EXHIBIT 10.1
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PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
DATED AS OF
APRIL 29, 2003
BY AND AMONG
SPECTRUM PHARMACEUTICALS, INC., AS ISSUER AND SELLER
AND
EACH OF THE PARTIES LISTED ON SCHEDULE 1, AS PURCHASERS
WITH RESPECT TO
SERIES D 8% CUMULATIVE CONVERTIBLE VOTING PREFERRED STOCK
AND SERIES D WARRANTS TO PURCHASE COMMON STOCK
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TABLE OF EXHIBITS AND SCHEDULES
Exhibit A Form of Certificate of Designation of the Series D 8%
Cumulative Convertible Voting Preferred Stock
Exhibit B Form of Warrant
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Management Lock-up Agreement
Schedule 1 Purchasers
Schedule 3 Schedule of Representations and Warranties of
Spectrum Pharmaceuticals, Inc.
Schedule 6.1(j) Officers and Directors of the Seller
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated
as of April 29, 2003, by and among Spectrum Pharmaceuticals, Inc., a Delaware
corporation (the "Seller"), and each of the persons listed on Schedule 1 hereto
(individually, "Purchaser" and collectively, the "Purchasers").
WITNESSETH:
WHEREAS, each of the Purchasers is willing to purchase from the Seller,
and the Seller desires to sell to the Purchasers, the numbers of shares set
forth on Schedule 1 attached hereto, which aggregate 444 shares of its Series D
8% Cumulative Convertible Voting Preferred Stock, stated value $10,000 per
share, par value $0.001 per share (the "Preferred Stock"), and Series D-1 Common
Stock Purchase Warrants (the "Series D-1 Warrants") entitling the holders
thereof to purchase up to an aggregate of 944,681 shares of the Seller's common
stock, $0.001 par value per share (the "Common Stock"), at an exercise price of
$3.00 per share and Series D-2 Common Stock Purchase Warrants (the "Series D-2
Warrants" and, collectively with the Series D-1 Warrants, the "Series D
Warrants" or the "Warrants") to purchase up to an aggregate of 944,681 shares of
Common Stock at an exercise price of $3.50 per share (in each case subject to
adjustment as more fully set forth herein and in the Warrants).
NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 PURCHASE AND SALE. On the terms and subject to the conditions
set forth in this Agreement, at the Closing (as defined in Section 2.2), the
Seller will sell and each of the Purchasers will purchase (i) the Preferred
Stock in the amounts set forth on Schedule 1 hereto, and (ii) the numbers of
Warrants set forth on Schedule 1 hereto. The shares of Common Stock issuable
upon conversion of the Preferred Stock are referred to herein as the "Conversion
Shares," and the shares of Common Stock issuable upon exercise of the Warrants
are referred to herein as the "Warrant Shares." The Preferred Stock, the
Warrants, the Conversion Shares, the Dividend Shares (as hereinafter defined)
and the Warrant Shares are collectively referred to as the "Securities."
1.2 TERMS OF THE PREFERRED STOCK AND WARRANTS. The terms and
provisions of the Preferred Stock are set forth in the Form of Certificate of
Designation of Series D 8% Cumulative Convertible Voting Preferred Stock, in the
form attached hereto as Exhibit A. The terms and provisions of the Warrants are
more fully set forth in the Form of Common Stock Purchase Warrant, in the form
attached hereto as Exhibit B.
1.3 TRANSFERS; LEGENDS.
(a) Any of the Securities may be transferred, in whole or
in part, by any of the Purchasers at any time by delivering written transfer
instructions to the Seller, and the Seller shall reflect such transfer on its
books and records and reissue certificates evidencing the Securities being
transferred. The Seller hereby consents to and agrees to register on the books
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of the Seller and with any transfer agent for the securities of the Seller any
transfer of Securities by a Purchaser to an Affiliate of such Purchaser. Any
transferee other than a purchaser of shares of Common Stock which have been
registered under the Securities Act shall have the rights of a Purchaser under
this Agreement and the Registration Rights Agreement. The Seller shall reissue
certificates evidencing the Securities upon surrender of certificates evidencing
the Securities being transferred in accordance with this Section 1.3(a). Any
such transfer shall be made by a Purchaser in accordance with applicable federal
and state securities laws and other applicable laws. An "Affiliate" means any
Person (as such term is defined below) that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser. A "Person" means any individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision of any thereof) or other entity of any kind.
(b) The certificates representing the Securities shall
bear the following legend:
"THE SHARES REPRESENTED BY, OR ACQUIRABLE UPON
CONVERSION OR EXERCISE OF SECURITIES EVIDENCED BY,
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT UNLESS THE
ISSUER OF THIS CERTIFICATE RECEIVES AN OPINION OF
LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER
AND ITS LEGAL COUNSEL THAT SUCH SALE IS EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND IS IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS
UNLESS SUCH REGISTRATION IS NOT REQUIRED."
ARTICLE II - PURCHASE PRICE AND CLOSING
2.1 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") to be paid by the Purchasers to the Seller to acquire the Preferred
Stock and the Warrants shall be the total amount set forth on Schedule 1 hereto.
2.2 THE CLOSING. The closing of the transactions contemplated
under this Agreement (the "Closing") shall take place at the offices of Kane
Kessler, P.C., 1350 Avenue of the Americas, 26th Floor, New York, New York, on a
date to be determined by the mutual agreement of the parties, but if they cannot
so agree, then on the 10th day after the date hereof; provided, however, that if
such day is not a Tuesday, Wednesday or Thursday, the Closing Date shall be on
the first Tuesday after such 10th day. The date on which the Closing occurs is
herein called the "Closing Date," and the 10th day after the date hereof (or, if
such 10th day after the date hereof is not a Tuesday, Wednesday or Thursday, the
first Tuesday after such 10th day) is herein called the "Expiration Date." All
proceedings to be taken and all documents to be
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executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
2.3 DELIVERIES.
(a) DELIVERIES BY THE SELLER. At the Closing, the Seller
shall deliver or cause to be delivered to each of the Purchasers the following:
1. (i) One or more certificates evidencing the aggregate
number of shares of the Preferred Stock, duly
authorized, issued, fully paid and non-assessable, as
is indicated on Schedule 1 for such Purchaser,
registered in the name of such Purchaser, in such
denominations as is indicated on Schedule 1 for such
Purchaser;
(ii) One or more Warrants in the form of Exhibit B
hereto, registered in the name of such Purchaser, in
such denominations as is indicated on Schedule 1 for
such Purchaser, pursuant to which such Purchaser
shall be entitled to purchase an aggregate of that
number of shares of Common Stock as is indicated on
Schedule 1 for such Purchaser.
2. The Registration Rights Agreement, in the form
attached hereto as Exhibit C (the "Registration
Rights Agreement"), duly executed by the Seller.
3. The legal opinion of Latham & Watkins LLP ("Seller's
Counsel"), counsel to the Seller, in form and
substance reasonably satisfactory to the Purchasers.
4. A certificate of the Secretary of the Seller (the
"Secretary's Certificate"), in form and substance
satisfactory to the Purchasers, certifying as
follows:
(i) that the Certificate of Designation
authorizing the Preferred Stock has been
duly filed in the office of the Secretary of
State of the State of Delaware, and that
attached to the Secretary's Certificate is
true and complete copy of the Certificate of
Incorporation of the Seller together with
all amendments thereto and the Certificate
of Designation;
(ii) that a true copy of the Bylaws of the
Seller, as amended to the Closing Date, is
attached to the Secretary's Certificate;
(iii) that attached to the Secretary's Certificate
are true and complete copies of the
resolutions of the Board of Directors of the
Seller authorizing the execution, delivery
and performance of this Agreement and the
Related Documents (as defined below),
instruments and certificates required to be
executed by it in connection herewith and
therewith and approving the consummation of
the transactions in the manner contemplated
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hereby including, but not limited to, the
authorization and issuance of the Preferred
Stock,
(iv) the names and true signatures of the
officers of the Seller signing this
Agreement and all other documents to be
delivered in connection with this Agreement,
(v) that (A) set forth in or attached to the
Secretary's Certificate is a true and
complete list of all directors and officers
of Seller as of the date thereof, and that
attached to such certificate is an original
or true and complete copy of the Management
Lock-up Agreement in the form of Exhibit D
attached hereto (the "Management Lock-up
Agreement") executed by each of such
officers and directors, and (B) the staff of
the Nasdaq Stock Market has verbally
confirmed to the Seller that (y) it has
reviewed this Agreement, the form of
Certificate of Designation, form of Series
D-1 Warrant, form of Series D-2 Warrant,
form of Placement Agent Warrant and form of
Registration Rights Agreement and (z) on the
basis of such review, approval by the
stockholders of the Seller of the issuance
of the Preferred Stock, the Warrants, the
Conversion Shares, the Dividend Shares and
the Warrant Shares is not required, and the
Seller has not received from such staff any
oral or written information or advice
contrary to such verbal confirmation.
5. A wire transfer representing the Purchasers'
reasonable legal fees and expenses as described in
Section 9.2 hereof; such fee may, at the election of
the Seller, be paid out of the funds due from the
Purchasers at the Closing.
6. Proof of due filing with the Secretary of State of
the State of Delaware of the Certificate of
Designation authorizing the Preferred Stock.
7. The Management Lock-up Agreements executed by all the
directors and officers of the Company.
(b) DELIVERIES BY THE PURCHASERS. At the Closing, each of
the Purchasers shall deliver or cause to be delivered to the Seller the
following:
1. Payment of the purchase price set forth opposite such
Purchaser's name on Schedule 1, in cash by wire
transfer of immediately available funds to an account
designated in writing by Seller.
2. The Registration Rights Agreement duly executed by
such Purchaser.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER
For purposes of this Article III, all references to the Seller and its
Subsidiaries shall be deemed to include all their respective predecessor
entities, if any. The Seller represents,
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warrants and covenants to the Purchasers, except as set forth on the Schedule of
Representations and Warranties attached hereto as Schedule 3 specifically
identifying the applicable section of this Article III, it being understood that
information disclosed under a particular section of Schedule 3 shall be deemed
disclosed only for purposes of such section and not for purposes of or with
respect to any other section of this Article III, as of the date hereof, as
follows:
3.1 CORPORATE EXISTENCE AND POWER; SUBSIDIARIES. The Seller and
its Subsidiaries are corporations duly incorporated, validly existing and in
good standing under the laws of the state in which they are incorporated, and
have all corporate powers required to carry on their business as now conducted.
The Seller and its Subsidiaries are duly qualified to do business as a foreign
corporation and are in good standing in each jurisdiction where the character of
the property owned or leased by them or the nature of their activities makes
such qualification necessary, except for those jurisdictions where the failure
to be so qualified would not have a Material Adverse Effect on the Seller or any
of its Subsidiaries. For purposes of this Agreement, the term "Material Adverse
Effect" means, with respect to any person or entity, a material adverse effect
on its or its Subsidiaries' condition (financial or otherwise), business,
properties, assets, liabilities (including contingent liabilities), and results
of operations. True and complete copies of the Seller's Certificate of
Incorporation, as amended, and Bylaws, as amended (collectively, the "Charter"
and Bylaws") have previously been provided to the Purchasers. For purposes of
this Agreement, the term "Subsidiary" or "Subsidiaries" means, with respect to
any entity, any corporation or other organization of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are directly or
indirectly owned by such entity or of which such entity is a partner or is,
directly or indirectly, the beneficial owner of 50% or more of any class of
equity securities or equivalent profit participation interests. The Seller has
no Subsidiaries other than as set forth in Exhibit 21 to the Seller's annual
report on Form 10-K for the fiscal year ended December 31, 2002.
3.2 CORPORATE AUTHORIZATION; RIGHTS PLAN. (a) The execution,
delivery and performance by the Seller of this Agreement, the Warrants, the
Registration Rights Agreement, the Certificate of Designation and each of the
other documents executed pursuant to and in connection with this Agreement (the
"Related Documents"), and the consummation of the transactions contemplated
hereby and thereby (including, but not limited to, the sale and delivery of the
Preferred Stock and the Warrants, and the subsequent issuance of the Conversion
Shares upon conversion of the Preferred Stock, and the subsequent issuance of
the Warrant Shares upon exercise of the Warrants, and the subsequent issuance,
if the Seller so elects, of shares of Common Stock in payment of the dividends
on the Preferred Stock, which shares of Common Stock are herein referred to as
"Dividend Shares") have been duly authorized, and no additional corporate action
is required for the approval of this Agreement or the Related Documents. The
Conversion Shares, the Dividend Shares and the Warrant Shares have been duly
reserved for issuance by the Seller. This Agreement and the Related Documents
have been or, to the extent contemplated hereby or by the Related Documents,
will be duly executed and delivered and constitute the legal, valid and binding
agreement of the Seller, enforceable against the Seller in accordance with their
terms, except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the
enforcement of
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rights of creditors, and except as enforceability of its obligations hereunder
are subject to general principles of equity.
(b) The Preferred Stock that will be issued to the
Purchasers at Closing will have been duly and validly reserved for issuance and,
when issued and delivered in accordance with the terms hereof, will be duly
authorized, validly issued, fully paid and non-assessable and free of
restrictions on transfer other than applicable state and federal securities
laws. The Common Stock issuable upon conversion of the Preferred Stock and
exercise of the Warrants has been duly and validly reserved for issuance, and
upon issuance in accordance with the terms of the Certificate of Designation or
the Warrants, will be duly authorized, validly issued, fully paid and
non-assessable and free of restrictions on transfer other than applicable
federal and state securities laws and, assuming the accuracy of the
representations and warranties of the Purchasers, will be issued in compliance
with all applicable federal and state securities laws.
(c) The issuance of the Preferred Stock, the Warrants, or
the Common Stock upon conversion or exercise of the Preferred Stock or Warrants,
as applicable, will not result in or obligate the Seller to (i) issue or offer
to issue, with or without consideration, any securities or rights to acquire any
securities to any person, whether as a pre-emptive right, or pursuant to any to
rights plan, or pursuant to any agreement, undertaking or other obligation of
any nature, or (ii) adjust the number or kind of securities held by or issuable
(with or without the payment of any consideration) to any person.
3.3 CORPORATE RECORDS. The minute books of the Seller and its
Subsidiaries contain complete and accurate records of all meetings and other
corporate actions of the board of directors, committees of the board of
directors, incorporators and shareholders of the Seller and its Subsidiaries
from the date of their incorporation to the date hereof. All material corporate
decisions and actions have been validly made or taken. The Seller's share
transfer register complies with applicable laws and regulations and has been
regularly updated through the date hereof. Such books fully and correctly
reflect all the decisions of the shareholders. The Seller maintains complete and
correct books and records of the Seller and its Subsidiaries which fairly
present, in all material respects, the financial position and the results of
operations and cash flows of the Seller and its Subsidiaries as of the dates and
for the periods indicated therein, subject to customary and usual audit
adjustments consistently applied.
3.4 GOVERNMENTAL AUTHORIZATION; NASD AND NASDAQ. (a) Except as
otherwise specifically contemplated in this Agreement and the Related Documents,
and except for: (i) the filing of the Registration Statement with the
Commission; (ii) any filings required under SEC Regulation D or any state
securities laws that are permitted to be made after the date hereof, including
but not limited to filings pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, and
(iii) the filing of the Certificate of Designation in the office of the
Secretary of State of the State of Delaware, the execution, delivery and
performance by the Seller of this Agreement and the Related Documents, and the
consummation of the transactions contemplated hereby and thereby (including, but
not limited to, the sale and delivery of the Preferred Stock and Warrants and
the subsequent issuance of the Conversion Shares and Warrant Shares upon
conversion of the Preferred Stock or exercise of the Warrants, and the issuance
of the Dividend Shares if and when issued, as applicable) by
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the Seller require no action by or in respect of, or filing with, any
governmental body, agency, official or authority.
(b) The Seller will provide a Listing Notice, which shall
include true copies of this Agreement, the form of Certificate of Designation,
form of Series D-1 Warrant, form of Series D-2 Warrant, form of Placement Agent
Warrant and form of Registration Rights Agreement, to the Nasdaq SmallCap Market
with respect to the Conversion Shares, the Dividend Shares and the Warrant
Shares.
3.5 NON-CONTRAVENTION. The execution, delivery and performance by
the Seller and its Subsidiaries, as applicable, of this Agreement and the
Related Documents, and the consummation by the Seller of the transactions
contemplated hereby and thereby (including, but not limited to, the issuance of
the Conversion Shares, Dividend Shares and Warrant Shares) do not and will not
(a) violate or conflict with the Charter and Bylaws of the Seller and its
Subsidiaries or any material agreement (which, for purposes of this Agreement,
means any agreement, contract or other document which the Seller would be
required to disclose pursuant to SEC Regulation S-K, Item 601, Exhibits 1, 2, 3,
4, 9 or 10) to which the Seller or any of its Subsidiaries is a party or bound;
(b) violate or conflict with or constitute a material violation of any provision
of any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Seller or any of its Subsidiaries; (c) constitute a default
under or give rise to a right of termination, cancellation or acceleration or
loss of any benefit under any material agreement, contract or other instrument
binding upon the Seller or any of its Subsidiaries or under any material
license, franchise, permit or other similar authorization held by the Seller or
any of its Subsidiaries; or (d) result in the creation or imposition of any Lien
(as defined below) on any material asset of the Seller or any of its
Subsidiaries. For purposes of this Agreement, the term "Lien" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest,
claim or encumbrance of any kind in respect of such asset.
3.6 SEC DOCUMENTS. The Seller is obligated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") to file reports pursuant
to Sections 13 and 15(d) thereof (all such reports filed or required to be filed
by the Seller, including all exhibits thereto or incorporated therein by
reference, and all documents filed by the Seller under the Securities Act are
hereinafter called the "SEC Documents"). The Seller has filed all reports or
other documents required to be filed under the Exchange Act. All SEC Documents
filed by the Seller (i) were prepared in all material respects in accordance
with the requirements of the Exchange Act and the Securities Act and (ii) did
not at the time they were filed (or, if amended or superseded by a filing prior
to the date hereof, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Seller has
previously delivered to the Purchaser a correct and complete copy of each report
which the Seller filed with the Securities and Exchange Commission (the "SEC" or
the "Commission") under the Exchange Act for any period ending on or after
December 31, 2001 (the "Recent Reports," which term includes all exhibits
thereto and all exhibits and other information incorporated by reference into
the Recent Reports) other than those Recent Reports, if any, which have been
filed via the SEC's EDGAR filing system; Schedule 3.6 identifies all Recent
Reports which have not been filed via the SEC's EDGAR filing system. All of the
information about the Seller or its Subsidiaries which has been disclosed to the
Purchasers herein
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or in the course of discussions and negotiations with respect hereto which is
material to the Seller has been disclosed in the Recent Reports.
3.7 FINANCIAL STATEMENTS. Each of the Seller's consolidated
balance sheet and related consolidated statements of income, cash flows and
changes in stockholders' equity (including the related notes), as contained in
the Recent Reports (collectively, the "Seller's Financial Statements" or the
"Financial Statements") (x) present fairly in all material respects the
financial position of the Seller and its consolidated Subsidiaries as of the
dates thereof and the results of operations, cash flows and stockholders' equity
as of and for each of the periods then ended, except that any unaudited
financial statements are subject to normal year-end adjustments, and (y) were
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved, in each case,
except as otherwise indicated in the notes thereto.
3.8 COMPLIANCE WITH LAW. The Seller and its Subsidiaries are in
compliance and have conducted their business so as to comply in all respects
with all laws, rules and regulations, judgments, decrees or orders of any court,
administrative agency, commission, self regulatory organization, regulatory
authority or other governmental authority or instrumentality, domestic or
foreign, applicable to its operations except as in each case could not in the
aggregate have or result in a Material Adverse Effect. There are no judgments or
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration), including any such actions
relating to affirmative action claims or claims of discrimination, against the
Seller or its Subsidiaries or against any of their properties or businesses.
3.9 NO DEFAULTS. The Seller and its Subsidiaries are not, nor will
they be with the passage of time, giving of notice, or both, (i) in violation of
any provision of their Charter and Bylaws (ii) in default or violation of any
term, condition or provision of (A) any judgment, decree, order, injunction or
stipulation applicable to the Seller or its Subsidiaries or (B) any material
agreement, note, mortgage, indenture, contract, lease or instrument, permit,
concession, franchise or license to which the Seller or its Subsidiaries are a
party or by which the Seller or its Subsidiaries or their properties or assets
may be bound, and no circumstances exist which would entitle any party to any
material agreement, note, mortgage, indenture, contract, lease or instrument to
which such Seller or its Subsidiaries are a party, to terminate such as a result
of such Seller or its Subsidiaries, having failed to meet any provision thereof
including, but not limited to, meeting any applicable milestone under any
material agreement or contract.
3.10 LITIGATION. Except as disclosed in Item 3 of the Seller's
Annual Report on Form 10-K for the year ended December 31, 2002, there is no
action, suit, proceeding, judgment, claim or investigation pending or, to the
best knowledge of the Seller, threatened against the Seller and any of its
Subsidiaries which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Seller or its Subsidiaries.
There is no action, suit, proceeding, judgment, claim or investigation pending
or, to the best knowledge of the Seller, threatened, which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated hereby, and, to the Seller's knowledge, there is no
basis for the assertion of any of the foregoing. There are no claims or
complaints existing or, to the knowledge of the Seller or its Subsidiaries,
threatened for product liability in respect of any
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product of the Seller or its Subsidiaries, and the Seller and its Subsidiaries
are not aware of any basis for the assertion of any such claim.
3.11 ABSENCE OF CERTAIN CHANGES. Since December 31, 2002, the
Seller has conducted its business only in the ordinary course and there has not
occurred, except as set forth in the Recent Reports:
(a) Any event that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Seller or any of its Subsidiaries;
(b) Any amendments or changes in the Charter or Bylaws of
the Seller and its Subsidiaries, other than on account of the filing of the
Certificate of Designation;
(c) Any damage, destruction or loss, whether or not
covered by insurance, that would, individually or in the aggregate, have a
Material Adverse Effect on the Seller and its Subsidiaries;
(d) Any
(i) incurrence, assumption or guarantee by the
Seller or its Subsidiaries of any debt for
borrowed money (other than for equipment
leases or working capital lines of credit);
(ii) issuance or sale of any securities
convertible into or exchangeable for
securities of the Seller other than to
directors, employees and consultants
pursuant to existing equity compensation or
stock purchase plans of the Seller in
accordance with past business practices;
(iii) issuance or sale of options or other rights
to acquire from the Seller or its
Subsidiaries, directly or indirectly,
securities of the Seller or any securities
convertible into or exchangeable for any
such securities, other than options issued
to directors, employees and consultants in
the ordinary course of business pursuant to
existing equity compensation or stock
purchase plans of the Seller in accordance
with past practices;
(iv) issuance or sale of any stock, bond or other
corporate security;
(v) declaration or making any dividend, payment
or other distribution to shareholders or
purchase or redemption of any share of its
capital stock or other security;
(vi) sale, assignment or transfer any of its
intangible assets except in the ordinary
course of business, or cancellation of any
debt or claim except in the ordinary course
of business all in accordance with past
practices;
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(vii) waiver of any right of substantial value
whether or not in the ordinary course of
business;
(viii) material change in officer compensation; or
(ix) other commitment (contingent or otherwise)
to do any of the foregoing.
(e) Any creation, sufferance or assumption by the Seller
or any of its Subsidiaries of any Lien on any asset or any making of any loan,
advance or capital contribution to or investment in any Person in an aggregate
amount which exceeds $25,000 outstanding at any time;
(f) Any entry into, amendment of, relinquishment,
termination or non-renewal by the Seller or its Subsidiaries of any material
contract, license, lease, transaction, commitment or other right or obligation,
other than in the ordinary course of business; or
(g) Any transfer or grant of a right with respect to the
patents, patent applications, patent licenses, trademarks, trade names, service
marks, trade secrets, copyrights or other intellectual property rights owned or
licensed by the Seller or its Subsidiaries, except as among the Seller and its
Subsidiaries.
3.12 NO UNDISCLOSED LIABILITIES. The Seller and its Subsidiaries do
not have any direct or indirect indebtedness, liabilities, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise, whether or not of a kind required by GAAP to
be set forth in financial statements, including but not limited to off-balance
sheet financings, guarantees and similar transactions ("Liabilities") which are
not fully and adequately reflected in the Financial Statements. To the knowledge
of the Seller, there are no existing circumstances, conditions, events or
arrangements which may hereafter give rise to any Liabilities of the Seller or
its Subsidiaries except in the ordinary course of business.
3.13 TAXES. All tax returns and tax reports required to be filed
with respect to the income, operations, business or assets of the Seller and its
Subsidiaries have been timely filed (or appropriate extensions have been
obtained) with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, and all of the
foregoing as filed are correct and complete and, in all material respects,
reflect accurately all liability for taxes of the Seller and its Subsidiaries
for the periods to which such returns relate, and all amounts shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value added,
occupancy, property, excise, payroll, withholding, FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by the Seller
and its Subsidiaries or relating to or chargeable against any of its material
assets, revenues or income or relating to any employee, independent contractor,
creditor, stockholder or other third party through the Closing Date, were fully
collected and paid by such date if due by such date or provided for by adequate
reserves in the Financial Statements as of and for the periods ended December
31, 2002 (other than taxes accruing after such date) and all similar items due
through the Closing Date will have been fully paid by that date or provided for
by adequate reserves, whether or not any such taxes
10
were reported or reflected in any tax returns or filings. No taxation authority
has sought to audit the records of the Seller or any of its Subsidiaries for the
purpose of verifying or disputing any tax returns, reports or related
information and disclosures provided to such taxation authority, or for the
Seller's or any of its Subsidiaries' alleged failure to provide any such tax
returns, reports or related information and disclosure. To the knowledge of
Seller and its Subsidiaries, no material claims or deficiencies have been
asserted against or inquiries raised with the Seller or any of its Subsidiaries
with respect to any taxes or other governmental charges or levies which have not
been paid or otherwise satisfied, including claims that, or inquiries whether,
the Seller or any of its Subsidiaries has not filed a tax return that it was
required to file, and there exists no reasonable basis for the making of any
such claims or inquiries. Neither the Seller nor any of its Subsidiaries has
waived any restrictions on assessment or collection of taxes or consented to the
extension of any statute of limitations relating to taxation. Neither the Seller
nor any of its Subsidiaries is a party to any tax sharing or indemnification
agreement, and none of them is liable for the taxes of any other Person (other
than Subsidiaries) whether as a transferee, successor, by contract or otherwise.
3.14 INTERESTS OF OFFICERS, DIRECTORS AND OTHER AFFILIATES. The
description of any material interest held, directly or indirectly, by any
officer, director or other Affiliate of Seller in any property, real or
personal, tangible or intangible, used in or pertaining to Seller's business,
including any interest in the Seller's Intellectual Property (as defined in
Section 3.15 hereof), as set forth in the Recent Reports, is true and complete,
and no officer, director or, to the Seller's knowledge, other Affiliate of the
Seller has any interest in any property, real or personal, tangible or
intangible, used in or pertaining to the Seller's business, including the
Seller's Intellectual Property, other than as set forth in the Recent Reports.
3.15 INTELLECTUAL PROPERTY. Other than as set forth in the Recent
Reports: (a) the Seller or a Subsidiary thereof has the right to use or is the
sole and exclusive owner of all right, title and interest in and to all foreign
and domestic patents, patent rights, patent applications, trademarks, service
marks, trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, used or
controlled by the Seller and its Subsidiaries (collectively, the "Rights") and
in and to each material invention, software, trade secret, technology, product,
composition, formula, method of process used by the Seller and any intangible
property and assets that are material to the business of the Seller or its
Subsidiaries (the Rights and such other items, the "Intellectual Property"), and
has the right to use the same, free and clear of any claim or conflict with the
rights of others; (b) no royalties or fees (license or otherwise) are payable by
the Seller or its Subsidiaries to any Person by reason of the ownership or use
of any of the Intellectual Property except as set forth on Schedule 3.15; (c) to
the Seller's knowledge, there have been no claims made against the Seller or any
Subsidiary asserting the invalidity, abuse, misuse, or unenforceability of any
of the Intellectual Property, and, to each of their knowledge, there are no
reasonable grounds for any such claims; (d) neither the Seller nor any
subsidiary has made any claim of any violation or infringement by others of its
rights in the Intellectual Property, and to the best of their knowledge, no
reasonable grounds for such claims exist; and (e) neither the Seller nor any
Subsidiary has received any notice that it is in conflict with or infringing
upon the asserted rights of others in connection with the Intellectual Property,
and to the best of their knowledge, no reasonable grounds for such claims exist.
Each of the Seller and its Subsidiaries has taken security measures designed to
enable it to assert trade secret protection in its non-patented technology.
11
3.16 RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as set forth
in the Recent Reports, there is no agreement, judgment, injunction, order or
decree binding upon the Seller or its Subsidiaries which has or could reasonably
be expected to have the effect of prohibiting or materially impairing any
business practice of the Seller or its Subsidiaries, any acquisition of property
by the Seller or its Subsidiaries or the conduct of business by the Seller or
its Subsidiaries as currently conducted or as currently proposed to be conducted
by the Seller.
3.17 PREEMPTIVE RIGHTS. No Person possesses any preemptive rights,
registration rights or anti-dilution rights, in respect of the Preferred Stock
or the Conversion Shares or Warrant Shares to be issued to the Purchasers upon
conversion of the Preferred Stock or exercise of the Warrants, or the Dividend
Shares, if any, issuable (at the Seller's election) in payment of dividends on
the Preferred Stock, as applicable.
3.18 INSURANCE. The insurance policies providing insurance coverage
to the Seller or its Subsidiaries, including for product liability, provide
adequate and customary coverage for the business conducted by the Seller and its
Subsidiaries and are sufficient for compliance by the Seller and its
Subsidiaries with all requirements of law and all material agreements to which
the Seller or its Subsidiaries are a party or by which any of their assets are
bound. All of such policies are with financially sound and reputable insurers
having an "A" rating or better from Best's Rating Service (or any successor
thereto), are in full force and effect and are valid and enforceable in
accordance with their terms, and the Seller and its Subsidiaries have complied
with all material terms and conditions of such policies, including premium
payments. None of the insurance carriers has indicated to the Seller or its
Subsidiaries an intention to cancel any such policy.
3.19 SUBSIDIARIES AND INVESTMENTS. Except as set forth in the
Recent Reports or on Schedule 3.19, the Seller has no Subsidiaries or
Investments. For purposes of this Agreement, the term "Investments" shall mean,
with respect to any Person, all advances, loans or extensions of credit to any
other Person, all purchases or commitments to purchase any stock, bonds, notes,
debentures or other securities of any other Person, and any other investment in
any other Person, including partnerships or joint ventures (whether by capital
contribution or otherwise) or other similar arrangement (whether written or
oral) with any Person, including but not limited to arrangements in which (i)
the Person shares profits and losses, (ii) any such other Person has the right
to obligate or bind the Person to any third party, or (iii) the Person may be
wholly or partially liable for the debts or obligations of such partnership,
joint venture or other arrangement.
3.20 CAPITALIZATION. The authorized capital stock of the Seller
consists of 50,000,000 shares of common stock, $0.001 par value per share, of
which 3,109,701 shares are issued and outstanding as of the date hereof, and
5,000,000 shares of preferred stock, issuable in one or more classes or series,
with such relative rights and preferences as the Board of Directors may
determine, none of which has been authorized for issuance or designated and
provided with terms, other than as follows:
400 shares have been designated 5% Series A Preferred Stock,
of which no shares are outstanding and as to which
there is no obligation (including any contingent
obligation) to issue any such shares;
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200,000 shares have been designated Series B Junior
participating Preferred Stock, of which no shares are
outstanding and as to which there is no obligation
(including any contingent obligation) to issue any
such shares, other than pursuant to the Rights
Agreement by and between the Seller and U.S. Stock
Transfer Corporation (the "Rights Plan");
200 shares have been designated 7% Series C Preferred Stock,
of which no shares are outstanding and as to which
there is no obligation (including any contingent
obligation) to issue any such shares;
A number of shares equal to the number set forth on Schedule 1
hereto will be, immediately prior to the Closing of
this Agreement, designated as the Series D 8%
Cumulative Convertible Voting Preferred Stock, of
which no shares are issued and outstanding
immediately prior to the execution of this Agreement.
All shares of the Seller's issued and outstanding capital stock have been duly
authorized, are validly issued and outstanding, and are fully paid and
nonassessable. No securities issued by the Seller from January 1, 2000, to the
date hereof were issued in violation of any statutory, contractual or common law
preemptive rights. There are no dividends which have accrued or been declared
but are unpaid on the capital stock of the Seller. All taxes required to be paid
by Seller in connection with the issuance and any transfers of the Seller's
capital stock have been paid. All permits or authorizations required to be
obtained from or registrations required to be effected with any Person in
connection with any and all issuances of securities of the Seller from January
1, 2000, to the date hereof have been obtained or effected, and all securities
of the Seller issued on or after January 1, 2000, have been issued in accordance
with the provisions of all applicable securities or other laws.
3.21 OPTIONS, WARRANTS, RIGHTS. Except as set forth on Schedule
3.21, there are no outstanding (a) securities, notes or instruments convertible
into or exercisable for any of the capital stock or other equity interests of
the Seller or its Subsidiaries; (b) options, warrants, subscriptions or other
rights to acquire capital stock or other equity interests of the Seller or its
Subsidiaries; or (c) commitments, agreements or understandings of any kind,
including employee benefit arrangements, relating to the issuance or repurchase
by the Seller or its Subsidiaries of any capital stock or other equity interests
of the Seller or its Subsidiaries, any such securities or instruments
convertible into or exercisable for securities or any such options, warrants or
rights. Other than the rights of the Purchasers under the Preferred Stock and
the Warrants, and except as set forth on Schedule 3.21, neither the Seller nor
any Subsidiary has granted anti-dilution rights to any person or entity in
connection with any option, warrant, subscription or any other instrument
convertible into or exercisable for the securities of the Seller or any of its
Subsidiaries. Other than the rights granted to the Purchasers under the
Registration Rights Agreement, there are no outstanding rights which permit the
holder thereof to cause the Seller or the Subsidiaries to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of the Seller or any of its Subsidiaries in a registration statement
filed by the Seller or any of its Subsidiaries under the Securities Act, and
there are no outstanding agreements or other commitments which otherwise relate
to the registration of any
13
securities of the Seller or any of its Subsidiaries for sale or distribution in
any jurisdiction, except as set forth on Schedule 3.21.
3.22 EMPLOYEES, EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in the Recent Reports or on Schedule 3.22, there are no
employment, consulting, severance or indemnification arrangements, agreements,
or understandings between the Seller or its Subsidiaries and any officer,
director, consultant or employee of the Seller or its Subsidiaries (the
"Employment Agreements"). No Employment Agreement provides for the acceleration
or change in the award, grant, vesting or determination of options, warrants,
rights, severance payments, or other contingent obligations of any nature
whatsoever of the Seller or its Subsidiaries in favor of any such parties in
connection with the transactions contemplated by this Agreement. Except as
disclosed in the Recent Reports or on Schedule 3.22, the terms of employment or
engagement of all directors, officers, employees, agents, consultants and
professional advisors of the Seller and its Subsidiaries are such that their
employment or engagement may be terminated upon not more than two weeks' notice
given at any time without liability for payment of compensation or damages and
the Seller and its Subsidiaries have not entered into any agreement or
arrangement for the management of their business or any part thereof other than
with their directors or employees.
(b) Except as set forth on Schedule 3.22, the Seller and
its Subsidiaries have no pension, retirement, stock purchase, stock bonus, stock
ownership, stock option, profit sharing, savings, medical, disability,
hospitalization, insurance, deferred compensation, bonus, incentive, welfare or
any other employee benefit plan, policy, agreement, commitment, arrangement or
practice currently or previously maintained or contributed to by the Seller or
its Subsidiaries for any of its directors, officers, consultants, employees or
former employees (the "Seller Plans"). The Seller has previously made available
to Purchaser, to the extent applicable, (i) a true and complete copy of all of
the Seller Plans (or, if oral, a true and complete written summary thereof);
(ii) a current summary plan description (plus summaries of any subsequent
modifications thereto) for each Seller Plan; (iii) the latest IRS determination
letter obtained with respect to any Seller Plan qualified under Section 401 or
501 of the Code; and (iv) Forms 5500 for the last three (3) plan years for each
Seller Plan required to file such form. Except as set forth on Schedule 3.22,
none of the Seller Plans is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and, except as set forth on Schedule 3.22,
neither the Seller nor any of its Subsidiaries has established, maintained, made
or been required to make any contributions to, or terminated, and has no
liability with respect to, any "employee benefit plan" within the meaning of
ERISA. The Seller and its Subsidiaries have not incurred any liability to the
Pension Benefit Guaranty Corporation (the "PBGC"), and, to the Seller's
knowledge, no facts or circumstances exist which might give rise to any
liability of the Seller or its Subsidiaries to the PBGC or which could
reasonably be anticipated to result in any claims being made against the
Purchaser, the Seller or their Subsidiaries by the PBGC. To the Seller's
knowledge, no facts or circumstances exist which might give rise to any
liability of any Seller Plan to any other Person, other than in the ordinary
course of the Seller's business. The Seller and its Subsidiaries have paid all
amounts required under applicable law and any Seller Plan to be paid as a
contribution to any Seller Plan through the date hereof. The Seller has set
aside adequate reserves to meet contributions which are not yet due under any
Seller Plan. Neither the Seller, nor its Subsidiaries nor, to the Seller's
knowledge, any other Person has engaged in any transaction with respect to any
Seller Plan which would subject the Seller to any tax, penalty or
14
liability for prohibited transactions. No director, officer or employee of the
Seller or its Subsidiaries, to the extent he or she is a fiduciary with respect
to any Seller Plan, has breached any of his/her responsibilities or obligations
imposed upon fiduciaries or which could result in any claim being made under, by
or on behalf of any Seller Plan. No Seller Plan provides post-employment
medical, health, or life insurance benefits for present or future retirees or
present or future terminated employees, except for continuation coverage
provided pursuant to the requirements of Section 4980B of the Code or Sections
601-608 of ERISA or a similar state law.
(c) No material labor dispute with employees of the
Seller exists or, to the best knowledge of the Seller is imminent.
3.23 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Seller, nor
any Affiliate of the Seller (including, but not limited to, its Subsidiaries),
nor any agent or employee of the Seller, any other Person acting on behalf of or
associated with the Seller, or any individual related to any of the foregoing
Persons, acting on behalf of the Seller alone or together, has: (a) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, supplier, trading company, shipping company, governmental
employee or other Person with whom the Seller or its Subsidiaries has done
business directly or indirectly; or (b) directly or indirectly, given or agreed
to give any gift or similar benefit to any customer, supplier, trading company,
shipping company, governmental employee or other Person who is or may be in a
position to help or hinder the business of the Seller or its Subsidiaries (or
assist the Seller or its Subsidiaries in connection with any actual or proposed
transaction) which (i) may subject the Seller or its Subsidiaries to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, may have had an adverse effect on the Seller or its
Subsidiaries or (iii) if not continued in the future, may adversely affect the
assets, business, operations or prospects of the Seller or its Subsidiaries or
subject the Seller or its Subsidiaries to suit or penalty in any private or
governmental litigation or proceeding.
3.24 PRODUCTS AND SERVICES. There exists no set of facts (i) which
could furnish a basis for the withdrawal, suspension or cancellation of any
registration, license, permit or other governmental approval or consent of any
governmental or regulatory agency issued to the Seller with respect to any
component of any product being developed by, or that is material to and used by,
the Seller or its Subsidiaries, or (ii) which could have a Material Adverse
Effect on the continued development of any product candidate of the Seller or
its Subsidiaries or which could otherwise cause the Seller or its Subsidiaries
to withdraw, suspend or cancel development of any such product, it being
understood that the Seller is not presently offering any product or service for
sale and has never in the past offered any product or service for sale, and that
the Seller's product candidates will require, before they can be offered for
commercial sale, certain governmental or regulatory licenses, permits or
approvals which have not been issued.
3.25 ENVIRONMENTAL MATTERS. None of the premises or any other
property owned, occupied or leased by the Seller or its Subsidiaries (the
"Premises") in the past has been used by the Seller or its Subsidiaries, or to
the Seller's knowledge, by any other Person, to manufacture, treat, utilize,
store, or dispose of any waste, pollutant or toxic or hazardous substance
(including, without limitation, asbestos, radioactive material and pesticides)
or any other substance that has been designated to be a "hazardous substance"
under Environmental Laws ("Hazardous
15
Substances") other than substances customarily used in the Seller's or its
Subsidiaries' businesses and in accordance with applications laws and
regulations. The Seller and its Subsidiaries have not disposed of, discharged,
emitted or released any Hazardous Substances which would require, under
applicable Environmental Laws, remediation, investigation or similar response
activity. No Hazardous Substances are present as a result of the actions of the
Seller or its Subsidiaries or, to the Seller's or its Subsidiaries' knowledge,
any other Person, in, on or under the Premises which would give rise to any
liability or clean-up obligations of the Seller or its Subsidiaries under
applicable Environmental Laws. The Seller and its Subsidiaries and, to the
Seller's and its Subsidiaries' knowledge, any other Person for whose conduct it
may be responsible, are in material compliance with all laws, regulations and
other federal, state or local governmental requirements, and all applicable
judgments, orders, writs, notices, decrees, permits, licenses, approvals,
consents or injunctions in effect on the applicable Closing Date relating to the
generation, management, handling, transportation, treatment, disposal, storage,
delivery, discharge, release or emission of any waste, pollutant or toxic or
hazardous substance (including, without limitation, asbestos, radioactive
material and pesticides) or to any other actions, omissions or conditions
affecting the environment (the "Environmental Laws"). Neither the Seller nor its
Subsidiaries nor, to the Seller's or its Subsidiaries' knowledge, any other
Person for whose conduct it may be responsible has received any complaint,
notice, order, or citation of any actual, threatened or alleged noncompliance
with any of the Environmental Laws, and there is no proceeding, suit or
investigation pending or, to the Seller's or its Subsidiaries knowledge,
threatened against the Seller or its Subsidiaries or any such Person with
respect to any violation or alleged violation of the Environmental Laws, and
there is no basis for the institution of any such proceeding, suit or
investigation.
3.26 LICENSES; COMPLIANCE WITH FDA AND OTHER REGULATORY
REQUIREMENTS.
(a) GENERAL. The Seller and its Subsidiaries hold all
authorizations, consents, approvals, franchises, licenses and permits required
under applicable law or regulation for the operation of the business of the
Seller and its Subsidiaries as presently operated (the "Governmental
Authorizations"). All the Governmental Authorizations have been duly issued or
obtained and are in full force and effect, and the Seller and its Subsidiaries
are in compliance with the terms of all the Governmental Authorizations. The
Seller and its Subsidiaries have not engaged in any activity that could cause
revocation or suspension of any such Governmental Authorizations. The Seller and
its Subsidiaries have no knowledge of any facts which could reasonably be
expected to cause them to believe that the Governmental Authorizations will not
be renewed by the appropriate governmental authorities in the ordinary course.
Neither the execution, delivery nor performance of this Agreement will adversely
affect the status of any of the Governmental Authorizations.
(b) FDA. Without limiting the generality of the
representations and warranties made in paragraph (a) above, the Seller
represents and warrants that (i) the Seller and each of its Subsidiaries is in
compliance in all material respects with all applicable provisions of the United
States Federal Food, Drug, and Cosmetic Act (the "FDC Act"), (ii) the Seller and
each of its Subsidiaries is in compliance with the following specific
requirements: (A) all of the products used by the Seller and its Subsidiaries
comply in all material respects with any conditions of approval and the terms of
the applications, if any, submitted by or on behalf of the Seller to the United
States Food and Drug Administration (the "FDA"); (B) all adverse events
16
that were required to be reported by Seller or its Subsidiaries to the FDA have
been reported to the FDA in a timely manner; (C) neither the Seller nor any of
its Subsidiaries is, to their knowledge, employing or utilizing the services of
any individual who has been debarred under the FDC Act; (D) all stability
studies required to be performed by or on behalf of the Seller for products used
by the Seller or any of its Subsidiaries have been completed or are ongoing in
accordance with the applicable FDA requirements; and (E) any substances exported
by the Seller or any of its Subsidiaries have been exported in compliance in all
material respects with the FDC Act. Without limiting the general liability of
the representations and warranties made in paragraph (a) above, the Seller and
its Subsidiaries are in compliance in all material respects with all applicable
provisions of the Controlled Substances Act.
3.27 BROKERS. Except as set forth in Schedule 3.27 hereto, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement, based upon any arrangement made by or on behalf of the Seller or any
of its Affiliates.
3.28 SECURITIES LAWS. Neither the Seller nor its Subsidiaries nor
any agent acting on behalf of the Seller or its Subsidiaries has taken or will
take any action which might cause this Agreement or any of the Securities to
violate the Securities Act or the Exchange Act or any rules or regulations
promulgated thereunder, or any applicable state securities laws, as in effect on
the Closing Date. All offers and sales of capital stock, securities and notes of
the Seller were conducted and completed in compliance with the Securities Act,
the rules and regulations promulgated thereunder and applicable state securities
laws. All shares of capital stock and other securities issued by the Seller and
its Subsidiaries prior to the date hereof have been issued in transactions that
were either registered offerings or were exempt from the registration
requirements under the Securities Act and all applicable state securities or
state securities laws and in compliance with all applicable corporate laws.
3.29 DISCLOSURE. No representation or warranty made by the Seller
in this Agreement, nor in any document, written information, financial
statement, certificate, schedule or exhibit prepared and furnished by the Seller
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished.
3.30 CHANGE IN CONTROL. Assuming that there are no contractual
agreements (other than this Agreement) among any two or more of the Purchasers
with respect to the purchase, sale or other disposition, or voting of the equity
securities of the Company, the execution, delivery and performance of this
Agreement and the Related Documents, and the consummation of the transactions
contemplated hereby and thereby (including the conversion of some or all of the
Preferred Stock, the exercise of some or all of the Warrants and the issuance of
the Conversion Shares, Dividend Shares and Warrant Shares) do not and will not
constitute a change in control under or give rise to a right of termination,
cancellation, severance or similar payments, or acceleration or loss of any
benefit under any material agreement, contract or other instrument binding upon
the Seller or any of its Subsidiaries, under any material license, franchise,
permit or other similar authorization held by the Seller or any of its
Subsidiaries or under any agreement or
17
arrangement between the Seller or any of its Subsidiaries and their directors,
officers, employees or consultants.
3.31 APPLICATION OF TAKEOVER PROTECTION. The Seller and its board
of directors have taken all necessary action in order to render inapplicable,
and have rendered inapplicable, any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti- takeover provision under the Charter, the By-laws, the
laws of the state of its incorporation or any rights plan or similar arrangement
which is or could become applicable as a result of the transactions contemplated
by this Agreement, including, without limitation, the Seller's issuance of the
Securities and the Purchasers' ownership of the Preferred Stock, the Warrants,
the Conversion Shares, the Dividend Shares or the Warrant Shares.
3.32 NASDAQ COMPLIANCE. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and is listed on the Nasdaq SmallCap Market
(the "Nasdaq Stock Market"), and the Seller has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market. The issuance of the Securities does not
require stockholder approval, including, without limitation, pursuant to the
Nasdaq Marketplace Rules as in effect on the Closing Date, including without
limitation all Interpretive Materials issued on or before the Closing Date. No
order ceasing or suspending trading in any securities of Seller or prohibiting
the issuance and/or sale of the Preferred Stock, Warrants, Conversion Shares,
Dividend Shares or Warrant Shares is in effect and no proceedings for such
purpose are pending or, to the Seller's knowledge, threatened.
3.33 MATERIAL CONTRACTS. Each of the Seller's and its Subsidiaries
material contracts (which, for purposes of this Agreement, means any agreement,
contract or other document which the Seller would be required to disclose
pursuant to SEC Regulation S-K, Item 601, Exhibits 1, 2, 3, 4, 9 or 10) are
listed as exhibits to the Recent Reports and are in full force and effect on the
date hereof, and none of the Seller, its Subsidiaries nor, to the Seller's or
any Subsidiary's knowledge, any other party to such contracts is in breach of or
default under any of such contracts. The Seller is not required to file and will
not be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into by the Seller or any Subsidiary prior to the date hereof
which has not been previously filed as an exhibit to its Recent Reports.
3.34 TITLE TO AND CONDITION OF PERSONAL PROPERTY; NO LIENS. The
Seller and its Subsidiaries have good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of their
tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any Liens, except as set forth on Schedule 3.34. All
tangible personal property owned by the Seller and its Subsidiaries is in good
operating condition and in a good state of maintenance and repair, and is
adequate for the business conducted and proposed to be conducted by the Seller
and its Subsidiaries. Except for the Leases specifically identified in Schedule
3.34, there are no assets owned by any third party which are material to the
operation of the business of the Seller or its Subsidiaries, as presently
conducted or proposed to be conducted.
18
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, for itself, hereby severally, and not jointly,
represents and warrants to the Seller as follows:
4.1 EXISTENCE AND POWER. The Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of such
Purchaser's organization. The Purchaser has all powers required to carry on such
Purchaser's business as now conducted.
4.2 AUTHORIZATION. The execution, delivery and performance by the
Purchaser of this Agreement, the Related Documents to which such Purchaser is a
party, and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized, and no additional action is required for the
approval of this Agreement. This Agreement and the Related Documents to which
the Purchaser is a party have been or, to the extent contemplated hereby, will
be duly executed and delivered and constitute valid and binding agreements of
the Purchaser, enforceable against such Purchaser in accordance with their
terms, except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the
enforcement of rights of creditors and except that enforceability of their
obligations thereunder are subject to general principles of equity.
4.3 INVESTMENT. The Purchaser is acquiring the Securities for its
own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with the intention of distributing or
reselling the same, provided, however, that by making the representation herein,
the Purchaser does not agree to hold any of the securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act. The Purchaser is aware that none of the Securities has
been registered under the Securities Act or under applicable state securities or
blue sky laws. The Purchaser is an "Accredited Investor" as such term is defined
in Rule 501 of Regulation D, as promulgated under the Securities Act.
4.4 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Purchaser is subject or any provision of
its charter or bylaws or other similar governing instruments.
4.5 NO REGISTRATION. The Purchaser understands that the Preferred
Stock and Warrants are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Seller is relying upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.
4.6 BUSINESS OR FINANCIAL EXPERTISE; QUALIFIED INSTITUTIONAL
BUYER. Purchaser has, by reason of Purchaser's business or financial expertise
or the business or financial experience of its professional advisors who are
unaffiliated with and who are not, to such Purchaser's
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knowledge, compensated by the Seller or any affiliate or selling agent of the
Seller, directly or indirectly, the capacity to protect its own interests in
connection with its acquisition of the Securities. If the Purchaser is
identified on Schedule 1 as being a "qualified institutional buyer," such
Purchaser is a "qualified institutional buyer" as defined in Rule 144A
promulgated under the Securities Act. Purchaser has had the opportunity to ask
questions about the Seller's business affairs and financial condition, and has
acquired sufficient information about the Seller to reach an informed and
knowledgeable decision to acquire the Securities.
4.7 BROKERS' FEES. Purchaser has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated; without limiting the generality of the foregoing, the
Purchaser understands that certain fees payable in the form of cash and warrants
will be paid by the Seller to SCO Group in accordance with agreements between
the Seller and SCO Group.
ARTICLE V - COVENANTS OF THE SELLER AND PURCHASERS
5.1 INSURANCE. The Seller and its Subsidiaries shall maintain
insurance coverage which is adequate and customary coverage for the business in
which the Seller and its Subsidiaries shall then be engaged in. The Seller and
its Subsidiaries shall, from time to time upon the written request of the
Purchasers, promptly furnish or cause to be furnished to the Seller evidence, in
form and substance reasonably satisfactory to the Purchasers, of the maintenance
of all insurance maintained by it for loss or damage by fire and other hazards,
damage or injury to persons and property, including from product liability, and
under workmen's compensation laws.
5.2 REPORTING OBLIGATIONS. So long as at least 60 shares of
Preferred Stock are outstanding, and so long as Warrants are outstanding under
which more than 700,000 shares of Common Stock may be acquired, the Seller shall
furnish to the Purchasers, or any other persons who hold any of the Preferred
Stock or Warrants (provided that such holders give notice to the Seller that
they hold Preferred Stock or Warrants and furnish their addresses) promptly upon
their becoming available one copy of each report, notice or proxy statement sent
by the Seller to its stockholders generally, and of each regular or periodic
report (pursuant to the Exchange Act) and any registration statement, prospectus
or written communication other than transmittal letters (pursuant to the
Securities Act) relating to the Conversion Shares, the Dividend Shares and the
Warrant Shares and filed by the Seller with (i) the Commission or (ii) any
securities exchange on which shares of Common Stock are listed, provided,
however, that the Seller shall not be required to deliver any report filed and
available through the SEC's EDGAR website. To the extent that the Seller is no
longer required to provide information pursuant to the Exchange Act, the Seller
shall provide the Purchasers with (i) within 45 days after the close of each
fiscal quarter in each fiscal year of the Seller an unaudited consolidated
balance sheet of the Seller, a consolidated statement of income of the Seller,
and a consolidated statement of cash flows of the Seller, as at the end of and
for the period commencing at the end of the previous fiscal year and ending with
such month, prepared in accordance with GAAP, subject to normal year-end
adjustments and complete notes thereto; and (ii) within 90 days after the close
of each fiscal year then ended of the Seller a consolidated balance sheet of the
Seller, a consolidated statement of income of the Seller, and a consolidated
statement of cash flows of the Seller, as at the end of
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and for the fiscal year then ended, setting forth the corresponding figures of
the previous fiscal year in comparative form, and certified (without any
qualification or exception reasonably deemed material by the Purchasers, other
than a qualification as to the going-concern status of the Seller or the
unavailability of Arthur Anderson LLP) by the independent certified public
accountants of the Seller.
5.3 INVESTIGATION. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. Without limiting the generality of the
foregoing, the inability or failure of the Purchasers to discover any breach,
default or misrepresentation by the Seller under this Agreement or the Related
Documents (including under any certificate furnished pursuant to this Agreement)
shall not in any way diminish any liability hereunder.
5.4 PUBLIC ANNOUNCEMENTS. Neither the Purchasers nor the Seller
shall (and each such party shall use its reasonable efforts to cause its
Subsidiaries, Affiliates, directors, officers, employees and authorized
representatives not to), issue any press release, make any public announcement
or furnish any written statement to its employees or stockholders generally
concerning the transactions contemplated by this Agreement without the consent
of the other party (which consent shall not be unreasonably withheld), except to
the extent required by applicable law or the applicable requirements of
applicable stock exchange rules (including Nasdaq) or as otherwise contemplated
herein (and in either such case such party shall, to the extent consistent with
timely compliance with such requirement, consult with the other party prior to
making the required release, announcement or statement). Notwithstanding the
foregoing, the Seller shall, promptly after the Closing, issue a press release
disclosing the transactions contemplated hereby.
5.5 USE OF PROCEEDS. The Seller covenants and agrees that the
proceeds of the Purchase Price shall be used by the Seller for working capital
and general corporate purposes.
5.6 CORPORATE EXISTENCE. So long as a Purchaser owns Preferred
Stock, Warrants, Conversion Shares, Dividend Shares or Warrant Shares, the
Seller shall preserve and maintain and cause its Subsidiaries to preserve and
maintain their corporate existence and good standing in the jurisdiction of
their incorporation and the rights, privileges and franchises of the Seller and
its Subsidiary in each case where failure to so preserve or maintain could have
a Material Adverse Effect on the financial condition, business or operations of
the Seller and its Subsidiaries taken as a whole.
5.7 PERFORM COVENANTS. The Seller shall (a) make full and timely
payment of any and all payments on the Preferred Stock, and all other
indebtedness of the Seller to the Purchasers in connection therewith, whether
now existing or hereafter arising, and (b) duly comply with all the terms and
covenants contained herein and in each of the instruments and documents given to
the Purchasers in connection with or pursuant to this Agreement, all at the
times and places and in the manner set forth herein or therein.
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5.8 ADDITIONAL COVENANTS. Subject to the limitations set forth in
the last paragraph of this Section 5.8, the Seller covenants and agrees that so
long as 20% of the Preferred Stock issued at the Closing is outstanding, none of
the following actions will take place without the prior written consent of the
holders of a Special Majority (as defined in Section 9.10 hereof) of the
outstanding Preferred Stock, which consent may be withheld for any or no reason:
(a) Any amendment, alteration or repeal of any provision
of the Charter or Bylaws which adversely affects the terms of the Preferred
Stock or the relative rights, preferences and privileges of the Holders of the
Preferred Stock as such holders;
(b) Any amendments or changes to the Rights Plan or the
adoption of any other similar plans or arrangements, provided that nothing
herein shall be deemed to restrict the right of the Seller to redeem all, but
not less than all, of the outstanding Rights (as defined in the Rights Plan) or
otherwise terminate the Rights Plan;
(c) The offer, sale, designation or issuance by the
Seller or any of its Subsidiaries of any equity or debt security senior to or
pari passu with the Preferred Stock in any respect;
(d) The sale or issuance of any shares of Common Stock,
any warrant, option, subscription or purchase right with respect to shares of
Common Stock, any security convertible into, exchangeable for, or otherwise
entitling the holder thereof to acquire shares of Common Stock, or any warrant,
option, subscription or purchase right with respect to any such convertible,
exchangeable or other security at a price below the Conversion Value, other than
(A) options, warrants, and other rights outstanding on the date hereof to
acquire, directly or indirectly, Common Stock, and the Common Stock acquirable
thereunder, and (B) options granted hereafter to any employee, officer, Director
or consultant pursuant to any plan approved by stockholders for the benefit of
employees, officers, Directors and consultants ("Incentive Options"), and the
Common Stock acquirable thereunder, and (C) awards presently outstanding or
hereafter awarded under the Seller's employee stock purchase plan effective as
of January 26, 2001 (the "ESPP"), provided that the aggregate number of shares
of Common Stock acquirable under such Incentive Options and awards under the
ESPP, and the options which may hereafter be issued as disclosed in Schedule
3.21, is not greater than 1,300,000;
(e) The entering into by the Seller or any Subsidiary of
any bank or other non-trade indebtedness for borrowed money;
(f) The granting or making by the Seller or any of its
Subsidiaries of any mortgage or pledge, or the assumption or suffering to exist
on, or the imposition on, any of its material properties or assets any Lien;
(g) The liquidation, dissolution or winding-up of the
Corporation or any of its Subsidiaries or any merger or consolidation of the
Corporation or any of its Subsidiaries with or into another entity or the sale,
conveyance or other disposition of all, or substantially all, the assets,
property or business of the Corporation or any of its Subsidiaries;
22
(h) The reorganization, recapitalization, sale,
conveyance, or other disposition of or encumbrance of all or substantially all
of the property or business of the Corporation or any of its Subsidiaries or the
merger into or consolidation with any other corporation (other than a wholly
owned subsidiary corporation) or effect any transaction or series of related
transactions in which, in any case, more than 20% of the voting power of the
corporation is disposed of;
(i) The redemption, purchase, repurchase or other
acquisition, directly or indirectly, of any shares of capital stock of the
Seller or any of its Subsidiaries or any option, warrant or other right to
purchase or acquire any such shares;
(j) The declaration or payment of any dividend or other
distribution (whether cash, stock or property) with respect to the capital stock
of the Seller, other than the Preferred Stock; and
(k) The taking of any action by the Company with the
primary intent of causing the Common Stock to be delisted from any securities
exchange or quotation system upon which the Common Stock is then listed.
For purposes of this Agreement, "Fair Market Value" shall mean: (i) if the
Common Stock is then listed for trading on a national securities exchange or
through the Nasdaq National Market System or the Nasdaq SmallCap Market, the
closing price of the Common Stock for such Trading Day; (ii) if on the date as
of which Fair Market Value is to be determined the Common Stock is not so
listed, the average of the highest bid and lowest asked prices of the Common
Stock quoted in the Nasdaq OTC Bulletin Board or the over-the-counter-market,
for such Trading Day as reported by Bloomberg Financial, L.P.; or (iii) if on
the date for which Fair Market Value is to be determined the Common Stock is not
listed on any national securities exchange, the Nasdaq National Market System,
the Nasdaq SmallCap or quoted in the Nasdaq System or the over-the-counter
market, the Fair Market Value of Common Stock shall be the highest price per
share which the Corporation could then obtain from a willing buyer (not an
employee or director of the Corporation at the time of determination), under no
compulsion to buy, in an arms'-length for shares of Common Stock sold by the
Corporation, from authorized but unissued shares, as determined in good faith by
the Board of Directors. For purposes of this Agreement, "Trading Day" means a
day on whichever of (x) the national securities exchange, (y) the Nasdaq or (z)
such other securities market, in any such case which at the time constitutes the
principal securities market for the Common Stock, is open for general trading of
securities.
The restrictions contained in this Section 5.8 shall cease to apply if,
for no less than 20 trading days during any period of 30 consecutive trading
days following the Closing Date, (i) the Fair Market Value (as defined herein)
of the Common Stock exceeds five dollars ($5) per share, (ii) all of the
Conversion Shares, Warrants Shares and Dividend Shares have been duly registered
for sale under an effective registration statement pursuant to the Securities
Act, and such registration statement is effective throughout the aforesaid
30-day period, and (iii) the actual daily trading volume of the Common Stock is
greater than 100,000 shares per day on each day on which the Fair Market Value
is greater than five dollars ($5).
5.9 LISTING OF SHARES. The Seller shall use its best efforts to
list the Conversion Shares, Dividend Shares and Warrant Shares on each
securities exchange or quotation system
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upon which the Common Stock may be listed from time to time during the time
period that the Common Stock is listed on such securities exchange or quotation
system.
5.10 RESERVATION OF SHARES. The Seller shall hereafter take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 100% of the number of shares of Common Stock needed to
provide for the issuance of the shares of Common Stock upon conversion of all
outstanding Preferred Stock and exercise of all outstanding Warrants (without
regard to any limitations on conversions or exercise).
5.11 INTERNAL ACCOUNTING CONTROLS. The Seller and each of its
Subsidiaries shall maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability and (iii) assets are amortized and depreciated, as applicable, in
accordance with generally accepted accounting principles.
5.12 FILING OF FORM D. The Seller will timely file Form D in
accordance with the provisions of Regulation D promulgated by the SEC under the
Securities Act.
5.13 INDEMNIFICATION FOR CLAIMS. The Seller agrees to indemnify and
hold harmless the Purchasers, their Affiliates, each of their officers,
directors, employees and agents and their respective successors and assigns (for
purposes of this subsection 5.13, the "Indemnified Parties"), from and against
any losses, damages, or expenses (net of any related insurance proceeds)
incurred by the Indemnified Parties due to any and all third party actions,
suits, proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) which are brought by or on behalf of a third
party or any of its successors or assigns claiming a right to participate as a
placement agent, underwriter, financial advisor, finder or broker with respect
to the offering of the Securities pursuant to this Agreement, against any of the
Indemnified Parties, with respect to any act or omission occurring on or before
the Closing Date. The indemnification herein provided shall be provided in the
manner and in accordance with the procedures set forth in Section 7.3 hereof.
The indemnification provided for in this Section 5.13 shall be made
notwithstanding the reference to any underwriting, placement agent, financial
advisory, finder's or broker's agreement in the Schedule to the Representations
and Warranties, and notwithstanding any knowledge or information which the
Purchasers have with respect to any underwriting, placement agent, financial
advisory, finder's or broker's agreement.
5.14 NO SOLICITATION OF TRANSACTION. Prior to the earlier of (i)
the Closing, or (ii) the termination of this Agreement pursuant to Section 8,
the Seller shall not, and shall use its best efforts to cause its
representatives (other than SCO Financial Group LLC and its affiliates) not to,
directly or indirectly, take any of the following actions with any person other
than the Purchasers without the prior written consent of all the Purchasers: (A)
solicit, initiate, facilitate or encourage, or furnish information with respect
to the Seller, in connection with, any inquiry, proposal or offer with respect
to any equity transaction involving the Seller (an "Alternative Transaction")
(other than the information which the Seller provides to other persons in the
ordinary course of its business consistent with past custom and practice, so
long as the Seller and its shareholders have no reason to believe that the
information may be utilized to evaluate an
24
Alternative Transaction); (B) negotiate, discuss explore or otherwise
communicate or cooperate in any way with any third party with respect to any
Alternative Transaction; or (C) enter into any agreement, arrangement or
understanding with respect to an Alternative Transaction or requiring the Seller
to abandon, terminate or refrain from consummating a transaction with the
Purchasers. The Seller shall, and shall use its best efforts to cause its
representatives (other than SCO Financial Group LLC and its affiliates) to,
notify the Purchasers orally and in writing promptly upon receipt of any
inquiry, offer or proposal with respect to an Alternative Transaction, including
the identity of the party making such inquiry, offer or proposal and stating the
terms thereof. The Seller shall immediately cease any existing discussions or
negotiations with any third party relating to any proposed Alternative
Transaction.
5.15 CONDUCT OF THE SELLER PENDING CLOSING. The Seller covenants
and agrees that until the earlier of the time of Closing or the termination of
the Agreement pursuant to Section 8, the Seller shall conduct its business only
in the ordinary course consistent with past practice and shall use its
commercially reasonable best efforts to preserve intact its business
organizations and relationships with third parties. Without limiting the
generality of the foregoing, other than as contemplated pursuant to the terms of
this Agreement, without the prior written consent of the Purchasers:
(a) There shall not be any declaration, setting aside or
payment of any dividend or other distribution with respect to any shares of
capital stock of the Seller or any repurchase, redemption or other acquisition
by the Seller of any outstanding shares of its capital stock or of the Seller;
(b) There shall not be any amendment of any term of any
outstanding security of the Seller or any Subsidiary;
(c) There shall not be any transaction or commitment
made, or any contract, agreement or settlement entered into, by (or judgment,
order or decree affecting) the Seller relating to its assets or business
(including the acquisition or disposition of any material amount of assets) or
any relinquishment by the Seller of any contract or other right, other than
transactions, commitments, contracts, agreements or settlements (including
without limitation settlements of litigation and tax proceedings) in the
ordinary course of business and those contemplated by this Agreement;
(d) Except for any change required by reason of a
concurrent change in GAAP, there shall not be any change in any method of
accounting or accounting practice by the Seller;
(e) There shall not be any (i) grant of any severance or
termination pay to (or amendment to any such existing arrangement with) any
director or officer of the Seller, (ii) entering into of any employment,
deferred compensation, supplemental retirement or other similar agreement (or
any amendment to any such existing agreement) with any director or officer of
the Seller, (iii) increase in, or accelerated vesting and/or payment of,
benefits under any existing severance or termination pay policies or employment
agreements of any director or officer of the Seller or (iv) increase in or
enhancement of any rights or features related to
25
compensation, bonus or other benefits payable to directors or officers of the
Seller, in each case, other than in the ordinary course of business consistent
with past practice; or
(f) There shall not be any material tax election made or
changed, any material audit settled or any material amended tax returns filed;
(g) Except as required herein, the Seller will not adopt
any change in its Certificate of Incorporation or by-laws;
(h) The Seller will not adopt a plan or agreement of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Seller;
(i) The Seller will not issue, sell, transfer, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class or series of the Seller;
(j) The Seller will not (A) split, combine, subdivide or
reclassify its outstanding shares of capital stock, or (B) declare, set aside or
pay any dividend or other distribution payable in cash, stock or property with
respect to its capital stock; and
(k) The Seller will not agree or commit to do any of the
foregoing.
5.16 SUBMISSION TO NASDAQ. Promptly after the execution of this
Agreement, the Seller shall submit to the staff of the Nasdaq Stock Market this
Agreement, the form of Certificate of Designation, form of Series D-1 Warrant,
form of Series D-2 Warrant, form of Placement Agent Warrant and form of
Registration Rights Agreement and shall request confirmation that approval of
the stockholders of the Seller to any or all such agreements, instruments and
securities is not required under any rule, procedure, practice or requirement
with respect to the continued listing of the Seller's Common Stock on the Nasdaq
Stock Market.
ARTICLE VI
CONDITIONS TO THE CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. The obligations
of the Purchasers are subject to the fulfillment or satisfaction, on and as of
the Closing Date, except as otherwise expressly indicated below or in Section
2.3 hereof, of each of the following conditions (any one or more of which may be
waived by any Purchaser, in its sole discretion, but only with respect to its
investments and only in a writing signed by such Purchaser):
(a) OPINION. The Purchasers shall have received the
opinion of Seller's Counsel, in form and substance reasonably satisfactory to
the Purchasers.
26
(b) PROOF OF FILING. At the Closing, the Seller shall
deliver or cause to be delivered to each of the Purchasers proof of due filing
with the Secretary of State of the State of Delaware of the Certificate of
Designation authorizing the Preferred Stock.
(c) SUPPORTING DOCUMENTS. The Purchasers shall have
received the following:
(i) Such certificates to evidence compliance
with the conditions set forth in this Section 6 as may be reasonably requested
by the Purchasers, executed by the chief executive officer and chief financial
officer of the Seller.
(ii) Certificates of good standing with respect
to the Seller issued by the Secretaries of State of Delaware and California; and
copies of the resolutions of the Seller's Board of Directors approving this
Agreement, the Registration Rights Agreement, the creation and issuance of
Series D Preferred Stock, the filing of the Certificate of Designation and the
transactions, contemplated herein and therein, certified by an appropriate
officer.
(iii) Such additional supporting documentation and
other information with respect to the transactions contemplated by this
Agreement as the Purchasers may reasonably request.
(d) PREFERRED STOCK, WARRANTS. The Seller shall have
executed and delivered certificates evidencing the Preferred Stock and the
Warrants purchased hereby.
(e) REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been duly executed, and the Seller, its Subsidiaries
and Affiliates shall not be in breach of default of any provision thereof. There
shall not then exist any facts or circumstances which would prevent the Seller
from registering the Registrable Shares (as that term is defined in the
Registration Rights Agreement) in accordance with the Registration Rights
Agreement..
(f) PERFORMANCE; REPRESENTATION AND WARRANTIES.
COVENANTS; REPRESENTATIONS AND WARRANTIES. (i) The Seller shall have performed
and observed in all material respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date; (ii) the representations
and warranties of the Seller contained in this Agreement and in any certificate
delivered by the Seller pursuant hereto shall be true and correct in all
material respects (except to the extent such representations and warranties
contain a materiality qualification, in which case they shall be true and
correct in all respects) at and as of the Closing Date as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which
case as of such earlier date); and (iii) the Purchasers shall have received a
certificates signed by the chief executive officer and the chief financial
officer to the foregoing effect.
(g) CONSENTS AND WAIVERS. The Seller shall have obtained
all consents or waivers necessary to execute and perform its obligations under
this Agreement, and the documents contemplated herein, to issue the Preferred
Stock and Warrants, and to carry out the transactions contemplated hereby and
thereby. All corporate and other action and governmental filings necessary to
effectuate the terms of this Agreement, the Preferred Stock and Warrants and
27
other agreements and instruments to be executed and to be delivered, or executed
and delivered, by the Seller in connection herewith shall have been made or
taken.
(h) NO MATERIAL ADVERSE CHANGE. There shall not have
been, nor shall there have occurred any event which could result in, a material
adverse change in the business, properties, assets, results of operations, or
condition (financial or otherwise) of the Seller from and after the date of this
Agreement and until the Closing Date.
(i) NO LITIGATION. No litigation, arbitration or other
legal or administrative proceeding against the Seller or its Subsidiaries shall
have been commenced or be pending by or before any court, arbitration panel or
governmental authority or official, and no statute, rule or regulation of any
foreign or domestic, national or local government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative
decision shall have been rendered which enjoins or prohibits, or seeks to enjoin
or prohibit, the consummation of all or any of the transactions contemplated by
this Agreement.
(j) MANAGEMENT LOCK-UP AGREEMENTS. Each of the directors
and officers of the Registrant has executed a management lock-up agreement in
the form set forth in Exhibit D. Schedule 6.1(j) correctly and completely
identifies all officers and directors of the Seller.
(k) NASDAQ CONFIRMATION. The staff of the Nasdaq Stock
Market shall have verbally confirmed to the Seller that (i) it has reviewed this
Agreement, the form of Certificate of Designation, form of Series D-1 Warrant,
form of Series D-2 Warrant, form of Placement Agent Warrant and form of
Registration Rights Agreement and (ii) on the basis of such review, approval by
the stockholders of the Seller of the issuance of the Preferred Stock, the
Warrants, the Conversion Shares, the Dividend Shares and the Warrant Shares is
not required, and the Seller shall not have received from such staff any oral or
written information or advice contrary to such verbal confirmation
6.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of
the Seller hereunder with respect to each Purchaser are subject to the
fulfillment or satisfaction, on and as of the Closing Date, of the following
condition (which may be waived by the Seller, in its sole discretion):
(a) PERFORMANCE; REPRESENTATION AND WARRANTIES. Such
Purchaser shall have performed and complied in all respects with all agreements
and conditions contained in this Agreement which are required to be performed or
complied with by such Purchaser prior to or at the Closing, the representation
and warranties of such Purchaser contained herein shall be true and correct on
and as of the Closing Date as though made on such date.
(b) NO LITIGATION. No litigation, arbitration or other
legal or administrative proceeding against the Purchasers shall have been
commenced or be pending by or before any court, arbitration panel or
governmental authority or official, and no statute, rule or regulation of any
foreign or domestic, national or local government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative
decision shall have been
28
rendered which enjoins or prohibits, or seeks to enjoin or prohibit, the
consummation of all or any of the transactions contemplated by this Agreement.
ARTICLE VII - - INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS. Except as otherwise provided
herein, the representations and warranties of the Seller and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing Date and shall continue in full force
and effect for a period of 24 months after the Closing Date and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of the Seller or the Purchasers.
7.2 INDEMNIFICATION. (a) The Seller agrees to indemnify and hold
harmless the Purchasers, their Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any losses, damages, or expenses (net of any related insurance proceeds)
due to any and all third party actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees and expenses)
(all of the foregoing, "Third Party Claims") which are caused by or arise out of
(i) any breach or default in the performance by the Seller of any covenant or
agreement made by the Seller in this Agreement or in any of the Related
Documents; (ii) any breach of warranty or representation made by the Seller in
this Agreement or in any of the Related Document.
(b) Each of the Purchasers agrees to indemnify and
hold harmless the Seller, its Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any Third Party Claims (net of any related insurance proceeds) which are
caused by or arise out of (i) any breach or default in the performance by it of
any covenant or agreement made by it in this Agreement or in any of the Related
Documents; (ii) any breach of warranty or representation made by it in this
Agreement or in any of the Related Documents; provided, however, that a
Purchaser's liability under this Section 7.2(b) shall not exceed the Purchase
Price paid by such Purchaser hereunder.
7.3 INDEMNITY PROCEDURE. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
An Indemnified Party under this Agreement shall, with
respect to claims asserted against such party by any third party, give written
notice to the Indemnifying Party of any liability which might give rise to a
claim for indemnity under this Agreement within sixty (60) business days of the
receipt of any written claim from any such third party, but not later than
twenty (20) days prior to the date any answer or responsive pleading is due, and
with respect to other matters for which the Indemnified Party may seek
indemnification, give prompt written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity; provided, however,
that any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
materially prejudiced.
29
The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense, compromise or
settlement of any third Person claim, action or suit against such Indemnified
Party as to which indemnification will be sought by any Indemnified Party from
any Indemnifying Party hereunder, and in any such case the Indemnifying Party
shall cooperate in connection therewith and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnified
Party in connection therewith; provided, that the Indemnifying Party may
participate, through counsel chosen by it and at its own expense, in the defense
of any such claim, action or suit as to which the Indemnified Party has so
elected to conduct and control the defense thereof; and provided, further, that
the Indemnified Party shall not, without the written consent of the Indemnifying
Party (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit, except that no such consent
shall be required if, following a written request from the Indemnified Party,
the Indemnifying Party shall fail, within 14 days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or suit
shall be adversely determined, such Indemnifying Party has an obligation to
provide indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided, that
in such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
The parties agree to cooperate in defending such
third party claims and the Indemnified Party shall provide such cooperation and
such access to its books, records and properties as the Indemnifying Party shall
reasonably request with respect to any matter for which indemnification is
sought hereunder; and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof.
With regard to claims of third parties for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment
against the Indemnified Party and the expiration of any applicable appeal
period, or if earlier, five (5) days prior to the date that the judgment
creditor has the right to execute the judgment; (ii) the entry of an
unappealable judgment or final appellate decision against the Indemnified Party;
or (iii) a settlement of the claim. Notwithstanding the foregoing, the
reasonable expenses of counsel to the Indemnified Party shall be reimbursed on a
current basis by the Indemnifying Party if such expenses are required to be paid
pursuant to this Agreement. With regard to other claims for which
indemnification is payable hereunder, such indemnification shall be paid
promptly by the Indemnifying Party upon demand by the Indemnified Party.
ARTICLE VIII - TERMINATION
8.1 BEST EFFORTS. Subject to the terms and conditions provided in
this Agreement, each of the parties shall use their respective best efforts in
good faith to take or cause to be taken as promptly as practicable all
reasonable actions that are within its power to cause to be fulfilled those of
the conditions precedent to its obligations or the obligations of the other
parties to consummate the transactions contemplated by this Agreement that are
dependent upon its
30
actions, including obtaining all necessary consents, authorizations, orders,
approvals and waivers.
8.2 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated:
(i) at any time by the mutual consent of the
Seller and the Purchasers;
(ii) by the Purchasers at any time at or prior to
Closing in their sole discretion if:
(1) any of the representations or
warranties of the Seller in this
Agreement are not true, accurate
and complete in all material
respects (except to the extent such
representations and warranties
contain a materiality
qualification, in which case they
shall be true and correct in all
respects) and such breach, if
curable, is not cured by the
Expiration Date;
(2) the Seller materially breaches any
covenant contained in this
Agreement and such breach, if
curable, is not cured by the
Expiration Date;
(3) any of the conditions precedent to
the Purchasers' obligations to
conduct the Closing have not been
satisfied by the date required
thereof;
(4) any legal proceeding is commenced
or threatened by any governmental
agency or other person directed
against the consummation of the
Closing or any other transaction
contemplated hereby, and the
Purchasers reasonably and in good
faith deem it impractical or
inadvisable to proceed in view of
such legal proceeding or threat
thereof;
(5) the Closing has not occurred on or
before the Expiration Date,
provided that the failure of the
Closing to occur has not been
caused by any breach or default by
the Purchasers.
(iii) by the Seller at any time at or prior to
Closing in its sole discretion if:
(1) any of the representations or
warranties of the Purchaser in this
Agreement are not true, accurate
and complete in all material
respects (except to the extent such
representations and warranties
contain a materiality
qualification, in which case they
shall be true and correct in all
respects) and such breach, if
curable, is not cured by the
Expiration Date;
31
(2) Purchasers materially breach any
covenant contained in this
Agreement and such breach, if
curable, is not cured by the
Expiration Date; or
(3) any of the conditions precedent to
Seller's obligations to conduct the
Closing have not been satisfied by
the date required thereof;
(4) the Closing has not occurred on or
before the Expiration Date,
provided that the failure of the
Closing to occur has not been
caused by any breach or default by
the Seller.
8.3 EFFECT OF TERMINATION. In the event of termination of this
Agreement as expressly permitted under 8.2 hereof, this Agreement shall
forthwith become void and no party hereto shall be liable to any other party
hereto or their respective officers, directors or affiliates; provided, that, if
such termination shall result from the willful breach by a party of the
covenants of such party contained in this Agreement, such party shall be fully
liable for any and all damages sustained or incurred as a result of such breach,
including without limitation all expenses incurred in connection with this
Agreement.
ARTICLE IX - MISCELLANEOUS
9.1 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement, and further agrees to take promptly, or cause to
be taken, all actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated hereby, to obtain all necessary waivers,
consents and approvals, to effect all necessary registrations and filings, and
to remove any injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the transactions contemplated by this
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement.
9.2 FEES AND EXPENSES. The Seller shall be responsible for the
payment of the Purchasers' reasonable legal fees and expenses relating to the
preparation and negotiation of this Agreement, the Related Documents, the
conversion of any Preferred Stock or the exercise of any Warrants.
9.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 5:00 p.m. (New York City
time) on a business day, (b) the next business day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a business day
or later than 5:00 p.m. (New York City time) on any business day, or (c) the
business day following the date of mailing, if sent by U.S. nationally
recognized
32
overnight courier service such as Federal Express. The address for such notices
and communications shall be as follows:
If to the Purchasers, to their respective If to the Seller:
addresses set forth on Schedule 1. Spectrum Pharmaceuticals, Inc.
157 Technology Dr
Irvine, CA 92618
Att'n: CEO
Fax No. 949-788-6706
With a copy in each case to: With a copy in each case to:
Kane Kessler, P.C. Latham and Watkins LLP
1350 Avenue of the Americas - 26th Floor 650 Town Center Drive, Twentieth Floor
New York, New York 10019 Costa Mesa, California 92626
Attention: Robert L. Lawrence, Esq. Att'n: Allan W. Pettis, Esq.
Fax No.: (212) 245-3009 Fax No. 714-755-8290
Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.
9.4 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and enforced in accordance with the laws of the State of New York without
reference to the choice of law principles thereof.
9.5 JURISDICTION AND VENUE. This Agreement shall be subject to the
exclusive jurisdiction of the Federal and State Courts located in New York
County, New York. The parties to this Agreement agree that any breach of any
term or condition of this Agreement shall be deemed to be a breach occurring in
the State of New York by virtue of a failure to perform an act required to be
performed in the State of New York and irrevocably and expressly agree to submit
to the jurisdiction of the Federal District Court, Southern District of New York
and if such court does not have proper jurisdiction, the State Courts of New
York County, New York for the purpose of resolving any disputes among the
parties relating to this Agreement or the transactions contemplated hereby. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
which they may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement, or any judgment
entered by any court in respect hereof brought in New York County, New York, and
further irrevocably waive any claim that any suit, action or proceeding brought
in Federal or State Courts located in New York County, New York has been brought
in an inconvenient forum.
9.6 SUCCESSORS AND ASSIGNS. This Agreement is personal to each of
the parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Purchasers shall be permitted to
assign their rights under this Agreement to any transferee of such Purchaser to
whom it assigns or transfers Securities, as provided in Section 1.3 hereof.
33
9.7 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
9.8 ENTIRE AGREEMENT. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
9.9 OTHER REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law, or in
equity on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
9.10 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the Seller, the holders of at least a
majority of the outstanding Preferred Stock, which majority shall include each
holder who acquired in the aggregate more than 100 shares of Preferred Stock so
long as such holder continues to hold more than 100 shares of Preferred Stock
(such majority herein called a "Special Majority"). The waiver by a party of any
breach hereof or default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
9.11 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
9.12 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. For purposes of this
Agreement, the term "knowledge," when used in reference to a corporation means
the knowledge of the directors, officers and managers of such corporation
assuming such officers shall have made inquiry that is customary and appropriate
under the circumstances to which reference is made, and when used in reference
to an individual means the knowledge of such individual assuming the individual
shall have made inquiry that is customary and appropriate under the
circumstances to which reference is made.
9.13 COUNTERPARTS; FACSIMILE. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against any party
whose signature appears thereon and all of which together shall constitute one
and the same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
9.14 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto
34
and their respective heirs, personal representatives, legal representatives,
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.
[SIGNATURE PAGES FOLLOW:]
35
IN WITNESS WHEREOF, the undersigned Purchasers and the Seller have
caused this Preferred Stock and Warrant Purchase Agreement to be duly executed
as of the date first above written.
SELLER:
SPECTRUM PHARMACEUTICALS, INC.
By: /s/ Rajesh C. Shrotriya
-------------------------
Rajesh C. Shrotriya, M.D.
Chief Executive Officer
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: North Sound Legacy Fund LLC
By: /s/Andrew Wilder
-------------------
Name: Andrew Wilder
Title: Chief Financial Officer
Address: c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, CT 06870
Telephone: 203-967-5700
Facsimile: 203-967-5701
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 4
Series D-1 Warrants Purchased 8,511
Series D-2 Warrants Purchased 8,511
Aggregate Purchase Price $40,000
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: North Sound Legacy International Ltd.
By: /s/Andrew Wilder
------------------
Name: Andrew Wilder
Title: Chief Financial Officer
Address: c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, CT 06870
Telephone: 203-967-5700
Facsimile: 203-967-5701
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 47
Series D-1 Warrants Purchased 100,000
Series D-2 Warrants Purchased 100,000
Aggregate Purchase Price $470,000
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: North Sound Legacy Institutional Fund LLC
By: /s/Andrew Wilder
------------------
Name: Andrew Wilder
Title: Chief Financial Officer
Address: c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, CT 06870
Telephone: 203-967-5700
Facsimile: 203-967-5701
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 49
Series D-1 Warrants Purchased 104,255
Series D-2 Warrants Purchased 104,255
Aggregate Purchase Price $490,000
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: OTA LLC
By: /s/Richard M. Cayne
--------------------
Name: Richard M. Cayne
Title: General Counsel
Address: c/o OTA LLC
One Manhattanville Road
Purchase, New York 10577
Telephone: (914) 694-5857
Facsimile: (914) 694-6335
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 10
Series D-1 Warrants Purchased 21,277
Series D-2 Warrants Purchased 21,277
Aggregate Purchase Price $100,000
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: ProMed Partners, L.P.
By: /s/Barry Kurokawa
------------------
Name: Barry Kurokawa
Title: Managing Member
Address: 237 Park Avenue, 9th Floor
New York, NY 10017
Old Greenwich, CT 06870
Telephone: (212) 692-3626
Facsimile: (212) 692-3627
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 30
Series D-1 Warrants Purchased 63,830
Series D-2 Warrants Purchased 63,830
Aggregate Purchase Price $300,000
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: SCO Capital Partners LLC
By: /s/Steve H. Rouhandeh
-----------------------
Name: Steve H. Rouhandeh
Title: Chairman
Address: 1285 Avenue of the Americas
35th Floor
New York, NY 10019
Telephone: 212-554-4158
Facsimile: 212-554-4058
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 70
Series D-1 Warrants Purchased 148,936
Series D-2 Warrants Purchased 148,936
Aggregate Purchase Price $700,000
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: SDS Merchant Fund, L.P.
By: /s/Scott E. Derby
-------------------
Name: Scott E. Derby
Title: General Counsel
Address: c/o SDS Capital Partners, LLC
53 Forest Avenue, 2nd Floor
Old Greenwich, CT 06870
Telephone: 203-967-5850
Facsimile: 203-967-5851
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 100
Series D-1 Warrants Purchased 212,766
Series D-2 Warrants Purchased 212,766
Aggregate Purchase Price $1,000,000
OMNIBUS SIGNATURE PAGE TO
SPECTRUM PHARMACEUTICALS, INC.
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name: Xmark Fund, Ltd.
By: /s/Mitchell D. Kaye
-------------------
Name: Mitchell D. Kaye
Title: CIO
Address: 152 West 57th Street
21st Floor
New York, NY 10019
Telephone: 212-247-8200
Facsimile: 212-247-1329
SOC/EIN#: XX-XXXXXXX
Number of Shares of Series D Preferred Stock
Purchased 134
Series D-1 Warrants Purchased 285,106
Series D-2 Warrants Purchased 285,106
Aggregate Purchase Price $1,340,000
SCHEDULE 1
TO
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
PURCHASERS AND SHARES OF PREFERRED STOCK AND WARRANTS PURCHASED
======================================================================================================================
Shares of Shares of
Common Common
Shares of Stock Stock
Series D Acquirable Acquirable Total
Preferred under Series under Series Purchase
Name and Address of Purchase Stock D-1 Warrants D-2 Warrant Price
- ----------------------------------------------------------------------------------------------------------------------
North Sound Legacy Fund LLC
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n: Mr. Andrew Wilder, Chief Financial Officer
Fax: 203-967-5701
a Qualified Institutional Buyer 4 8,511 8,511 $ 40,000
- ----------------------------------------------------------------------------------------------------------------------
North Sound Legacy International Ltd.
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n: Mr. Andrew Wilder, Chief Financial Officer
Fax: 203-967-5701
a Qualified Institutional Buyer 47 100,000 100,000 $ 470,000
- ----------------------------------------------------------------------------------------------------------------------
North Sound Legacy Institutional Fund LLC
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n: Mr. Andrew Wilder, Chief Financial Officer
Fax: 203-967-5701
a Qualified Institutional Buyer 49 104,255 104,255 $ 490,000
- ----------------------------------------------------------------------------------------------------------------------
OTA LLC
1 Manhattanville Road
Purchase, New York 10577
Att'n: Mr. Richard M. Cayne
Fax: 914-694-6335
a Qualified Institutional Buyer 10 21,277 21,277 $ 100,000
- ----------------------------------------------------------------------------------------------------------------------
ProMed Partners, L.P.
237 Park Avenue, 9th Floor
New York, N.Y. 10017
Att'n: Mr. Barry Kurokawa
Fax: 212-692-3627 30 63,830 63,830 $ 300,000
- ----------------------------------------------------------------------------------------------------------------------
SCO Capital Partners LLC
1285 Avenue of the Americas, 35th Floor
New York, New York 10019
Att'n: Mr. Steven H. Rouhandeh
Fax: 212-554-4058 70 148,936 148,936 $ 700,000
- ----------------------------------------------------------------------------------------------------------------------
SDS Merchant Fund, L.P.
c/o SDS Capital Partners, LLC
53 Forest Avenue, 2nd Floor
Old Greenwich, CT 06870
Att'n: Mr. Steven Derby
Fax: 203-967-5851
a Qualified Institutional Buyer 100 212,766 212,766 $1,000,000
SCHEDULE 1 (CONT'D)
======================================================================================================================
Shares of Shares of
Common Common
Shares of Stock Stock
Series D Acquirable Acquirable Total
Preferred under Series under Series Purchase
Name and Address of Purchase Stock D-1 Warrants D-2 Warrant Price
- ----------------------------------------------------------------------------------------------------------------------
Xmark Fund Ltd.
152 West 57th Street, 21st Floor
New York, New York 10019
Att'n: Mr. Mitchell D. Kaye
Fax: 212-247-1329 134 285,106 285,106 $1,340,000
- ----------------------------------------------------------------------------------------------------------------------
Total 444 944,681 944,681 $4,440,000
======================================================================================================================