EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
February 23, 2004, by and among Epoch Biosciences, Inc., a Delaware corporation
(the "Company"), and the purchasers identified on the signature pages hereto
(each a "Purchaser" and collectively the "Purchasers"); and
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and the Purchasers, severally and not jointly, desire to
purchase from the Company in the aggregate, up to 2,470,000 shares of Common
Stock and Warrants to purchase up to 741,000 shares of Common Stock. The maximum
aggregate of Subscription Amounts which the Company will accept is $6,175,000.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in
this Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in Section
3.1(j).
"Affiliate" means any Person 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. 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.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
"Change of Control" means the occurrence of any of the following in one
or a series of related transactions: (i) an acquisition after the date hereof by
an individual or legal entity or "group" (as described in Rule 13d-5(b)(1) under
the Exchange Act) of a majority of the voting rights or equity interests in the
Company; (ii) a replacement of more than one-half of the members of the
Company's board of directors that is not approved by those individuals who are
members of the board of directors on the date hereof (or other directors
previously approved by such individuals); (iii) a merger or consolidation of the
Company or a sale of substantially all or more than one-half of the assets of
the Company in one or a series of related transactions, unless following such
transaction or series of transactions, the holders of the Company's securities
prior to the first such transaction continue to hold at least fifty percent of
the voting rights and equity interests in of the surviving entity or acquirer of
such assets; (iv) a recapitalization, reorganization or other transaction
involving the Company or any Subsidiary that constitutes or results in a
transfer of a majority of the voting rights or equity interests in the Company;
(v) consummation of a "Rule 13e-3 transaction" as defined in Rule 13e-3 under
the Exchange Act with respect to the Company, or (vi) the execution by the
Company or its controlling stockholders of an agreement providing for or
reasonably likely to result in any of the foregoing events.
"Closing" means the closing of the purchase and sale of the Shares and
the Warrants pursuant to Section 2.1.
"Closing Date" shall be deemed to mean the date hereof.
"Closing Price" means on any particular date (a) the last reported
closing bid price per share of Common Stock on such date on the Trading Market
(as reported by Bloomberg L.P. at 4:15 PM (New York time) as the last reported
closing bid price for regular session trading on such day), or (b) if there is
no such price on such date, then the closing bid price on the Trading Market on
the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM
(New York time) as the closing bid price for regular session trading on such
day), or (c) if the Common Stock is not then listed or quoted on the Trading
Market and if prices for the Common Stock are then reported in the "pink sheets"
published by the Pink Sheets LLC (formerly the National Quotation Bureau
Incorporated) (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock so
reported, or (d) if the shares of Common Stock are not then publicly traded the
fair market value of a share of Common Stock as determined by an appraiser
selected in good faith by the Purchasers of a majority in interest of the Shares
and reasonably acceptable to the Company.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, $0.01 par value
per share, and any securities into which such common stock may hereafter be
reclassified.
"Common Stock Equivalents" means any securities of the Company or its
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
"Company Counsel" means Stradling Yocca Carlson & Rauth, P.C.
"Disclosure Schedules" means the Disclosure Schedules attached as Annex
I hereto.
"Effective Date" means the date that the Registration Statement is
first declared effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Stock" means the issuance of Common Stock (A) upon exercise
or conversion of any options or other securities currently outstanding (provided
that such exercise or conversion occurs in accordance with the terms thereof,
without amendment or modification), (B) in connection with any grant of options
or issuance of shares to employees, officers, directors or consultants of the
Company pursuant to a stock option plan or other similar arrangement duly
adopted by the Company's board of directors or in respect of the issuance of
Common Stock upon exercise of any such options, (C) pursuant to a bona fide firm
commitment underwritten public offering with a nationally recognized underwriter
(excluding any equity line), (D) pursuant to the Company's bona fide acquisition
of another corporation or entity, or all or a portion of its assets, by merger,
purchase of assets or stock or other corporate reorganization in each case, as
approved by the Company's board of directors and not for the principal purpose
of raising capital, (E) in connection with a bona fide joint venture or
development or license agreement or strategic partnership, the primary purpose
of which is not to raise equity capital, or (F) in connection with a customary
loan financing or equipment lease by a financial institution, provided that the
aggregate
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amount of such shares under this subsection (F) shall not exceed the lesser of
10% in value of the value of the loan or lease, or 400,000 shares of Common
Stock in the aggregate.
"Intellectual Property Rights" shall have the meaning ascribed to such
term in Section 3.1(o).
"Liens" means a lien, charge, security interest, encumbrance, right of
first refusal or other restriction.
"Material Adverse Effect" shall have the meaning ascribed to such term
in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such term in
Section 3.1(m).
"Per Unit Purchase Price" equals $2.50, subject to adjustment for
reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this
Agreement and before the Closing.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Reedland" means Reedland Capital Partners, an Institutional Division
of Financial West Group.
"Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchasers of the Shares and the Warrant Shares.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and each
Purchaser, in the form of Exhibit A hereto.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SEC Reports" shall have the meaning ascribed to such term in Section
3.1(h).
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means an aggregate of up to 2,470,000 shares of Common Stock,
which are being issued and sold by the Company to the Purchasers at the Closing.
"Subscription Amount" means, as to each Purchaser and the Closing, the
amounts set forth below such Purchaser's signature block on the signature page
hereto, in United States dollars and in immediately available funds.
"Subsidiary" means any Person in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest.
"Trading Day" means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a
day on which the Common Stock is traded
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on the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)
if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the "pink sheets" published by the Pink Sheets LLC
(formerly the National Quotation Bureau Incorporated) (or any similar
organization or agency succeeding to its functions of reporting prices);
provided, that in the event that the Common Stock is not listed or quoted as set
forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
"Trading Market" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market
or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Transfer Agent
Instructions, the Registration Rights Agreement, the Warrant and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
"Transfer Agent" means American Stock Transfer and Trust Company, or
any other transfer agent selected by the Company.
"Transfer Agent Instructions" means the Irrevocable Transfer Agent
Instructions, in the form of Exhibit D, executed by the Company and delivered to
and acknowledged in writing by the Transfer Agent.
"Unit" means a Share and a Warrant to purchase 0.3 shares of Common
Stock.
"Warrants" means warrants to purchase up to an aggregate of the number
of shares of Common Stock equal to 30% of the number of Shares issuable to
Purchasers hereunder, which warrant shall be in the form of Exhibit B, issuable
to the Purchasers at Closing, which warrants shall be exercisable immediately
and have an exercise price equal to 125% of the Closing Price on the last
Trading Day prior to the Date hereof, and which warrants shall have a term of
exercise of 5 years.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. At the Closing, each Purchaser shall purchase,
severally and not jointly, and the Company shall issue and sell, to each
Purchaser such number of Units set forth opposite such Purchaser's name on
Schedule A hereto at the Per Unit Purchase Price. Upon satisfaction of the
conditions set forth in Section 2.2, the Closing shall occur at the offices of
Stradling Yocca Carlson & Rauth, or such other location as the parties shall
mutually agree.
2.2 Closing Conditions. (a) At the Closing the Company shall
deliver or cause to be delivered to each Purchaser (except as otherwise provided
below):
(i) this Agreement duly executed by the Company;
(ii) a copy of the Company's instructions to the
Transfer Agent to issue stock certificates evidencing such number of Shares set
forth opposite each Purchaser's name on Schedule A hereto,
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(iii) within three (3) Trading Days following the
Date hereof, one or more stock certificates, registered in the name of such
Purchaser free and clear of all restrictive and other legends (except as
expressly provided in Section 4.1(b) hereof), evidencing such number of Shares
set forth opposite such Purchaser's name on Schedule A hereto, registered in the
name of such Purchaser;
(iv) a Warrant, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to acquire up
to the number of shares of Common Stock equal to 30% of the number of Shares
issuable to such Purchaser pursuant to Section 2.2(a)(i), as set forth opposite
such Purchaser's name on Schedule A hereto;
(v) the Registration Rights Agreement duly
executed by the Company;
(vi) a legal opinion of Company Counsel, in the
form of Exhibit C, executed by such counsel and delivered to the Purchasers; and
(vii) duly executed Transfer Agent Instructions
acknowledged by the Transfer Agent.
(b) At the Closing each Purchaser shall deliver or cause
to be delivered to the Company the following:
(i) this Agreement duly executed by such
Purchaser;
(ii) upon delivery of the applicable stock
certificates as provided in Section 2.2(a)(iii) above (which may be satisfied by
a facsimile copy and an agreement to deliver the original certificates by
overnight courier), such Purchaser's Subscription Amount as to such Closing by
wire transfer to the account of the Company as provided to the Purchasers in
writing prior to the Closing Date; and
(iii) the Registration Rights Agreement duly
executed by such Purchaser.
(c) All representations and warranties of the other party
contained herein shall remain true and correct as of the Closing Date (except
for representations and warranties that speak as of a specific date, which
representations and warranties must be correct as of such date), and each party
shall have performed and complied in all material respects with the covenants
and conditions required by this Agreement to be performed or complied with by
the party at or prior to the Closing.
(d) As of the Closing Date, there shall have been no
Material Adverse Effect with respect to the Company since the date hereof.
(e) From the date hereof to the Closing Date, trading in
the Common Stock shall not have been suspended by the Commission (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, at any time prior to
the Closing Date, trading in securities generally as reported by Bloomberg
Financial Markets shall not have been suspended or limited, or minimum prices
shall not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set
forth under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:
(a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than those listed on Schedule 3.1(a). The Company owns,
directly or indirectly, all of the capital stock or comparable equity interests
of each Subsidiary free and clear of any lien, charge, security interest,
encumbrance, right of first refusal or other restriction (collectively,
"Liens"), and all the issued and outstanding shares of capital stock or
comparable equity interest of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company
and its Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and its Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have or reasonably be expected to result
in (i) an adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, prospects, business or condition (financial or otherwise) of
the Company and its Subsidiaries, taken as a whole, or (iii) adversely impair
the Company's ability to perform fully on a timely basis its obligations under
any Transaction Document (any of (i), (ii) or (iii), a "Material Adverse
Effect").
(c) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of each of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of the Company and no further consent or action
is required by the Company, its Board of Directors or its stockholders. Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
(d) No Conflicts. The execution, delivery and performance
of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of the Company's or any Subsidiary's
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any
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Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as would not have or
reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (a) the filing with the Commission of the Registration
Statement, the application(s) to each Trading Market for the listing of the
Shares and Warrant Shares for trading thereon in the time and manner required
thereby, and applicable Blue Sky filings, (b) such as have already been obtained
or such exemptive filings as are required to be made under applicable securities
laws, and (c) such other filings as may be required following the Closing Date
under the Securities Act, the Exchange Act and corporate law.
(f) Issuance of the Securities. The Securities are duly
authorized and, the Shares and Warrant Shares, when issued and paid for in
accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens and shall not be
subject to preemptive rights or similar rights of stockholders. The Company has
reserved from its duly authorized capital stock the maximum number of shares of
Common Stock issuable pursuant to this Agreement and the Warrants.
(g) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock, options and other securities
of the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is as set forth in the
SEC Reports as of the respective dates thereof. All outstanding shares of
capital stock are duly authorized, validly issued, fully paid and nonassessable
and have been issued in compliance with all applicable securities laws. Except
as disclosed in Schedule 3.1(g), there are no outstanding options, warrants,
script rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Except as set forth on Schedule
3.1(g), there are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders). The issue and sale of the Company Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under such securities. To the knowledge of the Company, except as
specifically disclosed in Schedule 3.1(g), no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act),
or has the right to acquire, by agreement with or by obligation binding upon the
Company, beneficial ownership of in excess of 5% of the outstanding Common
Stock, ignoring for such purposes any limitation on the number of shares of
Common Stock that may be owned at any single time.
(h) SEC Reports; Financial Statements. The Company has
filed all reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange Act,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto (together with any materials filed by the Company
under the Exchange Act, whether or not
7
required), being collectively referred to herein as the "SEC Reports") on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, as applicable, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP or may be condensed or summary statements, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
The Company represents, warrants and confirms that each press release
disseminated during the 12 months preceding the date of this Agreement did not
at the time of release 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 are
made, not misleading.
(i) Material Changes. Since the date of the latest
audited financial statements included within the SEC Reports, except as
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information.
(j) Litigation. Except as disclosed in the SEC Reports,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an "Action") which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
nor, to the knowledge of the Company, any director or officer thereof, is or has
been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
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(k) Labor Relations. No material labor dispute exists or,
to the knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result in a
Material Adverse Effect.
(l) Compliance. Except as disclosed in the SEC Reports,
neither the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in the case of clauses (i), (ii) and (iii) as would not have or
reasonably be expected to result in a Material Adverse Effect.
(m) Regulatory Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the
failure to possess such permits would not have or reasonably be expected to
result in a Material Adverse Effect ("Material Permits"), and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.
(n) Title to Assets. The Company and its Subsidiaries
have good and marketable title in fee simple to all real property owned by them
that is material to the business of the Company, and good and marketable title
in all personal property owned by them that is material to the business of the
Company, in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. To the
knowledge of the Company, any real property and facilities held under lease by
the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and its Subsidiaries are in material
compliance.
(o) Patents and Trademarks. The Company and its
Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports and
which the failure to so have could have or reasonably be expected to result in a
Material Adverse Effect (collectively, the "Intellectual Property Rights").
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes the rights of any Person. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.
(p) Insurance. The Company and its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in
which the Company and its Subsidiaries are engaged. Neither the Company nor any
of its Subsidiaries has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business.
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(q) Transactions With Affiliates and Employees. Except as
set forth in the SEC Reports, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(r) Internal Accounting Controls. The Company and its
Subsidiaries maintains 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 GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company
and designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company's Form 10-K or 10-Q, as the case may be, is
being prepared. The Company's certifying officers have evaluated the
effectiveness of the Company's controls and procedures as of a date within 90
days prior to the filing date of the Form 10-Q for the quarter ended September
30, 2003 (such date, the "Evaluation Date"). The Company presented in its Form
10-Q for the quarter ended September 30, 2003 the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls (as such
term is defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to
the knowledge of the Company, in other factors that could significantly affect
the Company's internal controls.
(s) Certain Fees. Except for the fees Except for fees
payable to Reedland or as described on Schedule 3.1(s), no brokerage or finder's
fees or commissions are or will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by this
Agreement. The Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.
(t) Private Placement. Assuming the accuracy of the
Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchasers as contemplated hereby. The issuance
and sale of the Securities hereunder does not contravene the rules and
regulations of the Trading Market.
(u) Investment Company. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(v) Registration Rights. Except as set forth in the
Disclosure Schedule or as disclosed in the SEC Reports, no Person has any right
to cause the Company to effect the registration under the Securities Act of any
securities of the Company.
10
(w) Listing and Maintenance Requirements. The Company has
not, in the two years preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.
(x) Application of Takeover Protections. The Company and
its Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, the Company's issuance of
the Securities and the Purchasers' ownership of the Securities.
(y) Disclosure. The Company confirms that neither the
Company nor any other Person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that constitutes or
might constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, furnished by or on behalf of the Company are true and correct and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. No event
or circumstance has occurred or information exists with respect to the Company,
its Subsidiaries or their respective businesses, properties, prospects,
operations or condition (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed.
(z) No Integrated Offering. Neither the Company, nor any
of its affiliates, nor any Person acting on its or their behalf (provided, that
the Company makes no representation with respect to the actions of Reedland)
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Securities Act or any applicable shareholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated.
(aa) S-3 Eligibility. The Company is eligible to register
the resale of the Shares and Warrant Shares on Form S-3 for transactions
involving secondary offerings, as described in General Instruction I.B.3 to Form
S-3.
Each Purchaser acknowledges and agrees that the Company does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in the
Transaction Documents.
11
3.2 Representations and Warranties of the Purchasers. Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full corporate or partnership power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement has been duly authorized by all necessary
corporate or similar action on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms.
(b) Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof in violation of applicable securities laws, without prejudice, however,
to such Purchaser's right, at all times to sell or otherwise dispose of all or
any part of such Securities pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Nothing contained
herein shall be deemed a representation or warranty by such Purchaser to hold
Securities for any period of time.
(c) Purchaser Status. At the time such Purchaser was
offered the Securities, it was, and at the date hereof it is (i) an "accredited
investor" as defined in Rule 501(a) under the Securities Act, and (ii) not a
"broker-dealer" or an affiliate of a "broker-dealer" as defined in under
applicable state and federal securities laws.
(d) Experience of Such Purchaser. Such Purchaser, either
alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser is
able to bear the economic risk of an investment in the Securities and, at the
present time, is able to afford a complete loss of such investment.
(e) Reliance on Exemptions. Such Purchaser understands
that the Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions in connection with the
issuance of the Securities.
(f) Information. Such Purchaser and its advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company, and materials relating to the offer and sale of the
Securities, that have been requested by the Purchaser or its advisors, if any.
The Purchaser and its advisors, if any, have been afforded the opportunity to
ask questions of the Company. The Purchaser acknowledges and understands that
its investment in the Securities involves a significant degree of risk.
(g) Governmental Review. Such Purchaser understands that
no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities or an investment therein.
12
(h) Residency. Such Purchaser is a resident of (or, if an
entity, has its principal place of business in) the jurisdiction set forth
immediately below such Purchaser's name on the signature pages hereto.
(i) Certain Fees. No brokerage or finder's fees or
commissions are or will be payable by such Purchaser to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement. The
Company shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by
this Agreement.
The Company acknowledges and agrees that each Purchaser does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
Section 3.2. The Company also acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm's length purchaser with
respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company or any other Purchaser (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
advice given by any Purchaser or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to such Purchaser's purchase of the Securities.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions. The Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities laws. In
connection with any transfer of Securities other than pursuant to an effective
registration statement or pursuant to Rule 144(k), to the Company, to an
Affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, reasonably acceptable
to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.
(a) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities in the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THESE SECURITIES.
13
The Company acknowledges and agrees that a Purchaser may from
time to time pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement or other loan or
financing agreement secured by the Securities and, if required under the terms
of such arrangement, such Purchaser may transfer pledged or secured Securities
to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal counsel of the
pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge or transfer. At the
appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of selling stockholders
thereunder.
(b) Certificates evidencing the Shares and Warrant Shares
shall not be required to contain any legend (including the legend set forth in
Section 4.1(b)): (i) following a sale of such Securities pursuant to an
effective registration statement (including the Registration Statement), or (ii)
following a sale of such Shares or Warrant Shares pursuant to Rule 144 (assuming
the transferor is not an Affiliate of the Company), or (iii) while such Shares
or Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the Staff of
the Commission), or (v) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act. Following such time as
restrictive legends are not required to be placed on certificates representing
Shares or Warrant Shares, the Company will, no later than three Trading Days
following the delivery by a Purchaser to the Company or the Company's transfer
agent of a certificate representing Shares or Warrant Shares containing a
restrictive legend, deliver or cause to be delivered to such Purchaser a
certificate representing such Shares or Warrant Shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.
4.2 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such holder of Securities, the Company
shall deliver to such holder a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence. As long as
any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
4.3 Integration. The Company shall not, and shall use commercially
reasonable efforts to ensure that no Affiliate thereof shall, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with
the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Purchasers or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market.
4.4 Conversion and Exercise Procedures. The form of Exercise
Notice included in the Warrants and the payment of the Exercise Price sets forth
the totality of the procedures required in order
14
to exercise the Warrants. No additional legal opinion or other information or
instructions shall be necessary to enable the Purchasers to exercise their
Warrants. The Company shall honor exercises of the Warrants and shall deliver
Warrant Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.
4.5 Securities Laws Disclosure; Publicity. The Company shall on
the date hereof, or if not feasible, by 8:30 a.m. (New York time) on the first
Trading Day following the date hereof, issue a press release reasonably
acceptable to Mainfield Enterprises, Inc., disclosing all material terms of the
transactions contemplated by the Transaction Documents, to the extent permitted
by applicable law. On the date hereof, or if not feasible, on the first Trading
Day following the date hereof , the Company shall file a Current Report on Form
8-K incorporating the press release described in the foregoing sentence, and
within one (1) Trading Day thereafter, the Company shall file a Current Report
on Form 8-K describing the terms of the transactions contemplated by the
Transaction Documents in the form required by the Exchange Act, and attaching
the material Transaction Documents as exhibits to such Form 8-K (including all
attachments, the "8-K FILINGS"). The Company and each Purchaser shall consult
with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with the Form 8-K to be
filed following the Date hereof and the registration statement contemplated by
the Registration Rights Agreement and (ii) to the extent such disclosure is
required by law or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure permitted under
subclause (i) or (ii).
4.6 Non-Public Information. The Company shall not, and shall cause
each of its Subsidiaries and its and each of their respective officers,
directors, employees and agents not to, provide any Purchaser with any material
nonpublic information regarding the Company or any of its Subsidiaries from and
after the filing of the 8-K Filings without the express written consent of such
Purchaser. Neither the Company nor any Purchaser shall issue any press releases
or any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of any Purchaser, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K
Filing and contemporaneously therewith and (ii) as is required by applicable law
and regulations (provided that in the case of clause (i) each Purchaser shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release).
4.7 Use of Proceeds. It is the current intent of the Company that
it shall use the net proceeds from the sale of the Securities hereunder for
working capital purposes and not for the satisfaction of any portion of the
Company's debt (other than payment of trade payables in the ordinary course of
the Company's business and prior practices), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.
4.8 Indemnification of Purchasers. The Company will indemnify and
hold the Purchasers and their directors, officers, shareholders, partners,
employees and agents (each, a "Purchaser Party") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees
15
and costs of investigation that any such Purchaser Party may suffer or incur as
a result of or relating to: (a) any misrepresentation, breach or inaccuracy, or
any allegation by a third party that, if true, would constitute a breach or
inaccuracy, of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents; or
(b) any cause of action, suit or claim brought or made against such Purchaser
Party and arising solely out of or solely resulting from the execution,
delivery, performance or enforcement of this Agreement or any of the other
Transaction Documents and without causation by any other activity, obligation,
condition or liability pertaining to such Purchaser. The Company will reimburse
such Purchaser for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. The indemnification
obligations of the Company under this paragraph shall be in addition to any
liability that the Company may otherwise have and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Purchasers and any such Purchaser Party. The Company also
agrees that neither the Purchasers nor any Purchaser Party shall have any
liability to the Company or any Person asserting claims on behalf of or in right
of the Company in connection with or as a result of the transactions
contemplated by the Transaction Documents, except to the extent that any Losses
incurred by the Company result from the gross negligence or willful misconduct
of the applicable Purchaser or Related Person in breach of this Agreement in
connection with such transactions. If the Company breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or reimburse the Purchasers on demand for all costs of collection and
enforcement (including reasonable attorneys fees and expenses). Without limiting
the generality of the foregoing, the Company specifically agrees to reimburse
the Purchasers on demand for all costs of enforcing the indemnification
obligations in this paragraph.
4.9 Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Shares pursuant
to this Agreement and Warrant Shares pursuant to the Warrants.
4.10 Listing of Common Stock. The Company hereby agrees to use its
commercially reasonable best efforts to maintain the listing of the Common Stock
on the Trading Market, and, unless completed prior to the Closing, to list the
applicable Shares and Warrant Shares on the Trading Market as soon as reasonably
practicable following the Closing (but not later than the earlier of the
Effective Date and the first anniversary of the Closing Date). The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will include in such application the Shares and Warrant
Shares, and will take such other action as is necessary or desirable in the
opinion of the Purchasers to cause the Shares and Warrant Shares to be listed on
such other Trading Market as promptly as possible. The Company will take all
action reasonably necessary to continue the listing and trading of its Common
Stock on a Trading Market and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the Trading
Market.
4.11 Subsequent Placements.
(a) From the date hereof until the 12-month anniversary
of the Effective Date (the "RIGHTS PERIOD"), the Company will not, directly or
indirectly, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition of) any of its or the Subsidiaries' equity or equity equivalent
securities, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for Common Stock
or Common Stock Equivalents (any such offer, sale, grant, disposition or
announcement being referred to as a "SUBSEQUENT PLACEMENT"). unless the Company
shall have first complied with this Section 4.11(a).
16
(i) The Company shall deliver to each Purchaser
a written notice (the "OFFER") of any proposed or intended issuance or sale or
exchange of the securities being offered (the "OFFERED SECURITIES") in a
Subsequent Placement, which Offer shall (w) identify and describe the Offered
Securities, (x) describe the price and other terms upon which they are to be
issued, sold or exchanged, and the number or amount of the Offered Securities to
be issued, sold or exchanged, (y) identify the lead investor or entity to which
or with which the Offered Securities are to be offered, issued, sold or
exchanged and (z) offer to issue and sell to or exchange with each Purchaser a
pro-rata portion of ONE-HALF OF the Offered Securities, based on such
Purchaser's pro rata portion of the aggregate purchase price paid by the
Purchasers for all of the Shares purchased hereunder (the "BASIC AMOUNT"), and
with respect to each Purchaser that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Purchasers as such Purchaser shall indicate it will purchase or acquire
should the other Purchasers subscribe for less than their Basic Amounts (the
"UNDERSUBSCRIPTION AMOUNT").
(ii) To accept an Offer, in whole or in part, a
Purchaser must deliver a written notice to the Company prior to the end of the
five (5) Trading Day period of the Offer, setting forth the portion of the
Purchaser's Basic Amount that such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, the Undersubscription
Amount, if any, that such Purchaser elects to purchase (in either case, the
"NOTICE OF ACCEPTANCE"). If the Basic Amounts subscribed for by all Purchasers
are less than the total of all of the Basic Amounts, then each Purchaser who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the "AVAILABLE
UNDERSUBSCRIPTION AMOUNT"), each Purchaser who has subscribed for any
Undersubscription Amount shall be entitled to purchase on that portion of the
Available Undersubscription Amount as the Basic Amount of such Purchaser bears
to the total Basic Amounts of all Purchasers that have subscribed for
Undersubscription Amounts, subject to rounding by the Board of Directors to the
extent its deems reasonably necessary.
(iii) The Company shall have ten (10) Trading Days
from the expiration of the period set forth in Section 4.11(a)(ii) above to
issue, sell or exchange all or any part of such Offered Securities as to which a
Notice of Acceptance has not been given by the Purchasers (the "REFUSED
SECURITIES"), but only pursuant to the Offer (if so described therein) and only
upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the acquiring Person or Persons
or less favorable to the Company than those set forth in the Offer. In the event
there is a change in the terms of the Offer during the period set forth in
Section 4.11(a)(ii) above or during the 10 Trading Day period described in this
subsection, provided that the Offer remains for the same type of securities as
in the original Offer, then the Company shall notify each Purchaser who has
previously accepted the Offer of such material changes, and such Purchaser shall
have two (2) Trading Days to
17
accept or reject such modified Offer. Any other change in terms of the Offer
shall require a new Offer under the procedure specified in this Agreement.
(iv) In the event the Company shall propose to
sell less than all the Refused Securities (any such sale to be in the manner and
on the terms specified in Section 4.11(a)(iii) above), then each Purchaser may,
at its sole option and in its sole discretion, reduce the number or amount of
the Offered Securities specified in its Notice of Acceptance to an amount that
shall be not less than the number or amount of the Offered Securities that the
Purchaser elected to purchase pursuant to Section 4.11(a)(ii) above multiplied
by a fraction, (i) the numerator of which shall be the number or amount of
Offered Securities the Company actually proposes to issue, sell or exchange
(including Offered Securities to be issued or sold to Purchasers pursuant to
Section 4.11(a)(ii) above prior to such reduction) and (ii) the denominator of
which shall be the original amount of the Offered Securities. In the event that
any Purchaser so elects to reduce the number or amount of Offered Securities
specified in its Notice of Acceptance, the Company may not issue, sell or
exchange more than the reduced number or amount of the Offered Securities unless
and until such securities have again been offered to the Purchasers in
accordance with Section 4.11(a)(i) above.
(v) Upon the closing of the issuance, sale or
exchange of all or less than all of the Refused Securities, the Purchasers shall
acquire from the Company, and the Company shall issue to the Purchasers, the
number or amount of Offered Securities specified in the Notices of Acceptance,
as reduced pursuant to Section 4.11(a)(iv) above if the Purchasers have so
elected, upon the terms and conditions specified in the Offer. The purchase by
the Purchasers of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Purchasers of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Purchasers and their respective counsel, and if the
Purchasers decline to execute such documents with respect to the Offered
Securities, such Purchasers will be deemed to have rejected the Offer.
(vi) Any Offered Securities not acquired by the
Purchasers or other Persons in accordance with Section 4.11(a)(iii) above may
not be issued, sold or exchanged until they are again offered to the Purchasers
under the procedures specified in this Agreement.
18
(b) The restrictions contained in paragraph (a) of this
Section shall not apply to Excluded Stock. The Rights Period set forth in the
preceding paragraph (a) shall be extended for the number of Trading Days during
such period in which (i) trading in the Common Stock is suspended by any Trading
Market, (ii) the Registration Statement is not effective, or (iii) the
prospectus included in the Registration Statement may not be used by the
Purchasers for the resale of Registrable Securities thereunder.
(c) Notwithstanding any other provision of this Section
4.11, to the extent, but only to the extent, that the Company has required each
Person to whom an offer to purchase Offered Securities was made (whether
pursuant to this Section 4.11 or otherwise) to be expressly bound by a
confidentiality agreement with respect to any material nonpublic information
disclosed to such Persons in connection with their evaluation of a potential
purchase of Offered Securities, the Company shall not be obligated to deliver
the Offer to any Purchaser unless such Purchaser to be bound by a
confidentiality agreement identical in form and substance to any confidentiality
agreement legally binding upon each such other Person, after being requested to
do so by the Company.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by the Company
or, as to any Purchaser and the Company, any Purchaser, by written notice to the
other parties, if the Closing has not been consummated by the third Business Day
following the date of this Agreement; provided that no such termination will
affect the right of any party to sue for any breach by the other party (or
parties).
5.2 Fees and Expenses. At the Closing, the Company shall pay to
Mainfield Enterprises, Inc. an aggregate of $20,000 for their legal fees and
expenses incurred in connection with the preparation and negotiation of the
Transaction Documents. In lieu of the foregoing payment, Mainfield Enterprises,
Inc. may retain such amount at the Closing or require the Company to pay such
amount directly to Proskauer Rose LLP. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of the Securities.
5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.4 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 on the signature pages attached hereto prior to 6:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number on the signature pages attached hereto on a day that is
not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
19
5.5 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchasers holding a majority of the Shares.
No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right. Any waiver effected in accordance with this Section 5.5 shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible or
exercisable), each future holder of all such securities, and the Company.
5.6 Construction. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
5.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchasers holding a majority
of the Shares; provided, however, that no consent shall be required in
connection with a merger, consolidation or sale of substantially all of the
Company's assets. Any Purchaser may assign any or all of its rights under this
Agreement to any Person in connection with the transfer of the Securities,
provided such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions hereof that apply to the "Purchasers".
Notwithstanding anything to the contrary herein, Securities may be assigned to
any Person in connection with a bona fide margin account or other loan or
financing arrangement secured by such Securities.
5.8 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.
5.9 Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York. Each party agrees that all legal proceedings concerning
the interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the city of New York, borough of Manhattan. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the city of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by delivering a copy thereof via
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any
20
provisions of a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and delivery and/or
exercise of the Securities, as applicable.
5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to
the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
5.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity or security, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a
payment or payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall, to the
extent permissible under
21
applicable law, be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
5.17 Adjustments in Share Numbers and Prices. In the event of any
stock split, subdivision, dividend or distribution payable in shares of Common
Stock (or other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly shares of Common Stock), combination
or other similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
5.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. The Company
has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or
requested to do so by the Purchasers.
(Signature Page Follows)
22
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
EPOCH BIOSCIENCES, INC. Address for Notice:
------------------
21720 23rd Drive SE, #150
Bothell, WA 98021
By: /s/ William G. Gerber Tel: (425) 482-5555
Name: William G. Gerber Fax: (425) 482-5550
Title: President and Chief Executive Officer Attn: President and CEO
With copy to (which shall not constitute notice):
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attn: Lawrence B. Cohn
Tel: (949) 725-4000
Fax: (949) 725-4100
[SIGNATURE PAGE CONTINUES]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Mainfield Enterprises, Inc.
By: /s/ Avi Vigdor
Name: Avi Vigdor
Title: Authorized Signatory
Subscription Amount: $2,550,000
Shares: 1,020,000
Warrants: 306,000
Address for Notice:
- ------------------
Mainfield Enterprises, Inc.
c/o Sage Capital Growth, Inc.
660 Madison Avenue
New York, NY 10022
Telephone No.: (212) 651-9000
Facsimile No.: (212) 651-9010
Attn: Eldad Gal
With copies to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Facsimile No.: (212) 969-2900
Telephone No.: (212) 969-3000
Attn: Adam J. Kansler, Esq.
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Elliott Associates, L.P
By: /s/ Elliot Greenberg
--------------------
Name: Elliot Greenberg
Title: Vice President
Subscription Amount: $400,000
Shares: 160,000
Warrants: 48,000
Address for Notice:
- ------------------
Elliott Associates, L.P.
c/o Elliott Management Corp
712 Fifth Avenue, 35th Floor
New York, NY 10019
Telephone No.: (212) 974-6000
Facsimile No.: (212) 974-2092
Attn: Brett Cohen and Elliot Greenberg
With copies to:
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, New York 10176
Facsimile No.: (212) 986-6000
Telephone No.: (212) 986-8866
Attn: Lawrence Hui, Esq.
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Elliott International, L.P.
By: /s/ Elliot Greenberg
Name: Elliot Greenberg
Title: Vice President
Subscription Amount: $600,000
Shares: 240,000
Warrants: 72,000
Address for Notice:
- ------------------
Elliott International, L.P.
c/o Elliott Management Corp
712 Fifth Avenue, 35th Floor
New York, NY 10019
Telephone No.: (212) 974-6000
Facsimile No.: (212) 974-2092
Attn: Brett Cohen and Elliot Greenberg
With copies to:
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, New York 10176
Facsimile No.: (212) 986-6000
Telephone No.: (212) 986-8866
Attn: Lawrence Hui, Esq.
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Enable Growth Partners, L.P
By: /s/ Mitch Levine
Name: Mitch Levine
Title: Managing Partner
Subscription Amount: $250,000
Shares: 100,000
Warrants: 30,000
Address for Notice:
- ------------------
Enable Growth Partners, LP
One Sansome Street, Suite 2900
San Francisco, CA 94104
Telephone No.: (415) 835-3838
Facsimile No.: (415) 835-3843
Attn: Mitch Levine, Managing Partner
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
MFN, LLC
By: /s/ Louis Ottimo
Name: Louis Ottimo
Title: Managing Member
Subscription Amount: $1,000,000
Shares: 400,000
Warrants: 120,000
Address for Notice:
- ------------------
MFN LLC
600 Old Country Road - Suite 207
Garden City, New York 11530
Attn.: Louis Ottimo/Robert M. Bursky, Esq.
Telephone No.: (516) 396-1300
Facsimile No.: (516) 396-1239
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Proximity Partners LP
By: /s/ Steven Crosby
Name: Steven Crosby
Title: General Partner
Subscription Amount: $250,000
Shares: 100,000
Warrants: 30,000
Legal Name of Record Holder: Proximity Partners LP
Tax ID No.: 82-0555502
Address for Notice:
- ------------------
Proximity Partners
c/o Steve Crosby
1 Montgomery St., Ste. 3300
San Francisco, CA 94104
Telephone No.: (415) 397-1755
Facsimile No.: (415) 397-1790
Attn: Steve Crosby
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Proximity Fund LP
By: /s/ Steven Crosby
Name: Steven Crosby
Title: General Partner
Subscription Amount: $250,000
Shares: 100,000
Warrants: 30,000
Legal Name of Record Holder: Proximity Fund LP
Tax ID No.: 94-3303099
Address for Notice:
- ------------------
Proximity Fund
c/o Steve Crosby
1 Montgomery St., Ste. 3300
San Francisco, CA 94104
Telephone No.: (415) 397-1755
Facsimile No.: (415) 397-1790
Attn: Steve Crosby
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Southport Millennium Fund II, L.P.
By: /s/ Managing Member
Name: James M. Thorburn
Title: Managing Member
Subscription Amount: $221,250
Shares: 88,500
Warrants: 26,550
Legal Name of Record Holder: Southport Millennium Fund II, L.P.
Tax ID No.: 06-1622747
Address for Notice:
- ------------------
Southport Millennium Fund II, L.P.
c/o Dawson-Herman Capital Management, Inc.
354 Pequot Avenue
Southport, CT 06890
Telephone No.: (203) 254-0091
Facsimile No.: (203) 254-0657
Attn: James M. Thorburn
with copies to:
Seward & Kissel, LLP
One Battery Park Plaza
New York, NY 10004
Facsimile No.: (212) 480-8421
Telephone No.: (212) 574-1200
Attn: Pat Poglinco
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Southport Millennium Fund, L.P.
By: /s/ Managing Member
Name: James M. Thorburn
Title: Managing Member
Subscription Amount: $109,000
Shares: 43,600
Warrants: 13,080
Legal Name of Record Holder: Southport Millenium Fund, L.P.
Tax ID No.: 06-156-5910
Address for Notice:
- ------------------
Southport Millennium Fund, L.P.
c/o Dawson-Herman Capital Management, Inc.
354 Pequot Avenue
Southport, CT 06890
Telephone No.: (203) 254-0091
Facsimile No.: (203) 254-0657
Attn: James M. Thorburn
With copies to:
Patricia Poglinco, Esq.
Seward & Kissel, LLP
One Battery Park Plaza
New York, NY 10004
Facsimile No.: (212) 480-8421
Telephone No.: (212) 574-1247
Attn: Patricia Poglinco
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Southport Millennium Micro Cap Fund, L.P.
By: /s/ Managing Member
Name: James M. Thorburn
Title: Managing Member
Subscription Amount: $141,250
Shares: 56,500
Warrants: 16,950
Legal Name of Record Holder: Southport Millennium Micro Cap Fund, L.P.
Tax ID No.: 20-0435674
Address for Notice:
- ------------------
c/o Dawson-Herman Capital Management, Inc.
Southport Millennium Micro Cap Fund, L.P.
354 Pequot Avenue
Southport, CT 06890
Telephone No.: (203) 254-0091
Facsimile No.: (203) 254-0657
Attn: James M. Thorburn
With copies to:
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
Facsimile No.: (212) 480-8421
Telephone No.: (212) 574-1200
Attn: Pat Poglinco
[PURCHASERS' SIGNATURE PAGES FOLLOW]
[PURCHASER'S SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Southport Millennium Offshore Fund, L.P.
By: /s/ Managing Member
Name: James M. Thorburn
Title: Director
Subscription Amount: $403,500
Shares: 161,400
Warrants: 48,420
Legal Name of Record Holder: Southport Millennium Offshore Fund, Inc.
Tax ID No.: N/A
Address for Notice:
- ------------------
Southport Millennium Offshore Fund, Inc.
c/o Dawson-Herman Capital Management, Inc.
354 Pequot Avenue
Southport, CT 06890
Telephone No.: (203) 254-0091
Facsimile No.: (203) 254-0657
Attn: James M. Thorburn
With copies to:
Seward & Kissel, LLP
One Battery Park Plaza
New York, NY 10004
Facsimile No.: (212) 480-8421
Telephone No.: (212) 574-1200
Attn: Patricia Poglinco, Esq.
[PURCHASERS' SIGNATURE PAGES FOLLOW]
SCHEDULE A
NAME OF PURCHASER NUMBER OF SHARES NUMBER OF WARRANTS
- -----------------------------------------------------------------------------------
Elliott Associates, L.P. 160,000 48,000
Elliott International, L.P. 240,000 72,000
Enable Growth Partners, L.P. 100,000 30,000
Mainfield Enterprises, Inc. 1,020,000 306,000
MFN, LLC 400,000 120,000
Proximity Partners LP 100,000 30,000
Proximity Fund LP 100,000 30,000
Southport Millennium Fund II, L.P. 88,500 26,550
Southport Millennium Fund, L.P. 43,600 13,080
Southport Millennium Micro Cap Fund, L.P. 56,500 16,950
Southport Millennium Offshore Fund, L.P. 161,400 48,420
------------ -----------
TOTAL: 2,470,000 741,000
35