver to the Holder physical
certificates representing the Warrant Shares so purchased. Further, the Holder
may instruct the Company to deliver to the Holder physical certificates
representing the Warrant Shares so purchased in lieu of delivering such shares
by way of DTC Transfer. Any certificates so delivered shall be in such
denominations as may be requested by the Holder, shall be registered in the name
of Holder or such other name as shall be designated by such holder and, unless
otherwise required by the Securities Purchase Agreement, shall not bear any
restrictive legend. If this Warrant shall have been exercised only in part,
then, unless this Warrant has expired, the Company shall, at its expense, at the
time of delivery of such certificates, deliver to the Holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
If by the thirteenth Trading Day after exercise of this Warrant the Company
fails to deliver the required number of Warrant Shares in the manner required
pursuant to this Section 1, and if after such thirteenth Trading Day the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise, then the Company shall pay in
cash to the Holder the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue by (B) the closing bid price of the Common
Stock at the time of the obligation giving rise to such purchase obligation and
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery
obligations hereunder; provided, however, the Company shall only render such
payment in the event the Holder can provide reasonable evidence of an actual
loss in that amount.
If by the third Trading Day after a date of exercise the Company fails to
deliver the required number of Warrant Shares in the manner required pursuant to
Section 1, then the Holder will have the right to rescind such exercise.
The Company's obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares. Nothing herein shall
limit a Holder's right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's failure to
timely deliver certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.
2. Period of Exercise. Except as set forth in Section 3 below, this Warrant
------------------
may be exercised at any time or from time to time (an "EXERCISE DATE")
during the period (the "EXERCISE PERIOD") beginning on (a) the date hereof and
ending (b) at 5:00 p.m., California time, on the fifth annual anniversary of the
date of original issuance hereof.
3. Mandatory Exercise. On any Notification Date (as defined below), the
--------------------
Company may request that the Holder exercise this Warrant in whole but not in
part (the "MANDATORY EXERCISE") within twenty (20) Business Days after the date
of the Mandatory Exercise Notice (as defined below) by delivering a written
notice to the Holder at such address as set forth in the Securities Purchase
Agreement (the "MANDATORY EXERCISE NOTICE"). The Mandatory Exercise Notice
shall set forth the Exercise Price and the Closing Price for each of the ten
(10) consecutive Trading Days immediately preceding the date of the delivery of
the Mandatory Exercise Notice and shall state that this Warrant be exercised in
conformity with this Section 3 within twenty (20) Business Days. Within ten
(10) calendar days of receipt of a Mandatory Exercise Notice, the Holder shall
deliver a written notice to the Company (the "PARTICIPATION NOTICE"), stating
whether or not the Holder agrees to participate in such Mandatory Exercise. If
the Holder states in its Participation Notice that it elects not to participate
in the Mandatory Exercise, then (i) the Holder shall forfeit such Holder's
rights, title and interest under this Warrant, (ii) this Warrant shall be deemed
terminated and (iii) the Holder shall deliver to the Company within two (2)
Business Days of the date of such Holder's Participation Notice this Warrant
marked "cancelled." If the Holder states in its Participation Notice that it
elects to participate in the Mandatory Exercise or if the Holder fails to
deliver a Participation Notice within the time period specified in this Section
3, then this Warrant shall be deemed to be exercised on a cashless or "net"
exercise basis without any further action on the part of the Holder hereof
pursuant to this Section 3 for all of the Warrant Shares that can be obtained
pursuant to such exercise on the twentieth (20th) Business Day after the receipt
of the Mandatory Exercise Notice (the "AUTOMATIC MANDATORY EXERCISE DATE"),
unless prior to noon California time on the Automatic Mandatory Exercise Date,
the Holder shall have exercised this Warrant in whole, but not in part, in the
manner set forth in Section 1 hereof. Notwithstanding the foregoing, no
Mandatory Exercise may occur unless: (a) at all times from the Notification Date
through the Automatic Mandatory Exercise Date a Registration Statement covering
all Registrable Securities (as those terms are defined in that certain
Registration Rights Agreement dated January 17, 2002 by and among the company
and the other signatories thereto (the "REGISTRATION RIGHTS AGREEMENT")): (i) is
effective as to all Warrant Shares, (ii) does not require any amendment or
supplement and and (iii) discloses directly or through incorporation by
reference all material facts relating to Company and the Registrable Securities,
(b) the Company has no reason to believe that, during the period beginning on
the Notification Date and ending ninety (90) days after the Automatic Mandatory
Exercise Date (the "INITIAL SELLING PERIOD"), there will be any need to suspend
sales pursuant to the Registration Statement as a result of the need to amend or
supplement the Registration Statement or otherwise; (c) the Company covenants
not to take any action during the Initial Selling Period that is reasonably
likely to result in the suspension of sales during the Initial Selling Period;
(d) the Company is listed on Nasdaq; and (e) the Mandatory Exercise Notice
contains (i) a certification from the Company's chief executive officer and
chief financial officer as to the matters set forth in the immediately preceding
subclause (a) (as of the Notification Date; provided that the Company shall
immediately notify the Holder if such certification is no longer true at any
time on or prior to the Automatic Mandatory Exercise Date) and subclause (b);
and (ii) the covenant of the Company set forth in the immediately preceding
subclause (c). For purposes of this Section 3, "NOTIFICATION DATE" shall mean
any Business Day during the Exercise Period but after the Trigger Date (as
defined below) which Business Day is immediately preceded by ten (10)
consecutive Trading Days on each of which the Closing Price was greater than
200% of the Exercise Price ; and "TRIGGER DATE" shall mean the date the
Registration Statement covering all Registrable Securities (as those terms are
defined in the Registration Rights Agreement) is declared effective by the
Securities and Exchange Commission.
4. Certain Agreements of the Company. The Company hereby covenants and
-------------------------------------
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
---------------------------
accordance with the terms of this Warrant, be validly issued, fully paid and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b) Reservation of Shares. During the Exercise Period, the Company shall at
---------------------
all times have authorized, and reserved for the purpose of issuance upon
exercise of this Warrant, a suf-ficient number of shares of Common Stock to
provide for the exercise in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 12 hereof).
(c) Listing. The Company has secured the listing of the shares of Common
-------
Stock issuable upon exercise of or otherwise pursuant to this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed or become listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all shares
of Common Stock from time to time issuable upon the exercise of or otherwise
pursuant to this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of or otherwise pursuant to this Warrant if and so
long as any shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by amendment of its
----------------------------
charter or through any re-organi-zation, transfer of assets, consolidation,
mer-ger, dissolution, issuance or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon any entity
------------------------
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of issuance of
--------------
any Warrant Shares, take such actions as the Company shall reasonably determine
are necessary to qualify the Warrant Shares for, or obtain exemption for the
Warrant Shares for, sale to the Holder of this Warrant upon the exercise hereof
under applicable securities or "blue sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Holder of
this Warrant prior to such date; provided, however, that the Company shall not
be required to qualify as a foreign corporation or file a general consent to
service of process in any such jurisdiction.
5. Antidilution Provisions. During the Exercise Period, the Exercise Price
------------------------
and the number of Warrant Shares issuable upon the exercise of the Warrants,
shall be subject to adjustment from time to time as provided in this Section 5.
In the event that any adjustment of the Exercise Price as required herein
results in a fraction of a cent, such Exercise Price shall be rounded up or down
to the nearest cent; provided that, in no event shall the Exercise Price per
share be reduced below $.01.
(a) Subdivision or Combination of Common Stock. If the Company, at any time
------------------------------------------
during the Exercise Period, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a greater number of shares, then, after the date of record for
effecting such subdivision, the Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Company, at any time
during the Exercise Period, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into a
smaller number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such combination
will be proportionately increased. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 5(a), the number of shares of Common
Stock issuable upon exercise of this Warrant shall be increased or decreased to
equal the quotient obtained by dividing (i) the product of (A) the Exercise
Price in effect immediately prior to such adjustment, multiplied by (B) the
number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such adjustment, by (ii) the adjusted Exercise Price .
(b) Pro Rata Distributions. If the Company, at any time while this Warrant
-----------------------
is outstanding, distributes to all holders of Common Stock (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants to subscribe for
or purchase any security, or (iv) any other asset (in each case, "DISTRIBUTED
PROPERTY"), then, at the request of any Holder delivered before the 90th day
after the record date fixed for determination of stockholders entitled to
receive such distribution, the Company will deliver to such Holder, within five
Trading Days after such request (or, if later, on the effective date of such
distribution), the Distributed Property that such Holder would have been
entitled to receive in respect of the Warrant Shares for which such Holder's
Warrant could have been exercised immediately prior to such record date. If
such Distributed Property is not delivered to a Holder pursuant to the preceding
sentence, then upon any exercise of the Warrant that occurs after such
record date, such Holder shall be entitled to receive, in addition to the
Warrant Shares otherwise issuable upon such conversion, the Distributed Property
that such Holder would have been entitled to receive in respect of such number
of Warrant Shares had the Holder been the record holder of such Warrant Shares
immediately prior to such record date.
(c) Fundamental Transactions. If, at any time while this Warrant is
-------------------------
outstanding: (i) the Company effects any merger or consolidation of the Company
with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, or (iv)
the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the "ALTERNATE CONSIDERATION").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any successor to the Company
or surviving entity in such Fundamental Transaction shall, either (i) issue to
the Holder a new warrant substantially in the form of this Warrant and
consistent with the foregoing provisions and evidencing the Holder's right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof, or (ii) purchase the Warrant from the Holder for a purchase
price, payable in cash within five Trading Days after such request (or, if
later, on the effective date of the Fundamental Transaction), equal to the Black
Scholes value of the remaining unexercised portion of this Warrant on the date
of such request. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (c) and
insuring that the Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
(d) Issuances or Sales at less than Exercise Price.
-----------------------------------------------------
(i) If at any time during the term of this Warrant the Company shall issue
or sell any shares of Common Stock for a consideration per share less than the
Exercise Price in effect immediately prior to such issue or sale, then, in each
such case the number of shares subject to this Warrant thereafter purchasable
upon the exercise of this Warrant shall be determined by multiplying the number
of shares of Common Stock theretofore purchasable upon exercise of this Warrant
by a fraction, the numerator of which shall be (x) the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants,
plus the number of additional shares of Common Stock offered for subscription or
purchase, and the denominator of which shall be (y) the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants plus
the number of shares that the aggregate offering price of the total number of
shares of Common Stock so offered would purchase at the Exercise Price on such
date of issuance. For purposes of this Section 5(d)(i), the issuance of rights
or warrants or any other security to subscribe for or purchase or acquire Common
Stock or securities convertible into Common Stock shall be deemed to be the
issuance of Common Stock at an aggregate offering price equal to the aggregate
offering price of such securities plus the minimum aggregate amount (if any)
payable upon conversion of such securities into Common Stock. In addition to
the adjustment in the number of shares in this Section 5(d)(i), the Exercise
Price per share shall be appropriately adjusted so that Exercise Price shall be
equal to the price determined by multiplying the Exercise Price in effect
immediately prior to the issuance by a fraction, the numerator of which shall be
(x) the total number of outstanding shares of Common Stock of the Company
immediately prior to such issuance; and the denominator of which shall be (y)
the total number of outstanding shares of Common Stock of the Company
immediately after such issuance. The following transactions shall be exempt
from the antidilution adjustment requirements of this Section 5(d)(i): (A)
consideration in a merger (the primary purpose of which is not to raise
capital), consolidation or acquisition of assets (the primary purpose of which
is not to raise capital), or in connection with any strategic partnership,
collaboration or joint venture (the primary purpose of which is not to raise
capital), or as consideration for the acquisition of a business, product or
license by the Company (the primary purpose of which is not to raise capital),
(B) pursuant to widely distributed underwritten public offering, (C) upon
exercise or conversion of the Company's options, warrants or other convertible
securities outstanding as of the date hereof as set forth in Schedule 4(c) of
the Securities Purchase Agreement or issued pursuant to such Securities Purchase
Agreement, (D) under any duly authorized Company stock option, stock purchase or
restricted stock plan (for the benefit of the Company's employees, consultants
or directors), and (E) in connection with any loan made to the Company by a
lending institution engaged in the business of lending money, such as a bank,
trust company, insurance company or other institutional lender.
(ii) For the purposes of any computation respecting consideration received
pursuant to this Section 5(d):
(A) In the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of cash received, provided that in no case
shall any deduction be made for any commissions, discounts, or expenses incurred
by the Company for any underwriting of the issue or otherwise in connection
therewith;
(B) In the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Company, irrespective of the accounting
treatment thereof; and
(C) In the case of the issuance of securities convertible into,
exchangeable for, or consisting of any right or option to purchase, shares of
Common Stock, the aggregate consideration received for such shares shall be
equal to the consideration received by the Company for any such securities, plus
the additional minimum consideration, if any, to be received by the Company upon
the conversion, exchange, or exercise thereof (the consideration in each case to
be determined in the same manner as provided in (A) and (B) above).
(e) Notice of Adjustment. Upon the occurrence of any event which requires
----------------------
any adjustment of the Exercise Price, then, and in each such case, the Company
shall give notice thereof to the Holder of this Warrant, which notice shall
state the Exercise Price resulting from such adjustment and the increase or
decrease in the number of Warrant Shares issuable upon exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. Such calculation shall be certified by
the chief financial officer of the Company.
(f) Minimum Adjustment of the Exercise Price. No adjustment of the Exercise
----------------------------------------
Price shall be made in an amount of less than 1% of the Exercise Price in
effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(g) No Fractional Shares. No fractional shares of Common Stock are to be
----------------------
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(h) Other Notices. In case at any time:
--------------
(i) the Company shall declare any dividend upon the Common Stock payable in
shares of stock of any class or make any other distribution (other than
dividends or distributions payable in cash out of retained earnings consistent
with the Company's past practices with respect to declaring dividends and making
distributions) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the holders of the
Common Stock any additional shares of stock of any class or other rights;
(iii) there shall be any capital reorganiza-tion of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substan-tially all of its assets to, another
corporation or entity; or
(iv) there shall be a voluntary or involun-tary dissolution, liquidation or
winding-up of the Company;
then, in each such case, the Company shall give to the Holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such divi-dend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable upon such
reorganization, re-classification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least fifteen (15) days prior to the record date or the date on which the
Company's books are closed in respect thereto. Failure to give any such notice
or any defect therein shall not affect the validity of the proceedings referred
to in clauses (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing,
the Company may publicly disclose the substance of any notice delivered
hereunder prior to delivery of such notice to the Holder of this Warrant.
(i) Certain Events. If, at any time during the Exercise Period, any event
---------------
occurs of the type contemplated by the adjustment provisions of this Section 5
but not expressly provided for by such provisions, the Company will give notice
of such event as provided in Section 5(e) hereof, and the Company's Board of
Directors will make an appropriate adjustment in the Exercise Price and the
number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the Holder shall be neither enhanced nor diminished by such
event.
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
----------
exercise of this Warrant shall be made without charge to the Holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the Holder of this Warrant.
7. No Rights or Liabilities as a Shareholder. This Warrant shall not
-----------------------------------------------
entitle the Holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the Holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the Holder hereof, shall give rise to any
liability of such Holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
8. Transfer, Exchange, Redemption and Replacement of Warrant.
---------------------------------------------------------------
(a) Restriction on Transfer. This Warrant and the rights granted to the
-------------------------
Holder hereof are transferable in whole or in part, at any one time, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Section 8(e) below, provided, however, that any transfer or assignment shall be
subject to the conditions set forth in Sections 8(f) hereof and to the
provisions of Sections 3(e) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered Holder hereof as the owner and Holder hereof
for all purposes, and the Company shall not be affected by any notice to the
con-trary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
----------------------------------------------------
exchangeable, upon the surrender hereof by the Holder hereof at the office or
agency of the Company referred to in Section 8(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrant to represent the right to purchase such number of
shares as shall be designated by the Holder hereof at the time of such
surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
------------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
---
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reason-ably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant
-----------------------------------
in connection with any trans-fer, exchange, or replacement as provided in this
Section 8, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Section 8. The Company shall
indemnify and reimburse the Holder of this Warrant for all losses and damages
arising as a result of or related to any breach by the Company of the terms of
this Warrant, including costs and expenses (including legal fees) incurred by
such Holder in connection with the enforcement of its rights hereunder.
(e) Warrant Register. The Company shall maintain, at its principal
-----------------
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Transfer Without Registration. If, at the time of the surrender of this
-----------------------------
Warrant in connection with any transfer of this Warrant, this Warrant (or, in
the case of any exercise, the Warrant Shares issuable hereunder), shall not be
registered under the Securities Act and under applicable state securities or
blue sky laws, the Com-pany may require, as a condition of allowing such
transfer, (i) a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise may be made without registration
under the Securities Act and under applicable state securities or blue sky laws,
and (ii) that the transferee be an "ACCREDITED INVESTOR" as defined in Rule
501(a) promulgated under the Securities Act; provided that no such opinion,
letter, or status as an "accredited investor" shall be required in connection
with a transfer pursuant to Rule 144 under the Securities Act.
9. Registration Rights. The initial Holder of this Warrant (and certain
--------------------
assignees thereof) are entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.
10. Notices. Any notices required or permitted to be given under the terms
-------
of this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by courier, or by
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Genus, Inc.
1139 Karlstad Drive
Sunnyvale, CA 94089
Telephone No.: (408) 747-7140 (x1311)
Facsimile No.: (408) 747-7198
Attention: Mr. Shum Mukherjee
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
Attention: Mark Casillas, Esq.
If to the Holder, at such address as such Holder shall have provided in
writing to the Company, or at such other address as such Holder furnishes by
notice given in accordance with this Section 10.
11. Governing Law; Jurisdiction. All questions concerning the construction,
---------------------------
validity, enforcement and interpretation of this Warrant shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Warrant (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, Borough of Manhattan. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such
proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence a proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such
proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such proceeding.
12. Limitations on Holder's Right to Exercise.
----------------------------------------------
(a) Notwithstanding anything to the contrary contained herein, the number of
shares of Common Stock that may be acquired by the Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the total
number of shares of Common Stock then beneficially owned by such Holder and its
Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the Holder's for purposes of Section 13(d) of the
Exchange Act, does not exceed 4.999% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this paragraph and determined that
issuance of the full number of Warrant Shares requested in such Exercise Notice
is permitted under this paragraph. By written notice to the Company, the Holder
may waive the provisions of this Section but (i) any such waiver will not be
effective until the 61st day after such notice is delivered to the Company, and
(ii) any such waiver will apply only to the Holder and not to any other holder
of Warrants.
(b) Notwithstanding anything to the contrary contained herein, the number of
shares of Common Stock that may be acquired by the Holder upon any exercise of
this Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the total
number of shares of Common Stock then beneficially owned by such Holder and its
Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the Holder's for purposes of Section 13(d) of the
Exchange Act, does not exceed 9.999% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this paragraph and determined that
issuance of the full number of Warrant Shares requested in such Exercise Notice
is permitted under this paragraph. By written notice to the Company, the Holder
may waive the provisions of this Section but (i) any such waiver will not be
effective until the 61st day after such notice is delivered to the Company, and
(ii) any such waiver will apply only to the Holder and not to any other holder
of Warrants.
13. Miscellaneous.
-------------
(a) Amendments. This Warrant and any provision hereof may only be amended
----------
by an instrument in writing signed by the Company and the Holder hereof.
(b) Descriptive Headings. The descriptive head-ings of the several Sections
--------------------
of this Warrant are in-serted for purposes of reference only, and shall not
affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. This Warrant may be exercised at any time or from
------------------
time to time during the Exercise Period, by presentation and surrender of this
Warrant to the Company at its principal executive offices with a written notice
of the Holder's intention to effect a cashless exercise, including a calculation
of the number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "CASHLESS EXERCISE" ). In the event of a
Cashless Exercise in lieu of paying the Exercise Price in cash, the Holder shall
surrender this Warrant for that number of shares of Common Stock determined by
multiplying (i) the number of Warrant Shares to which it would otherwise be
entitled by (ii) a fraction, the numerator of which shall be the difference
between the then current Market Price per share of the Common Stock and the
Exercise Price, and the denominator of which shall be the Market Price per share
of Common Stock.
For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant to the
Securities Purchase Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
GENUS, INC.
By: _________________________________
Name:Shum Mukherjee
Title: Chief Financial Officer
FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)
To: Genus, Inc.
1139 Karlstad Drive
Sunnyvale, CA 94089
Attention: Shum Mukherjee
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of GENUS, INC., a corporation organized
under the laws of the State of California (the "COMPANY"), and either:
tenders herewith payment of the Exercise Price in full, in the amount of
$_____________, in cash, by certified or official bank check or by wire transfer
for the account of the Company; or
elects pursuant to Section 14(c) of the Warrant to convert such Warrant
into Common Stock on a cashless exercise basis.
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.
The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this Exercise
Agreement to the account of the undersigned or its nominee (which is
_________________) with DTC through its Deposit Withdrawal Agent Commission
System ("DTC TRANSFER").
In lieu of receiving the shares of Common Stock issuable pursuant to this
Exercise Agreement by way of DTC Transfer, the undersigned hereby requests that
the Company cause its transfer agent to issue and deliver to the undersigned
physical certificates representing such shares of Common Stock.
By its delivery of this Exercise Agreement, the Holder represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 13 of this Warrant to which
this notice relates.
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:
Dated:_________________ _____________________________________
Signature of Holder
_____________________________________
Name of Holder (Print)
Address:
_____________________________________
_____________________________________
_____________________________________
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the attached Warrant, with respect to
the number of shares of Common Stock covered thereby issuable pursuant to the
attached Warrant set forth hereinbelow, to:
Name of Assignee Address No of Shares
- ------------------ ------- --------------
, and hereby irrevocably constitutes and appoints
_____________________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named corporation, with full power of
substitution in the premises.
Dated: _____________________, ____
In the presence of
__________________
Name: ____________________________
Signature: _______________________
Title of Signing Officer or Agent (if any):
________________________
Address: ________________________
________________________
Note: The above signature should correspond exactly with the name on the
face of the within Warrant.
- 6 -
EXHIBIT B
TOSECURITIESPURCHASE AGREEMENT
-------------------------------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of January 17,
2002, by and among GENUS, INC., a corporation organized under the laws of the
State of California (the "COMPANY"), and the undersigned (the "INITIAL
INVESTORS").
WHEREAS:
A. The Company and the Initial Investors have entered into a Securities
Purchase Agreement dated the date hereof (the "SECURITIES PURCHASE AGREEMENT;"
capitalized terms used herein and not otherwise defined herein and that are
defined in the Securities Purchase Agreement shall have the respective meanings
set forth in the Securities Purchase Agreement). In connection with the
Securities Purchase Agreement, the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to the Initial
Investors (i) shares of the Company's common stock, no par value (the "COMMON
STOCK"), and (ii) warrants to purchase Common Stock (the "WARRANTS"). The
shares of Common Stock issued on the Closing Date under the Securities Purchase
Agreement are referred to herein as the "SHARES" and the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants are referred to
herein as the "WARRANT SHARES."
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investors, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
(i) "INVESTORS" means the Initial Investors and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 9 hereof; provided, however, that the term "Investors"
shall not include any of the Initial Investors and any transferees or assignees
who agree to become bound by the provisions of this Agreement in accordance with
Section 9 hereof that cease to own or hold all of the Registrable Securities.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means (i) the Shares, (ii) the Warrant
Shares, and (iii) any shares of capital stock issued or issuable, from time to
time (with any adjustments), as a distribution on or in exchange for or
otherwise with respect to any of the Transaction Documents.
(iv) "REGISTRATION STATEMENT" means one or more registration statements
of the Company under the Securities Act registering all of the Registrable
Securities, including the Initial Registration Statement, any Uncovered Shares
Amendments and Uncovered Shares Registration Statements (each, as defined
below).
2. REGISTRATION.
------------
a. Mandatory Registration. The Company shall file with the United
-----------------------
States Securities and Exchange Commission ("SEC"), on or prior to the date which
is forty-five (45) calendar days after the Closing Date (the "FILING DEADLINE")
a Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of the
Initial Investors as to the use of such form (as determined pursuant to Section
11(j) hereof)) to include the Plan of Distribution attached hereto as Exhibit A
---------
covering the resale of at least 4,300,000 shares of Common Stock, which
Registration Statement, to the extent allowable under the Securities Act and the
rules promulgated thereunder shall state that such Registration Statement also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon exercise of the Warrants to prevent dilution resulting from
stock splits, stock dividends or similar transactions (the "INITIAL REGISTRATION
STATEMENT"). In the event that the Initial Registration Statement is not filed
within forty-five (45) calendar days of the Closing Date, the Exercise Price
shall be reduced to $2.90. The Registrable Securities included in the Initial
Registration Statement shall be registered on behalf of the Investors as set
forth in Section 11(k) hereof. If for any reason (including, but not limited
to, a determination by the staff of the SEC that all or any portion of the
Warrant Shares or any other Registrable Securities cannot be included in the
Initial Registration Statement (an "SEC DETERMINATION")) the Initial
Registration Statement declared effective by the SEC does not include all of the
Registrable Securities (any such shares that are not included being the
"UNCOVERED SHARES"), the Company shall prepare and file with the SEC, as soon as
practicable, but in any event prior to the tenth (10th) Business Day after
becoming aware of the existence of any Uncovered Shares (such date referred to
herein as the "UNCOVERED SHARE FILING DEADLINE"), either (a) an amendment (the
"UNCOVERED SHARES AMENDMENT") to the Initial Registration Statement effecting a
registration of the Uncovered Shares or (b) a registration statement which
registers the Uncovered Shares (the "UNCOVERED SHARES REGISTRATION STATEMENT").
The Company shall file additional Registration Statements if the number of
Registrable Securities at any time exceeds 85% of the number of shares of Common
Stock then registered in a Registration Statement. The Uncovered Shares
Amendment or the Uncovered Shares Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided to the Initial Investors and their counsel for review and
comment at least two (2) Business Days prior to its filing or other submission.
The Company shall use its commercially reasonable best efforts to cause each
Registration Statement required to be filed pursuant to this Section 2(a) to
become effective as soon as practicable, but, as to the Initial Registration
Statement filed pursuant to Section 2(a), in no event later than the one hundred
and twentieth (120th) calendar day after the Filing Deadline, and as to any
Uncovered Shares Amendment or Uncovered Shares Registration Statement, in no
event later than the one hundred and twentieth (120th) calendar day after the
Uncovered Share Filing Deadline (the "UNCOVERED SHARE REGISTRATION DEADLINE").
In the event that the Registration Statement is not effective one hundred and
twenty (120) calendar days after the Filing Deadline, the Company shall pay the
Initial Investors a cash penalty of one percent (1%) of the Initial Investors'
Investment Amount as defined under the Securities Purchase Agreement for each
thirty (30) calendar day period that the Registration remains non-effective
beyond the initial one hundred and twenty (120) calendar day period.
b. Underwritten Offering. The Investors may offer and sell the
----------------------
Registrable Securities pursuant to a Registration Statement filed in accordance
with Section 2(a) in an underwritten offering. In any such underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, shall have the right to select
one legal counsel to represent the Investors and an investment banker or bankers
and manager or managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory to the Company.
In the event that any Investors elect not to participate in such underwritten
offering, the Registration Statement covering all of the Registrable Securities
shall contain appropriate plans of distribution reasonably satisfactory to the
Investors participating in such underwritten offering and the Investors electing
not to participate in such underwritten offering (including, without limitation,
the ability of nonparticipating Investors to sell from time to time and at any
time during the effectiveness of such Registration Statement).
c. Piggy Back Registrations.
--------------------------
(i) If at any time prior to the expiration of the Registration Period (as
hereinafter defined) the Company shall file with the SEC a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities (other than on Form S-4
or Form S-8 or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans), the Company shall send to each Investor who is entitled to registration
rights under this Section 2(c) written notice of such determination and, if
within twenty (20) days after the date of such notice, such Investor shall so
request in writing, the Company shall include in such registration statement all
or any part of the Registrable Securities such Investor requests to be
registered, provided, however, that (i) the number of Registrable Securities
proposed to be sold by such securities is equal to at least fifty percent (50%)
of the total number of Registrable Securities then held by such participating
Investor, (ii) such Investor agrees to sell those of its Registrable Securities
to be included in such registration in the same manner and on the same terms and
conditions as the other shares of Common Stock which the Company proposes to
register, and (iii) if the registration is to include shares of Common Stock to
be sold for the account of the Company or any party exercising registration
rights pursuant to any other agreement with the Company, the proposed managing
underwriter, if any, does not advise the Company that in its opinion the
inclusion of such Investor's Registrable Securities (without any reduction in
the number of shares to be sold for the account of the Company or such party
exercising registration rights) is likely to affect materially and adversely the
success of the offering or the price that would be received for any shares of
Common Stock offered, in which case the rights of such Investor shall be as
provided in Section 2(c)(ii) hereof.
(ii) If a registration pursuant to Section 2(c)(i) is done in connection
with any underwritten public offering for the account of the Company the
managing underwriter(s) thereof shall impose a limitation on the number of
shares of Common Stock which may be included in the registration statement
because, in such underwriter(s)' judgment, marketing or other factors dictate
such limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such registration statement only such limited
portion, if any of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit. Any
exclusion of Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such registration statement
or are not entitled to pro rata inclusion with the Registrable Securities; and
provided further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the registration statement other than holders of securities
entitled to inclusion of their securities in such registration statement by
reason of demand registration rights (except to the extent any existing
agreements otherwise provide). No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any registration
required under Section 2(a) hereof. If an offering in connection with which an
Investor is entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included in such
registration statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering.
d. Eligibility for Form S-3. The Company represents and warrants that
-------------------------
it is eligible to register the resale of Registrable Securities on a
registration statement on Form S-3 under the Securities Act, and that there
exist no facts or circumstances (including without limitation any required
approvals or waivers or any circumstances that may delay or prevent the
obtaining of accountant's consents) that would prohibit or delay the preparation
and filing of a registration statement on Form S-3 with respect to the
Registrable Securities. The Company shall file all reports required to be filed
by the Company with the SEC in a timely manner so as to maintain or, if
applicable, regain its eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
-----------------------------
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC, on or before the
Filing Deadline or the Uncovered Share Filing Deadline, as applicable, the
applicable Registration Statement required by Section 2(a) and shall use its
best efforts to cause such Registration Statement to become effective as soon as
practicable thereafter pursuant to the terms hereof. The Company shall keep
such Registration Statement effective pursuant to Rule 415 at all times until
the earlier of (i) two years or (ii) the date on which all of the Registrable
Securities may (in the reasonable opinion of counsel to the Initial Investors)
be immediately sold to the public without registration or restriction pursuant
to Rule 144(k) under the Securities Act (the "REGISTRATION PERIOD"). In the
event that the sale of Registrable Securities by one or more Investors is
determined by the SEC to constitute a primary offering, upon the written request
from time to time of any such Investor, the Company shall as promptly as
practicable: cause a Registration Statement to be amended and/or one or more
additional Registration Statements (which may be requested on a sequential
basis) to be filed (as specified by the applicable Investors) and to be declared
effective; and take all other actions reasonably requested by such Investors to
effectuate the offering of Registrable Securities. If the Initial Registration
Statement is not filed on Form S-3, the Company shall, as soon as it is eligible
to do so, file a post-effective amendment on Form S-3 to the Initial
Registration Statement to the extent permitted by the SEC or, if not so
permitted, file a new Registration Statement on Form S-3 to permit sales of the
Registrable Securities pursuant to Rule 429 under the Securities Act; and the
Company shall use its best efforts to cause such post-effective amendment or
Registration Statement to become effective as soon as possible. Each
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) filed pursuant to this Agreement (i) shall comply in all material
respects with the requirements of the Securities Act and the rules and
regulations of the SEC promulgated thereunder and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein not misleading.
The financial statements of the Company included in the Registration Statement
or incorporated by reference therein will comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements shall be prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, 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 shall
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to immaterial year-end
adjustments).
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto. The Company shall notify the holders of Registrable
Securities to be sold and their counsel as promptly as reasonably possible, and
(if requested by any such Person) confirm such notice in writing no later than
one Trading Day thereafter, of any of the following events: (i) the SEC notifies
the Company whether there will be a "review" of any Registration Statement; (ii)
the SEC comments in writing on any Registration Statement (in which case the
Company shall deliver to each Holder a copy of such comments and of all written
responses thereto); (iii) any Registration Statement or any post-effective
amendment is declared effective; (iv) the SEC or any other Federal or state
governmental authority requests any amendment or supplement to a Registration
Statement or Prospectus or requests additional information related thereto; (v)
the SEC issues any stop order suspending the effectiveness of any Registration
Statement or initiates any Proceedings for that purpose; (vi) the Company
receives notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction, or the
initiation or threat of any Proceeding for such purpose; or (vii) the financial
statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that 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, in
light of the circumstances under which they were made, not misleading.
The Company shall use its best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement.
The Initial Registration Statement (and each amendment or supplement thereto,
and each request for acceleration of effectiveness thereof) shall be provided to
(and subject to the review by) the Initial Investors and their counsel at least
five (5) Business Days prior to its filing or other submission; provided,
however, that the Initial Investors and their counsel shall submit any comments
to the Initial Registration Statement within two (2) Business Days of receipt.
The Company shall respond as promptly as reasonably possible, and in any event
within twenty (20) Trading Days, to any comments received from the SEC with
respect to the Registration Statement or any amendment thereto and as promptly
as reasonably possible provide the Investors true and complete copies of all
correspondence from and to the SEC relating to the Registration Statement. The
Company shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities and their counsel shall reasonably object.
d. The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as each Investor who holds Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its certificate of incorporation or by-laws, which in each
case the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.
e. In the event the Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
f. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor in writing of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission and deliver such number
of copies of such supplement or amendment to each Investor as such Investor may
reasonably request.
g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable date (including in each case by amending or supplementing
such Registration Statement) and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).
h. [Removed]
i. At the request of the Initial Investors whose Registrable Securities
are included in a Registration Statement, the Company shall furnish, on the date
of effectiveness of the Registration Statement (i) an opinion, dated as of such
date, from counsel representing the Company addressed to the Investors and in
form, scope and substance as is customarily given in an underwritten public
offering, including that the Registration Statement and related prospectus
comply as to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations thereunder, and (ii) a
letter, dated as of such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Initial Investors and the underwriters, if any.
j. The Company shall make available for inspection by (i) any Investor
whose Registrable Securities are included in a Registration Statement, (ii) any
underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by the Investors, and (iv) one firm of attorneys retained by all
such underwriters (collectively, the "INSPECTORS") all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such due
diligence.
k. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, (iv) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement, or (v) such Investor consents to the form and
content of any such disclosure. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to such Investor prior to making such disclosure, and allow
the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
l. The Company shall use its best efforts to promptly either (i) secure
the designation and quotation, of all the Registrable Securities covered by the
Registration Statement on The Nasdaq Stock Market, or (ii) cause all the
Registrable Securities covered by the Registration Statement to be listed on the
New York Stock Exchange or the American Stock Exchange or another national
securities exchange and on each additional national securities exchange on which
securities of the same class or series issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the
rules of such exchange.
m. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
n. [Removed]
o. The Company shall comply with applicable federal and state
securities laws and regulations related to a Registration Statement and offering
and sale of securities.
p. The Company shall take all such other actions as any Investor or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities.
q. From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company
(except to the extent existing agreements may otherwise provide) to include any
of their securities in any Registration Statement under Section 2(a) hereof or
any amendment or supplement thereto under Section 3(b) hereof without the
consent of the holders of a majority in interest of the Registrable Securities.
4. OBLIGATIONS OF THE INVESTORS.
-------------------------------
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) Business
Days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of any information the Company requires
from each such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriter(s) of such offering and the Company and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election not to participate in such
underwritten distribution.
d. No Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below. Notwithstanding anything in this Section
4(d) to the contrary, this Section 4(d) is not intended to limit an Investor's
rights under Section 2(a) or 3(b) hereof.
5. EXPENSES OF REGISTRATION.
--------------------------
All reasonable expenses incurred by the Company or the Investors in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3 above (excluding brokers' fees, underwriting discounts and commissions,
and similar selling expenses), including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees and the fees and
disbursements of counsel for the Company, and the fees and disbursements of
counsel selected by the Investors, shall be borne by the Company. In addition,
the Company shall pay all of the Investors' costs and expenses (including
reasonable legal fees) incurred in connection with the enforcement of the rights
of the Investors hereunder.
6. INDEMNIFICATION.
---------------
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities,
(ii) the directors, officers, partners, members, employees and agents of such
Investor, and (iii) each person who controls any Investor (and the directors,
officers, partners, members, employees and agents of such control person)
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), if any (each,
an "INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject
to the restrictions set forth in Section 6(c) with respect to the number of
legal counsel, the Company shall reimburse the Investors and each other
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (iii) with
respect to any prospectus, shall not inure to the benefit of any Indemnified
Person if the untrue statement or omission of material fact contained in such
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented, if such corrected prospectus was timely made available by the
Company pursuant to Section 3(c) hereof, and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a Violation and such Indemnified Person, notwithstanding such advice,
used it. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder or underwriter
within the meaning of the Securities Act or the Exchange Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) such Investor will
reimburse any legal or other expenses (promptly as such expenses are incurred
and are due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor; provided, further, however, that the Investor shall be
liable under this Agreement (including this Section 6(b) and Section 7) for only
that amount as does not exceed the net proceeds actually received by such
Investor as a result of the sale of Registrable Securities giving rise to such
indemnification obligation. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact by the
Investor contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented, and the Indemnified Party
failed to utilize such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that such indemnifying party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the reasonable fees and
expenses to be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such counsel
of the Indemnified Person or Indemnified Party and the indemnifying party would
be inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding or the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the Indemnified Party
and the indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by Investors
holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investors if any of them holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
(d) Notwithstanding anything to the contrary herein, the
indemnifying party shall not be entitled to settle any claim, suit or proceeding
unless in connection with such settlement the indemnified party receives an
unconditional release with respect to the subject matter of such claim, suit or
proceeding and such settlement does not contain any admission of fault by the
indemnified party.
7. CONTRIBUTION.
------------
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6, (ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
----------------------------------
With a view to making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
a. file with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the Securities Act and
the Exchange Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's obligations under
Section 5(c) of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents as is required for the
applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
------------------------------------
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable by each Investor to any transferee of all or any portion of the
Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee
and (b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee may be
subject to restrictions under the Securities Act and applicable state securities
laws, (iv) the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein, and (v) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement. In addition, and notwithstanding anything to the contrary
contained in this Agreement, the Securities Purchase Agreement or the Warrants,
the Securities (as defined in the Securities Purchase Agreement) may be pledged,
and all rights of the Investors under this Agreement or any other agreement or
document related to the transaction contemplated hereby may be assigned, without
further consent of the Company, to a bona fide pledgee in connection with an
Investor's margin or brokerage accounts.
10. AMENDMENT OF REGISTRATION RIGHTS.
-----------------------------------
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), and Investors (excluding Investors who are affiliates of the
Company) who hold fifty percent (50%) in interest of the Registrable Securities
(excluding Registrable Securities held by affiliates of the Company) or, in the
case of a waiver, with the written consent of the party charged with the
enforcement of any such provision. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company.
11. MISCELLANEOUS.
-------------
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Genus, Inc.
1139 Karlstad Drive
Sunnyvale, CA 94089
Telephone No.: (408) 747-7140 (x1311)
Facsimile No.: (408) 747-7198
Attention: Mr. Shum Mukherjee
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
Attention: Mark Casillas, Esq.
If to an Investor, at such address as such Investor shall have provided in
writing to the Company or such other address as such Investor furnishes by
notice given in accordance with this Section 11(b).
Each party hereto may from time to time change its address or facsimile
number for notices under this Section 11(b) by giving at least ten (10) days'
prior written notice of such changed address or facsimile number, in the case of
the Investors to the Company, and in the case of the Company to all of the
Investors.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
e. The Transaction Documents (including all schedules and exhibits
thereto) constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. The Transaction Docuemtns supersede all prior agreements and
understandings among the parties hereto and thereto with respect to the subject
matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
j. All consents, approvals and other determinations to be made by the
Investors pursuant to this Agreement shall be made by the Investors holding more
than fifty percent (50%) of the Registrable Securities (determined as if all
Warrants then outstanding had been exercised by the payment of cash) then held
by all Investors.
k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be registered on behalf of each Investor pro rata based
on the number of Registrable Securities held by each Investor at the time of
such establishment or increase, as the case may be. In the event an Investor
shall sell or otherwise transfer any of such holder's Registrable Securities,
each transferee shall be deemed to have registered on its behalf a pro rata
portion of the number of Registrable Securities included on a Registration
Statement for such transferor. Any shares of Common Stock included on a
Registration Statement on behalf of any person or entity which does not hold any
Registrable Securities shall be deemed registered on behalf of the remaining
Investors, pro rata based on the number of shares of Registrable Securities then
held by such Investors. For the avoidance of doubt, (A) the number of
Registrable Securities held by an Investor shall be determined as if all
Warrants then outstanding and held by an Investor were exercised by the payment
of cash and (B) no provision of this subsection shall operate to reduce the
number of Registrable Securities registered on behalf of any Investor pursuant
to the first sentence of this subsection.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT A
---------
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
- - ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- - block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
- - purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
- - an exchange distribution in accordance with the rules of the applicable
exchange;
- - privately negotiated transactions;
- - short sales
- - broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
- - a combination of any such methods of sale; and
- - any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholder may from time to time pledge or grant a security
interest in some or all of the Shares or common stock or Warrant owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.
The Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders
have informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
2
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT TO REGISTRATION RIGHTS AGREEMENT (this "Amendment"), dated
as of January 22, 2002, is entered into between and among, on the one hand,
Genus, Inc., a California corporation (the "Company"), and the undersigned
Initial Investor (as defined in the Agreement) in light of the following:
W I T N E S S E T H
-------------------
WHEREAS, the Company and the Initial Investor are parties to that certain
Registration Rights Agreement dated January 17, 2002 (the "Agreement");
WHEREAS, the Initial Investor requested that the Company consent to the
amendments to the Agreement set forth in Section 2 hereof; and
----------
WHEREAS, the Company is willing to so consent to such amendments to the
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree to amend the Agreement as
follows:
1. DEFINITIONS
-----------
. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Agreement, as amended hereby.
2. AMENDMENTS TO AGREEMENT
-------------------------
.
(a) Section 1(i) of the Agreement, the definition of "Investors", is hereby
-------------
amended and restated in its entirety as follows:
"(i) "INVESTORS" means the Initial Investors and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 9 hereof; provided, however, that the term "Investors"
shall not include any of the Initial Investors and any transferees or assignees
who agree to become bound by the provisions of this Agreement in accordance with
Section 9 hereof that cease to own or hold Registrable Securities."
(b) Section 2(a) of the Agreement hereby is amended and restated in its
-------------
entirety as follows:
"Mandatory Registration. The Company shall file with the United States
-----------------------
Securities and Exchange Commission ("SEC"), on or prior to the date which is
forty-five (45) calendar days after the Closing Date (the "FILING DEADLINE") a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of the
Initial Investors as to the use of such form (as determined pursuant to Section
11(j) hereof)) to include the Plan of Distribution attached hereto as Exhibit A
---------
covering the resale of at least 4,300,000 shares of Common Stock, which
Registration Statement, to the extent allowable under the Securities Act and the
rules promulgated thereunder shall state that such Registration Statement also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon exercise of the Warrants to prevent dilution resulting from
stock splits, stock dividends or similar transactions (the "INITIAL REGISTRATION
STATEMENT"). In the event that the Initial Registration Statement is not filed
within forty-five (45) calendar days of the Closing Date, the Exercise Price
shall be reduced to $2.90. The Registrable Securities included in the Initial
Registration Statement shall be registered on behalf of the Investors as set
forth in Section 11(k) hereof. If for any reason (including, but not limited
to, a determination by the staff of the SEC that all or any portion of the
Warrant Shares or any other Registrable Securities cannot be included in the
Initial Registration Statement (an "SEC DETERMINATION")) the Initial
Registration Statement declared effective by the SEC does not include all of the
Registrable Securities (any such shares that are not included being the
"UNCOVERED SHARES"), the Company shall prepare and file with the SEC, as soon as
practicable, but in any event prior to the tenth (10th) Business Day after
becoming aware of the existence of any Uncovered Shares (such date referred to
herein as the "UNCOVERED SHARE FILING DEADLINE"), either (a) an amendment (the
"UNCOVERED SHARES AMENDMENT") to the Initial Registration Statement effecting a
registration of the Uncovered Shares or (b) a registration statement which
registers the Uncovered Shares (the "UNCOVERED SHARES REGISTRATION STATEMENT").
The Company shall file additional Registration Statements if the number of
Registrable Securities at any time exceeds 85% of the number of shares of Common
Stock then registered in a Registration Statement. The Uncovered Shares
Amendment or the Uncovered Shares Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided to the Initial Investors and their counsel for review and
comment at least two (2) Business Days prior to its filing or other submission.
The Company shall use its commercially reasonable best efforts to cause each
Registration Statement required to be filed pursuant to this Section 2(a) to
become effective as soon as practicable, but, as to the Initial Registration
Statement filed pursuant to Section 2(a), in no event later than the one hundred
and twentieth (120th) calendar day after the Closing Date, and as to any
Uncovered Shares Amendment or Uncovered Shares Registration Statement, in no
event later than the one hundred and twentieth (120th) calendar day after the
Uncovered Share Filing Deadline (the "UNCOVERED SHARE REGISTRATION DEADLINE").
In the event that the Initial Registration Statement is not effective one
hundred and twenty (120) calendar days after the Closing Date or the Uncovered
Shares Registration Statement is not effective as of the Uncovered Shares
Registration Deadline, the Company shall pay the Initial Investors a cash
penalty of one percent (1%) of the Initial Investors' Investment Amount as
defined under the Securities Purchase Agreement for each thirty (30) calendar
day period that the Registration remains non-effective beyond the initial one
hundred and twenty (120) calendar day period . Nothing in this provision shall
limit the Initial Investors' other rights and remedies under the law."
3. CONSTRUCTION
------------
. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN THE STATE OF NEW YORK.
4. ENTIRE AMENDMENT; EFFECT OF AMENDMENT
-----------------------------------------
. This Amendment, and terms and provisions hereof, constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes any and all prior or contemporaneous amendments relating to the
subject matter hereof. Except for the amendments to the Agreement expressly set
forth in Section 2 hereof, the Agreement shall remain unchanged and in full
----------
force and effect. To the extent any terms or provisions of this Amendment
conflict with those of the Agreement, the terms and provisions of this
Amendment shall control.
5. COUNTERPARTS; TELEFACSIMILE EXECUTION
---------------------------------------
. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Amendment by signing any such counterpart.
Delivery of an executed counterpart of this Amendment by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Amendment. Any party delivering an executed counterpart of this Amendment by
telefacsimile also shall deliver an original executed counterpart of this
Amendment, but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Amendment.
6. MISCELLANEOUS.
--------------
(a) Upon the effectiveness of this Amendment, each reference in the
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Agreement shall mean and refer to the Agreement as
amended by this Amendment.
(b) Upon the effectiveness of this Amendment, each reference in the
Transaction Documents to the "Registration Rights Agreement", "thereunder",
"therein", "thereof" or words of like import referring to the Agreement shall
mean and refer to the Agreement as amended by this Amendment.
[Signature page follows.]
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the date first written above.
GENUS, INC.
a California corporation
By: _________________________________
Name: Shum Mukherjee
Title: CFO
INITIAL INVESTOR
By:__________________________________
Name:________________________________
Title:_________________________________