Equity Line Financing Agreement - Biopure Corp. and Societe Generale
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EQUITY LINE FINANCING AGREEMENT
BETWEEN
BIOPURE CORPORATION
AND
SOCIETE GENERALE
DATED AS OF
JUNE 21, 2001
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EQUITY LINE FINANCING AGREEMENT
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EQUITY LINE FINANCING AGREEMENT (this "Agreement"), dated as of June 21,
2001, between BIOPURE CORPORATION, a Delaware corporation (the "Company"), and
SOCIETE GENERALE, a bank organized under the laws of France (the "Investor").
W I T N E S S E T H:
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company may issue and sell to the Investor from
time to time as provided herein, and the Investor shall purchase from the
Company, shares of Common Stock for an aggregate purchase price up to
$75,000,000 on a private placement basis pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933; and
WHEREAS, the Investor shall be entitled to resell shares of Common Stock
acquired hereunder pursuant to a resale registration statement established by
the Company pursuant to the terms of the Registration Rights Agreement between
the Company and the Investor which shall be declared effective by the Commission
prior to the delivery of a Draw Down Notice hereunder.
NOW THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
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SECTION 1.01. CERTAIN DEFINITIONS. For purposes of this Agreement,
capitalized terms used herein and not otherwise defined shall have the following
respective meanings:
"Affiliate" of a Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first- mentioned Person. The term "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Average Daily Trading Volume" with respect to any Draw Down effected
by the Company shall mean the average daily volume of shares of Common Stock
traded on the Principal Market as reported by Bloomberg Financial during the
five (5) consecutive Trading Day period ending on the Trading Day immediately
preceding the date on which a Draw Down Notice is delivered pursuant to Section
2.03(b) hereof.
"Bloomberg Financial" shall mean Bloomberg Financial Markets or an
equivalent reliable reporting service acceptable to and hereafter designated by
the Investor.
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"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock, including each class of common stock and preferred stock, of such Person.
"Closing" shall have the meaning set forth in Section 2.02(a).
"Closing Date" shall mean the date on which the Closing occurs.
"Comfort Letter" shall mean a letter from Ernst & Young LLP or another
"Big Five" independent public accounting firm, in form and substance
satisfactory to the Investor, addressed to the Investor and dated as of the
Effective Date or the filing date of any Current Report on Form 8-K incorporated
by reference into the Registration Statement, if such report contains
substantial financial information, (i) confirming that they are independent
auditors within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission and (ii) stating, as of the Effective
Date or filing date, as applicable, the conclusions and findings of such firm
with respect to the financial information and other matters ordinarily covered
by accountants' "comfort letters" to underwriters in connection with registered
public offerings included in the Registration Statement on Form 8-K, as
applicable.
"Commission" means the United States Securities and Exchange
Commission.
"Commitment Period" shall mean the period commencing on the Effective
Date and expiring on the earliest to occur of (x) the date on which the Investor
shall have purchased Draw Down Shares pursuant to this Agreement for an
aggregate Purchase Price of $75,000,000, (y) the date this Agreement is
terminated pursuant to Article VII and (z) the date occurring twenty-four (24)
months from the date hereof.
"Common Stock" shall mean the Company's Class A Common Stock, $.01 par
value per share.
"Common Shares" shall mean shares of the Company's Common Stock issued
or issuable pursuant to this Agreement.
"Draw Down" shall mean each occasion the Company elects to exercise
its right to deliver a Draw Down Notice requiring the Investor to purchase the
Common Shares as specified in such Draw Down Notice, subject to the terms and
conditions of this Agreement.
"Draw Down Cancellation" shall have the meaning set forth in Section
6.04(a).
"Draw Down Cancellation Date" shall have the meaning set forth in
Section 6.04(a).
"Draw Down Cancellation Notice" shall have the meaning set forth in
Section 6.04(a).
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"Draw Down Date" shall mean any Trading Day during the Commitment
Period that a Draw Down Notice to sell Common Stock to the Investor is deemed
delivered pursuant to Section 2.03(b) hereof.
"Draw Down Notice" shall mean a written notice to the Investor
delivered in accordance with this Agreement in the form attached hereto as
Exhibit A setting forth the Investment Amount that the Company intends to sell
to the Investor pursuant to such Draw Down and the Floor Price applicable to
such Draw Down.
"Draw Down Shares" shall mean all shares of Common Stock issued or
issuable pursuant to a Draw Down that has occurred or may occur in accordance
with the terms and conditions of this Agreement.
"DWAC Transfer" shall have the meaning set forth in Section 2.04.
"Effective Date" shall mean the date on which the Commission first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 6.02(a).
"Exchange Act" means the Securities Exchange Act of 1934.
"Floor Price" shall mean the lowest VWAP (before taking into account
any discount used to calculate the Purchase Price hereunder) at which the
Company will sell its Common Stock as specified in the Draw Down Notice
delivered in connection with any Draw Down effected pursuant to this Agreement,
but in no event shall the Floor Price be less than $13.00.
"Governmental Authority" means any federal or state government or
political subdivision thereof and any agency or other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Investment Amount" shall mean the aggregate dollar amount (within the
range specified in Section 2.03) of any Draw Down Shares to be purchased by the
Investor with respect to any Draw Down effected by the Company in accordance
with Section 2.03 hereof.
"Irrevocable Transfer Agent Instructions" shall have the meaning set
forth in Article IX.
"Material Adverse Effect" has the meaning set forth in Section 3.01.
"Maximum Draw Down Amount" with respect to any Draw Down effected by
the Company in accordance with Section 2.03 hereof shall mean the lesser of (i)
$3,000,000 (subject to increase to (x) $3,750,000 in the event the average VWAP
for the Common Stock for each of the five Trading Days immediately preceding the
applicable Draw Down Date, multiplied by the Average Daily Trading Volume of the
Common Stock applicable with respect to such Draw Down Date shall exceed
$6,250,000 and (y) $4,500,000 in the event the average VWAP for the Common Stock
for each of the five Trading Days immediately preceding the applicable Draw Down
Date, multiplied by the Average Daily Trading Volume of the Common Stock
applicable
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with respect to such Draw Down Date shall exceed $7,500,000) and (ii) 15% of the
product of (x) the average VWAP for the Common Stock for each of the five
Trading Days immediately preceding the applicable Draw Down Date, multiplied by
(y) the Average Daily Trading Volume of the Common Stock applicable with respect
to such Draw Down Date.
"Maximum Share Amount" shall have the meaning set forth in Section
2.01(c).
"Minimum Draw Down Amount" shall mean $500,000.
"Periodic Accountant's Report" shall mean a review report from Ernst &
Young or another "Big Five" independent public accounting firm, delivered to the
Investor within 45 days of the end of each of the Company's fiscal quarters
(other than the fourth fiscal quarter) in conjunction with such accounting
firm's issuance to the Company of a SAS No. 71 review report with respect to
each of the Company's quarterly financial statements.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind.
"Principal Market" shall mean the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.
"Prospectus Supplement" shall have the meaning set forth in Section
6.02(o).
"Purchase Price" with respect to each Trading Day during a Valuation
Period shall mean 97% of the VWAP for such Trading Day.
"Registrable Securities" shall mean the Draw Down Shares, and any
other shares of capital stock issued or issuable as a dividend on or in exchange
for or otherwise with respect to the Draw Down Shares and until (i) the
Registration Statement has been declared effective by the Commission and all
such shares have been disposed of pursuant to the Registration Statement, (ii)
all such shares have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) are
met, (iii) all such shares have been otherwise transferred to holders who may
trade such shares without restriction under the Securities Act, and the Company
shall have delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, (iv) such time as, in the opinion
of counsel to the Investor, all such shares may be sold without any time, volume
or manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act or (v) any combination of the foregoing
relating to all such shares.
"Registration Rights Agreement" shall mean the agreement regarding the
filing of the Registration Statement for the resale of the Registrable
Securities entered into between the Company and the Investor as of the Closing
Date.
"Registration Statement" shall mean a registration statement on such
form promulgated by the Commission for which the Company then qualifies and
which counsel for the Company shall deem appropriate and which form shall be
available for the resale of the
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Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement and the Registration Rights Agreement, and in
accordance with the intended method of distribution of such securities, for the
registration of the resale by the Investor of the Registrable Securities under
the Securities Act.
"SEC Reports" means the Company's Annual Report on Form 10-K for the
year ended October 31, 2000 and the Company's Quarterly Reports on Form 10-Q for
the quarters ended January 31, 2001 and April 30, 2001.
"Securities Act" means the Securities Act of 1933.
"Settlement Date" shall mean the sixth Trading Day following the Draw
Down Date.
"Trading Day" shall mean any day during which the Principal Market
shall be open for trading.
"Transaction Documents" means, collectively, this Agreement and the
Registration Rights Agreement.
"Valuation Period" shall mean the period of five (5) consecutive
Trading Days following the Trading Day on which a Draw Down Notice is delivered
or deemed to be delivered pursuant to Section 2.03(b) hereof.
"VWAP" for any given Trading Day shall mean the daily volume weighted
average price of the Common Stock on such date on the Principal Market as
reported by Bloomberg Financial using the AQR function.
ARTICLE II
SALE AND PURCHASE OF COMMON STOCK
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SECTION 2.01. INVESTMENTS. (a) Purchase and Sale of Common Stock. Subject
to the terms and conditions of this Agreement, the Company, at its sole and
exclusive option, may issue and sell to the Investor, and the Investor shall
purchase from the Company shares of the Company's Common Stock, based on such
number of Draw Downs (subject to the Maximum Draw Down Amount and the Minimum
Draw Down Amount) as the Company, in its sole discretion, shall choose to
deliver during the Commitment Period until the aggregate Investment Amount with
respect to Common Shares purchased under this Agreement equals $75,000,000 or
this Agreement is otherwise terminated.
(b) Draw Downs. Upon the terms and subject to the conditions set forth
herein, on any Trading Day as provided in Section 2.03(b) hereof during the
Commitment Period on which the conditions set forth in Section 6.02 and 6.03
hereof have been satisfied, the Company may exercise a Draw Down by the delivery
of a Draw Down Notice, executed by the President, Chairman or Chief Financial
Officer of the Company, to the Investor. The aggregate number of Draw Down
Shares that the Investor shall be obligated to purchase pursuant to such
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Draw Down shall be the sum of the Draw Down Shares issuable in respect of each
day during the Valuation Period, determined on a daily basis during the
applicable Valuation Period in accordance with Section 2.03(c) below (unless
Common Shares may not be sold in respect of any Trading Day during the Valuation
Period as provided by this Agreement). Each Draw Down will be settled on the
applicable Settlement Date following the Draw Down Date.
(c) Maximum Amount of Draw Down Shares. No more than 5,000,000 shares
of Common Stock (the "Maximum Share Amount") may be issued and sold pursuant to
all Draw Downs hereunder.
(d) Limitation on Issuance of Common Shares. During any 61 consecutive
day period, the Company may not issue or sell Common Shares to the Investor
under this Agreement aggregating in excess of 9.9% of the total number of shares
of Common Stock outstanding on the first day of such period. The foregoing
limitation may not be waived, amended or modified.
SECTION 2.02. EFFECTIVENESS. The effectiveness of this Agreement (the
"Closing") shall be deemed to take place concurrently with the execution and
delivery of this Agreement by the parties hereto and the completion of the
closing transactions set forth in the immediately following sentence. At the
Closing, the following closing transactions shall take place, each of which
shall be deemed to occur simultaneously with the Closing: (i) the Company and
the Investor shall execute and deliver the Registration Rights Agreement; (ii)
the Company shall deliver to the Investor a certificate executed by the
Secretary of the Company, signing in such capacity, dated the date of the
Closing (A) certifying that attached thereto are true and complete copies of the
resolutions duly adopted by the Board of Directors of the Company authorizing
the execution and delivery of the Transaction Documents and the consummation of
the transactions contemplated thereby (including, without limitation, the
reservation and issuance of the Common Stock pursuant to this Agreement), which
authorization shall be in full force and effect on and as of the date of such
certificate and (B) certifying and attesting to the office, incumbency, due
authority and specimen signatures of each Person who executed any Transaction
Document for or on behalf of the Company; (iii) the Company shall deliver to the
Investor a certificate executed by the President, the Chairman or the Chief
Financial Officer of the Company, signing in such capacity, dated the date of
the Closing, confirming the accuracy of the representations and warranties of
the Company contained in this Agreement; (iv) LeBoeuf, Lamb, Greene & MacRae
L.L.P., counsel to the Company, shall deliver to the Investor an opinion, dated
the date of the Closing and addressed to the Investor, covering customary
matters; and (v) the Company shall pay the expenses set forth in Section 9.02
hereof by wire transfer to the account designated by the Investor in writing
prior to the Closing.
SECTION 2.03. MECHANICS OF DRAW DOWNS. (a) Draw Down Notice. On any
Trading Day during the Commitment Period, the Company may deliver a Draw Down
Notice to the Investor, subject to the satisfaction of the conditions set forth
in Sections 6.02 and 6.03; provided, however, the Investment Amount for each
Draw Down as designated by the Company in the applicable Draw Down Notice shall
be neither less than the Minimum Draw Down Amount nor more than the Maximum Draw
Down Amount (as determined as of the applicable Draw Down Date); provided
further, however, that if the Maximum Draw Down Amount as of
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the applicable Draw Down Date is less than the Minimum Draw Down Amount, the
Company shall not be entitled to deliver any such Draw Down Notice.
(b) Delivery of Draw Down Notice. A Draw Down Notice shall be deemed
delivered on (i) the Trading Day that it is received by facsimile or otherwise
(and the Company confirms such delivery by e-mail notice or by telephone
(including voicemail message)) by the Investor if received prior to 12:00 noon,
New York City time such Trading Day, or (ii) in the event it is received by
facsimile or otherwise (and the Company confirms such delivery by e-mail notice
or telephone (including voicemail message)) subsequent to 12:00 noon, New York
City time, on a Trading Day, the immediately succeeding Trading Day. No Draw
Down Notice may be delivered other than on a Trading Day during the Commitment
Period.
(c) Determination of Draw Down Shares Issuable. Subject to Section
2.03(d) and (e) hereof, the number of Draw Down Shares to be purchased by the
Investor with respect to any Draw Down shall be determined on a daily basis
during the applicable Valuation Period and shall equal with respect to any such
Trading Day the quotient of (x) one-fifth (1/5) of the Investment Amount,
divided by (y) the Purchase Price for such Trading Day. The portion of the
Investment Amount for which Draw Down Shares may be issued for each Trading Day
during the Valuation Period may not exceed one-fifth (1/5) of the Investment
Amount.
(d) Floor Price Limitation. If the VWAP on any Trading Day during a
Valuation Period is less than the Floor Price specified in the applicable Draw
Down Notice, the Company shall not sell and the Investor shall not purchase the
Draw Down Shares otherwise to be purchased for such Trading Day. In such case,
the Investment Amount shall be reduced by one-fifth (1/5) of the Investment
Amount for each such Trading Day.
(e) Minimum Trading Hours Limitation. In the event that the Common
Stock is not listed and approved for trading on a Principal Market and free from
any halts or suspensions of trading (whether imposed generally on such Principal
Market or specifically with respect to the Common Stock) for a period of at
least six (6) hours on any Trading Day during a Valuation Period, then the
Company shall not sell and the Investor shall not purchase the Draw Down Shares
otherwise to be purchased in respect of such Trading Day. In such case, the
Investment Amount shall be reduced by one-fifth (1/5) of the Investment Amount
for each such Trading Day.
SECTION 2.04. SETTLEMENTS. Subject to the provisions of Section 6.04, on
each Settlement Date the Company shall, unless otherwise instructed by the
Investor, cause the Transfer Agent to electronically transmit shares of Common
Stock to the Investor (by crediting the account of the Investor's Prime Broker,
as designated by the Investor, with The Depository Trust Company through its
Deposit Withdrawal Agent Commission system ("DWAC Transfer")) representing the
Draw Down Shares to be purchased by the Investor on such Settlement Date with
respect to the Draw Down Period immediately preceding such Settlement Date
pursuant to Section 2.03(c) hereof against delivery by the Investor of the
portion of the Investment Amount representing the Draw Down Shares to be
purchased on such Settlement Date by wire transfer of immediately available
funds to an account designated by the Company on or before the Settlement Date.
In addition, on or prior to each such Settlement Date, each of the Company and
the Investor shall deliver all documents, instruments and writings required to
be delivered by
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either of them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein. The Investor acknowledges that although the
Draw Down shares acquired from the Company pursuant to a DWAC Transfer do not
bear a restrictive legend, they constitute "restricted securities" within the
meaning of the Securities Act and the Investor agrees it will transfer the Draw
Down Shares through the facilities of The Depository Trust Company only pursuant
to the Registration Statement or pursuant to Rule 144 under the Securities Act.
SECTION 2.05. DAMAGES FOR LATE DELIVERY OR NON-DELIVERY OF DRAW DOWN
SHARES; INVESTOR RIGHT TO VOID DRAW DOWN NOTICE. (a) In the event the Draw Down
Shares are not delivered by the Company on any Settlement Date, the Company will
pay the Investor, the actual damages, if any, incurred by the Investor as a
result of such late delivery or non-delivery. For purposes of the foregoing, the
actual damages of the Investor shall mean the actual costs, penalties and
interest expense incurred by the Investor resulting from its failure to deliver
on the Settlement Date any Draw Down Shares it was entitled to receive from the
Company on any Settlement Date to any unaffiliated third party to whom it had
agreed to deliver shares of Common Stock. The Investor agrees to act in good
faith to minimize its actual damages in any such event and shall provide the
Company with a detailed calculation of its actual damages and supporting
documentation therefor. Except as provided by Section 2.05(c) below, such amount
may be offset by the Investor against the portion of the Investment Amount
otherwise payable by the Investor with respect to such Draw Down Shares or
future payment obligations of the Investor with respect to subsequent Draw Down
Notices. No amounts shall be payable in the event the Investor does not incur
any actual damages.
(b) The Company may not deliver a Draw Down Notice in the event (1)
all prior required deliveries of Draw Down Shares have not been made or (2) the
Company has not paid any amounts owed to the Investor pursuant to Section
2.05(a) unless, in connection with such notice, the Company shall have advised
the Investor in writing that the Investor may offset the amounts payable by the
Company (which amount shall be set forth in such notice and shall be consistent
with the Investor's calculation thereof) against the portion of the Investment
Amount otherwise payable by the Investor with respect to such Draw Down Notice.
(c) In the event the Company, acting in good faith, disputes in
writing the determination by the Investor of the amount of its actual damages
resulting from the failure of the Company to deliver Draw Down Shares on a
Settlement Date (or deliver such Draw Down Shares at all), the Company may
continue to deliver Draw Down Notices for a period of 30 days following such
Settlement Date without paying the Investor such damages, whether in cash or by
offset, provided that the aggregate Investment Amount drawn down during such
30-day period does not exceed $7,500,000. Notwithstanding any payment of damages
by the Company, whether in cash or by offset, if the Company, acting in good
faith, disputes the determination by the Investor of the amount of its actual
damages, such payment shall in no manner constitute an agreement by the Company
with the Investor's calculations. The Company may deliver Draw Down Notices for
up to an additional 90 days from the date of payment (not to extend beyond 120
days from the applicable Settlement Date) while the Company challenges the
Investor's calculations. If the Company and the Investor have not resolved their
dispute by such time as to the amount of actual damages incurred by the
Investor, the ability of the Company to deliver Draw Down Notices shall
thereafter be suspended until such matter is resolved.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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As a material inducement to the Investor to enter into this Agreement, the
Company hereby represents and warrants to the Investor that, except as set forth
in the Disclosure Schedules delivered by the Company to the Investor and
attached hereto, on and as of the date hereof:
SECTION 3.01. ORGANIZATION AND STANDING. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority necessary for it to own its properties
and assets and to carry on its business as it is now being conducted (and, to
the extent described therein, as described in the SEC Reports). The Company and
each of its subsidiaries is duly qualified to transact business and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or the nature of its businesses makes such qualification necessary,
except where the failure to so qualify or be in good standing would not have a
material adverse effect on the business, assets, operations, properties,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole, or any adverse effect on the Company's ability
to consummate the transactions contemplated by, or to execute, deliver and
perform its obligations under, each of the Transaction Documents (a "Material
Adverse Effect").
SECTION 3.02. SECURITIES OF THE COMPANY. The authorized Capital Stock of
the Company consists of 100,000,000 shares of Common Stock, 179 shares of Class
B Common Stock and 30,000,000 shares of preferred stock; as of May 31, 2001,
25,034,993 shares of Common Stock, 117.7 shares of Class B Common Stock and no
shares of preferred stock were outstanding and 5,275,299 shares of Common Stock
were reserved for issuance upon exercise of outstanding convertible securities,
warrants or options or pursuant to the Company's 1988 Stock Option Plan, the
1998 Stock Option Plan and the 1999 Omnibus Securities and Incentive Plan.
Except as set forth in the SEC Reports, the Company has no other authorized,
issued or outstanding equity securities or securities containing any equity
features, or any other securities convertible into, exchangeable for or
entitling any person to otherwise acquire any other securities of the Company
containing any equity features. The Company has no stock option, incentive or
similar plan other than the 1998 Stock Option Plan and the 1999 Omnibus
Securities and Incentive Plan. All of the outstanding shares of Capital Stock of
the Company have been duly and validly authorized and issued, and are fully paid
and nonassessable. The Common Shares (in an amount up to the Maximum Share
Amount) have been duly and validly authorized and have been duly reserved, and
will remain available for issuance, pursuant to this Agreement. When issued
against payment therefor as provided in this Agreement, the Common Shares will
be validly issued, fully paid and nonassessable, free and clear of all
preemptive rights, claims, liens, charges, encumbrances and security interests
of any nature whatsoever. Except as set forth in this Section 3.02 or the SEC
Reports, there are no outstanding options, warrants, conversion rights,
subscription rights, preemptive rights, rights of first refusal or other rights
or agreements of any nature outstanding to subscribe for or to purchase any
shares of Common Stock of the Company or any other securities of the Company of
any kind binding on the Company. The issuance of the Common Shares pursuant to
this Agreement is not subject to any preemptive
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rights, rights of first refusal or other similar limitation. Except as otherwise
required by law, there are no restrictions upon the voting or transfer of any
shares of the Company's Common Stock pursuant to the Company's Certificate of
Incorporation or bylaws. Except as provided herein or in the other Transaction
Documents, there are no agreements or other obligations (contingent or
otherwise) that may require the Company to repurchase or otherwise acquire any
shares of its Common Stock except for the Company's obligation to exchange
"non-lapse" restricted shares issued under its 1990 Incentive Compensation and
Company Stock Purchase Plan.
SECTION 3.03. AUTHORIZATION; ENFORCEABILITY. The Company has the corporate
power and authority to execute, deliver and perform the terms and provisions of
each of the Transaction Documents to be executed, delivered or performed by it
and has taken all necessary corporate action to authorize the execution,
delivery and performance by it of, and the consummation of the transactions
contemplated by, the Transaction Documents. No other corporate proceeding on the
part of the Company is necessary, and no consent of any shareholder of the
Company is required, for the valid execution and delivery by the Company of the
Transaction Documents, and the performance and consummation by the Company of
the transactions contemplated by the Transaction Documents to be performed by
the Company. The Company has duly executed and delivered, or concurrently
herewith is executing and delivering, each of the Transaction Documents.
Assuming the due execution of this Agreement and the Registration Rights
Agreement by the Investor, this Agreement and the Registration Rights Agreement
constitute the valid and binding obligations of the Company, enforceable against
the Company in accordance with each of their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
SECTION 3.04. NO VIOLATION; CONSENTS.
(a) The execution, delivery and performance by the Company of the
Transaction Documents and the consummation of the transactions contemplated
thereby to be performed by the Company do not and will not (i) contravene the
applicable provisions of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or Governmental Authority to or by
which the Company or any of its subsidiaries or any of its respective property
or assets is bound, (ii) violate, result in a breach of or constitute (with due
notice or lapse of time or both) a default or give rise to an event of
acceleration under any contract, lease, loan or credit agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company is a party or by which it or any of its subsidiaries is bound or to
which any of its respective properties or assets is subject, nor result in the
creation or imposition of any lien, security interest, charge or encumbrance of
any kind upon any of the properties, assets or Capital Stock of the Company or
any of its subsidiaries, or (iii) violate any provision of the organizational
and other governing documents of the Company or any of its subsidiaries.
(b) No consent, approval, authorization or order of, or filing or
registration with, any court or Governmental Authority or other Person is
required to be obtained or made by the Company for the execution, delivery and
performance of the Transaction Documents or the consummation of any of the
transactions contemplated thereby (other than (i) the registration of
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the resale of the Common Shares with the Commission and (ii) compliance with any
state "blue sky" laws as contemplated by the Registration Rights Agreement,
except for those consents or authorizations previously obtained and those
filings previously made.
SECTION 3.05. SECURITIES ACT REPRESENTATIONS. The Company has not offered
or sold and will not offer or sell any shares of its Capital Stock in this
offering other than to the Investor. Assuming the accuracy of the Investor's
representations pursuant to Section 4.02 hereof, the sale of the Common Shares
hereunder will be exempt from the registration requirements of the Securities
Act. Neither the Company, nor any of its Affiliates, or, to its knowledge, any
Person acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Common Shares
hereunder. Neither the Company, nor any of its Affiliates, nor any Person acting
on its or their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security other than pursuant to
this Agreement under circumstances that would require registration under the
Securities Act of the Common Shares to be issued under this Agreement. The
Company is eligible to use Form S-3 under the Securities Act to file the
Registration Statement (as defined in the Registration Rights Agreement). The
Company has not provided the Investor with any material non-public information
that, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to engaging in the transactions
contemplated by the Transaction Documents but that has not been so disclosed.
SECTION 3.06. SOLVENCY; NO DEFAULT. (a) The Company is, and upon giving
effect to the transactions contemplated hereby to be performed by it as of the
Closing will be, Solvent. "Solvent" means that, as of the date of determination,
(i) the then fair saleable value of the assets of the Company (on a consolidated
basis) exceeds the then total amount (on a consolidated basis) of its debts and
other liabilities (including any guarantees and other contingent, subordinated,
unmatured or unliquidated liabilities whether or not reduced to judgment,
disputed or undisputed, secured or unsecured), (ii) the Company has sufficient
funds and cash flow to pay its liability on its existing debts as they become
absolute and matured without taking into account future lease payments under
operating leases or payments due after June 30, 2003 under financing leases,
(iii) final judgments against the Company in pending or, to the Company's
knowledge, threatened actions for money damages will not be rendered at a time
when, or in an amount such that, the Company will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into account (a) the
maximum reasonable amount of such judgments in any such actions (other than
amounts that would be remote), (b) the earliest reasonable time at which such
judgments would be rendered and (c) any reasonably expected insurance recovery
with respect thereto), and (iv) the Company does not have unreasonably small
capital with which to engage in its present business.
(b) The Company is not, and immediately after the consummation of the
transactions contemplated hereby to be performed by the Company will not be, in
default of (whether upon the passage of time, the giving of notice or both) its
organizational and other governing documents, or any provision of any security
issued by the Company, or of any agreement, instrument or other undertaking to
which the Company is a party or by which it or any of its property or assets is
bound, or the applicable provisions of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or Governmental
Authority to
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or by which the Company or any of its property or assets is bound, which default
or violation, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.07. NO BROKERS. Other than Shoreline Pacific Institutional
Finance, the Institutional Division of Financial West Group, no broker, finder,
agent or similar intermediary is entitled to any broker's, finder's, placement
or similar fee or other commission in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding with
the Company.
SECTION 3.08. SEC REPORTS; FINANCIAL CONDITION; NO ADVERSE CHANGES. (a)
The audited consolidated financial statements of the Company and the related
notes thereto as of October 31, 2000 reported on by Ernst & Young LLP,
independent auditors, contained in the SEC Reports, present fairly the
consolidated financial position, results of operations and cash flows of the
Company at such date and for the periods set forth therein . The unaudited
consolidated financial statements of the Company and related notes thereto as of
January 31, 2001 (such audited and unaudited financial statements, collectively,
the "Financial Statements") contained in the SEC Reports present fairly the
consolidated financial position, results of operations and cash flows of the
Company at such date and for the periods set forth therein. The Financial
Statements, including the related schedules and notes thereto, have been
prepared in accordance with generally accepted accounting principles in the
United States as in effect on the date of filing of such documents with the
Commission, applied on a consistent basis (except for changes concurred in by
the Company's independent public auditors) unless otherwise expressly stated
therein. Except as disclosed in the SEC Reports, during the period from November
1, 2000 to and including the date hereof, there has been no sale, transfer or
other disposition by the Company of any material part of the business, property
or securities of the Company (other than the grant of options and warrants and
shares of Common Stock issued upon the exercise of outstanding options and
warrants) and no purchase or other acquisition of any business, property or
securities by the Company material in relation to the financial condition of the
Company.
(b) Except as are fully reflected or reserved against in the Financial
Statements and the notes thereto, there are no liabilities or obligations with
respect to the Company or any of its subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
that, either individually or in the aggregate, after taking into account (a) the
maximum reasonable amount of any liability that may arise on account of any
litigation or any other contingent liability or obligation (other than amounts
that would be remote), (b) the earliest reasonable time at which any such
liability or obligation may become due and (c) any reasonably expected insurance
recovery with respect thereto, could reasonably be expected to have a Material
Adverse Effect.
(c) Since October 31, 2000, except as set forth in the SEC Reports,
there has been no development or event, nor any prospective development or event
known to the Company or any of its subsidiaries, or any litigation, proceeding
or other action seeking an injunction or other restraining order, damages or
other relief from a court or administrative agency of competent jurisdiction
pending, threatened or, to the knowledge of the Company, contemplated, or any
action of any Governmental Authority, that has had or could reasonably be
expected to have a Material Adverse Effect.
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SECTION 3.09. USE OF PROCEEDS; FEDERAL REGULATIONS. No part of the net
proceeds from the sale of the Common Stock issued hereunder will be used in a
manner that would violate the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System. The Company will not use such proceeds
other than for or in connection with general working capital purposes.
SECTION 3.10. SUBSIDIARIES. As of the date hereof, the Company has no
subsidiaries other than those set forth in the SEC Reports or those that conduct
no active business.
SECTION 3.11. NO INTEGRATED OFFERING. Neither the Company, nor any of its
Affiliates, nor to its knowledge any Person acting on its or their behalf, has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would require
registration under the Securities Act of the offer and sale of the Common Stock
hereunder.
SECTION 3.12. NO LITIGATION. Except as disclosed in the SEC Reports, no
litigation or claim (including those for unpaid taxes), or environmental
proceeding against the Company or any of its subsidiaries is pending, threatened
or, to the Company's best knowledge, contemplated that, if determined adversely,
would (after taking into consideration any reasonably expected insurance
recovery with respect thereto) have a Material Adverse Effect on the Company.
SECTION 3.13. ENVIRONMENTAL MATTERS. The Company and each of its
subsidiaries is in compliance in all material respects with all applicable state
and federal environmental laws, and no event or condition has occurred that may
interfere in any material respect with the compliance by the Company or any of
its subsidiaries with any environmental law or that may give rise to any
liability under any environmental law that, individually or in the aggregate,
would have a Material Adverse Effect.
SECTION 3.14. INTELLECTUAL PROPERTY. The Company (and/or its subsidiaries)
owns or has licenses to use certain patents, copyrights and trademarks
("intellectual property") associated with its business. The Company and its
subsidiaries have all intellectual property rights that are needed to conduct
the business of the Company and its subsidiaries as it is now being conducted as
disclosed in the SEC Reports. To the Company's knowledge, the intellectual
property rights that the Company (and/or its subsidiaries) owns are valid and
enforceable. To the Company's knowledge, the use of such intellectual property
by the Company (and/or its subsidiaries') does not infringe upon or conflict
with any right of any third party, and, except as disclosed in the SEC Reports
neither the Company nor any of its subsidiaries has received notice, written or
otherwise, of any such infringement or conflict other than with respect to
alleged infringements or conflicts that, individually or in the aggregate, if
determined adversely to the Company would not have a Material Adverse Effect.
Except as set forth in the SEC Reports, the Company has no knowledge of any
infringement of its (and/or its subsidiaries) intellectual property by any third
party.
SECTION 3.15. INSURANCE. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent. The Company has no reason to believe that it and its subsidiaries will
not be able to renew its existing insurance coverage as and when
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such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant increase in cost.
SECTION 3.16. RELATED PARTY TRANSACTIONS. Except as disclosed in the SEC
Reports and except for such transactions for which disclosure pursuant to
Regulation S-K would not be required in an annual report on Form 10-K or
otherwise, none of the officers, directors, employees or 5% or greater
shareholders of the Company is presently a party to any transaction with the
Company or any of its subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or the advances of money or otherwise requiring
payments to or from any such officer, director, employee or shareholder or, to
the knowledge of the Company, any corporation, partnership, trust or other
entity in which any such officer, director, employee or shareholder has a
substantial interest or is an officer, director, trustee or partner other than
the Company's merger on May 24, 2001 with an affiliated company.
SECTION 3.17. PERMITS. The Company and each of its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits except for such Company
Permits the failure of which to possess, or the cancellation or suspension of
which, would not, individually or in the aggregate, have a Material Adverse
Effect. To the best of its knowledge neither the Company nor any of its
subsidiaries is in material conflict with, or in material default or material
violation of, any of the Company Permits.
SECTION 3.18. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
SECTION 3.19. TAX RETURNS. The Company has filed or caused to be filed all
Federal tax returns and all material state and local tax returns required to
have been filed by it and has paid or caused to be paid all taxes shown to be
due and payable by it on such returns or on any assessments received by it,
except any such tax, the validity or amount of which is being contested in good
faith by appropriate proceedings and as to which the Company has set aside on
its books adequate reserves with respect thereto in accordance with generally
accepted accounting principles. Neither the Company nor its subsidiaries has
received any tax assessment, notice of audit, notice of proposed adjustment or
deficiency notice from any taxing authority.
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SECTION 3.20. DISCLOSURE. The representations and warranties of the
Company in this Agreement and the statements contained in the SEC Reports (at
the time they were filed with the SEC and, except as modified by subsequent SEC
Reports) and the schedules, certificates and exhibits furnished to the Investor
by or on behalf of the Company in connection herewith did not and do not contain
any untrue statement of a material fact and do not omit to state any material
fact necessary to make the statements herein or therein not misleading. The SEC
Reports contain all material information concerning the Company required to be
set forth therein, and no event or circumstance has occurred or exists since
October 31, 2000, that would require the Company to disclose such event or
circumstance in order to make the statements in the SEC Reports not misleading
as of the date of the Closing that has not been so disclosed. The Company hereby
acknowledges that the Investor is and will be relying on the SEC Reports and the
Company's representations, warranties and covenants contained herein in making
an investment decision with respect to the Common Shares and will be relying
thereon (together with future reports filed with the Commission) in connection
with any transfer of Common Shares.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR
---------------------------------------------------------
The Investor hereby acknowledges, represents, warrants and covenants, to
the Company as follows:
SECTION 4.01. AUTHORIZATION; ENFORCEABILITY; NO VIOLATIONS.
(a) The Investor is duly organized, validly existing and in good standing
under the laws of its jurisdiction, has all requisite power and authority to
execute, deliver and perform the terms and provisions of this Agreement and the
Registration Rights Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement and the
Registration Rights Agreement and to consummate the transactions contemplated
hereby and thereby to be performed by it.
(b) The execution, delivery and performance by the Investor of this
Agreement and the Registration Rights Agreement and the consummation by the
Investor of the transactions contemplated hereby and thereby to be performed by
it do not and will not violate any provision of (i) the Investor's
organizational documents or (ii) any law, statute, rule, regulation, order,
writ, injunction, judgment or decree to which the Investor is subject. The
Investor has duly executed and delivered this Agreement and has executed and
delivered, or concurrently herewith is executing and delivering, the
Registration Rights Agreement. Assuming the due execution hereof and thereof by
the Company, each of this Agreement and the Registration Rights Agreement
constitutes the legal, valid and binding obligation of the Investor, enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
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SECTION 4.02. SECURITIES ACT REPRESENTATIONS; LEGENDS.
(a) The Investor understands that: (i) the offering and sale of the Common
Shares to be issued and sold hereunder is intended to be exempt from the
registration requirements of the Securities Act; (ii) the initial offer and sale
of the Common Shares issuable hereunder has not been registered under the
Securities Act or any other applicable securities laws and such securities may
be resold only if registered under the Securities Act and any other applicable
securities laws or if an exemption from such registration requirements is
available; and (iii) the Company is required to register any resale of the
Common Shares under the Securities Act and any other applicable securities laws
only to the extent provided in the Registration Rights Agreement.
(b) The Investor represents that the Common Shares to be acquired by the
Investor pursuant to this Agreement are being acquired for its own account and
not with a view to, or for sale in connection with, any distribution thereof or
(other than the resale of such Common Shares pursuant to an effective
registration statement as contemplated by the Registration Rights Agreement) in
violation of the Securities Act or any other securities laws that may be
applicable.
(c) The Investor represents that the Investor is not an affiliate (as such
term is defined in the Securities Act) of the Company.
(d) The Investor represents that the Investor (i) is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D under the
Securities Act, (ii) has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Common Stock and is capable of bearing the economic risks of
such investment, including a complete loss of its investment in the Common
Shares; (ii) believes that its investment in the Common Shares is suitable for
it based upon its objectives and financial needs, and the Investor has adequate
means for providing for its current financial needs and business contingencies
and has no present need for liquidity of investment with respect to the Common
Shares; (iii) has no present plan, intention or understanding and has made no
arrangement to sell the Common Shares at any predetermined time or for any
predetermined price; (iv) has not purchased, sold or entered into any put
option, short position or similar arrangement with respect to the Common Shares,
and will not, for the term of this Agreement purchase, sell or enter into any
such put option, short position or similar arrangement in any manner that
violates the provisions of the Securities Act or the Exchange Act.
(e) The Investor acknowledges that no oral or written statements or
representations have been made to the Investor by or on behalf of the Company in
connection with the offering and sale of the Common Shares hereunder other than
those set forth in the SEC Reports, or as set forth herein or in the other
Transaction Documents, and the Investor represents that it is not subscribing
for the Common Shares as a result of, or in response to, any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or presented at any seminar
or meeting.
(f) The Investor acknowledges that the Securities Act restricts the
transferability of securities, such as the Common Shares, issued in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereunder, and that,
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unless sold pursuant to the Registration Statement, the transfer of such Common
Shares is restricted.
(g) The Investor has 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 Common Shares which have been requested by the Investor.
The Investor has been afforded the opportunity to ask questions of the Company.
The Investor understands that its investment in the Common Shares involves a
significant degree of risk.
SECTION 4.03. NO BROKERS. No broker, finder, agent or similar intermediary
is entitled to any broker's, finder's, placement or similar fee or other
commission in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Investor.
SECTION 4.04. NO INFLUENCE ON BUSINESS. The Investor (whether in its
capacity as holder of the Common Stock or otherwise) covenants and agrees with
the Company that it will not: (a) in any manner exercise or attempt to exercise
a controlling influence over the management or policies of the Company or
attempt to influence the business activities or decisions of the Company; (b)
propose a director or slate of directors to serve on the board of directors of
the Company; (c) have or seek to have a representative of the Investor be
appointed to serve as a director of the Company or participate as an observer at
meetings of the board of directors (or committees thereof) or have or seek to
have any employee or representative of the Investor serve as an officer, agent
or employee of the Company; (d) attempt to influence the dividend policies or
practices of the Company; (e) solicit or participate in soliciting proxies with
respect to any matter presented to the shareholders of the Company; (f) dispose
or threaten to dispose of the Common Shares to any third party in any manner as
a condition to specific action or non-action by the Company; or (g) enter into
any joint venture, enterprise or undertaking of any kind with the Company.
SECTION 4.05. LIMITATIONS ON RESALES. The Investor further covenants and
agrees that it will not knowingly transfer to any Person (together with such
Person's Affiliates), other than the Company or Affiliates of the Investor, in a
transaction or series of transactions, Common Stock in an aggregate amount in
excess of 2% of the issued and outstanding shares of Common Stock of the Company
(based upon the number of shares of Common Stock of the Company issued and
outstanding on the applicable date of transfer); in furtherance thereof, the
Investor covenants and agrees that it shall not during any five (5) consecutive
trading days transfer Common Stock in secondary market transactions in which the
identity of the acquiror is not known to the Investor in an amount in excess of
2% of the issued and outstanding shares of Common Stock of the Company (based
upon the number of shares of Common Stock of the Company issued and outstanding
on the applicable date of transfer). The Investor covenants and agrees that the
foregoing transfers to third parties shall be made in bona fide, arms-length
transactions and that upon any such transfer, it will not retain the power to
control the disposition of the securities transferred or to direct the voting
with respect thereto.
SECTION 4.06. TRADING GUIDELINES. The Investor has the right to sell
shares of Common Stock during the Commitment Period. The Investor agrees,
however, that during the Commitment Period, neither the Investor nor any of its
affiliates will intentionally sell shares of
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Common Stock other than the shares of Common Stock which the Investor has
purchased under this Agreement (including for this purpose, in the case of a
Draw Down Notice that has been delivered, the number of Draw Down Shares
issuable in connection with such Draw Down Notice (assuming that the number of
Draw Down Shares to be issued pursuant to such Draw Down Notice equals the
Investment Amount specified in such Draw Down Notice divided by ninety-seven
percent (97%) of the Floor Price)).
SECTION 4.07. OWNERSHIP OF COMMON STOCK. As of the date of this Agreement,
the Investor and its affiliates beneficially own in aggregate no shares of
Common Stock.
SECTION 4.08. INVESTMENT LIMITATION. The Investor warrants and will take
any necessary action to ensure that Common Shares issuable to the Investor in
respect of a Draw Down, together with the shares of Common Stock beneficially
owned (as defined in the Exchange Act) by the Investor and its affiliates shall
not exceed 4.9% of the total outstanding shares of Common Stock as of such date.
The Investor will have sole responsibility for maintaining compliance with this
limitation. In no event shall this limitation affect the rights of the Company
under this Agreement to deliver a Draw Down Notice to the Investor or to issue
and sell Common Shares to the Investor on any Settlement Date.
SECTION 4.09. LIMITATION ON SALES OF COMMON STOCK. The Investor agrees
that it will not during any 61 consecutive day period sell shares of Common
Stock (whether acquired pursuant to this Agreement or otherwise) aggregating in
excess of 9.9% of the total number of shares of Common Stock outstanding on the
first day of such period. Investor will have sole responsibility for maintaining
compliance with this limitation. In no event shall this limitation affect the
rights of the Company under this Agreement to deliver a Draw Down Notice to the
Investor or to issue and sell Common Stock to the Investor on any Settlement
Date.
ARTICLE V
COVENANTS
---------
SECTION 5.01. EXEMPTION FROM REGISTRATION; LIMITATION ON ISSUANCE OF
SECURITIES.
The Company will not make any offer to sell, solicit any offer to buy,
agree to sell or sell any security or right to acquire any security, except at
such time and in such manner so as not to cause the loss of any of the
exemptions for the offer and sale of the Common Shares from the registration
requirements under the Securities Act or under the securities or "blue sky" laws
of any jurisdiction in which such offer, sale or issuance is made.
SECTION 5.02. TRANSFER RESTRICTIONS.
The Investor acknowledges that any proposed offer, sale, pledge or other
transfer of Common Shares prior to the date that is two (2) years from the date
of issuance (or such other date as may be required pursuant to Rule 144 under
the Securities Act (or similar successor provision) as in effect from time to
time), in the absence of registration under the Securities Act, is limited.
Accordingly, prior to such passage of time or such registration, the Common
Shares may be offered, sold, pledged or otherwise transferred only (i) to the
Company, (ii) in an
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offshore transaction in accordance with Rule 904 under the Securities Act, (iii)
pursuant to any other exemption from registration provided by the Securities
Act, (iv) pursuant to Rule 144 under the Securities Act or (v) pursuant to an
effective registration statement under the Securities Act; in the case of any
transfer pursuant to clause (ii), (iii) or (iv), the Company shall be entitled
to receive an opinion of the selling Investor's counsel, in form and substance
reasonably satisfactory to the Company, to the effect that registration is not
required in connection with such disposition.
SECTION 5.03. RULES 144; CURRENT INFORMATION. For so long as this
Agreement is in effect or there are outstanding any Common Shares which
constitute Registrable Securities, the Company will (i) cause its Common Stock
to continue to be registered under Section 12 of the Exchange Act, file all
reports required to be filed by it under the Securities Act and the Exchange Act
and will take such further actions as the Investor may reasonably request, all
to the extent required from time to time to enable any Purchaser to sell Common
Shares without registration under the Securities Act pursuant to the safe
harbors and exemptions provided by Rule 144 under the Securities Act (to the
extent applicable), as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission, and (ii) furnish
the Investor with all reports, proxy statements and registration statements that
the Company files with the Commission or distributes to its securityholders
pursuant to the Securities Act and the Exchange Act at the times of such filings
and distributions (unless such documents are available electronically from the
Commission or elsewhere without charge and within a period reasonably
contemporaneous with the filing thereof with the Commission, in which case such
documents need not be provided to the Investor). Upon the request of the
Investor, the Company will deliver to the Investor a written statement as to
whether it has complied with the foregoing requirements.
SECTION 5.04. RESERVATION OF COMMON SHARES. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, sufficient shares of Common Stock to provide for the
issuance of the Common Shares in an amount equal to the Maximum Share Amount
less the number of Common Shares previously issued hereunder.
SECTION 5.05. STOCK LISTING. The Company shall have the Common Shares in
an amount equal to the Maximum Share Amount approved for quotation or listing,
prior to issuance, upon the Principal Market upon which the Common Stock is
listed or traded at the time of issuance of such Common Shares and shall use its
best efforts to maintain such listing.
SECTION 5.06. REPORTING STATUS. The Company's Common Stock is registered
under Section 12(g) of the Exchange Act. So long as the Investor beneficially
owns any Registrable Securities, the Company shall timely file all reports
required to be filed with the SEC pursuant to the Exchange Act, and the Company
shall not terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations thereunder
would permit such termination.
SECTION 5.07. NO INTEGRATION. The Company shall not make any offers or
sales of any security (other than the Common Shares) under circumstances that
would require registration of the Common Shares being offered or sold hereunder
under the Securities Act.
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SECTION 5.08. REGISTRATION RIGHTS. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all respects with the terms thereof.
SECTION 5.09. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION
OF RIGHT TO DELIVER A DRAW DOWN NOTICE. The Company will immediately notify the
Investor upon the occurrence of any of the following events in respect of the
Registration Statement or related prospectus in respect of the resale of the
Registrable Securities: (i) receipt of any request for additional information
from the Commission or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement, the response to which
would require any amendments or supplements to the Registration Statement or
related prospectus; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (v) a post-effective amendment or supplement to the Registration to
reflect events covered by the Company's annual report on Form 10-K, quarterly
report or Form 10-Q or current report on Form 8-K is necessary or will be
necessary during the subsequent ten Trading Days, (vi) the withdrawal of any
relevant Comfort Letter or Periodic Accountant's Report; and (vii) the Company's
reasonable determination that a post-effective amendment or supplement to the
Registration Statement would otherwise be appropriate; and the Company will
promptly make available to the Investor any such supplement or amendment to the
related prospectus. The Company shall not deliver to the Investor any Draw Down
Notice during the continuation of any of the foregoing events and shall cancel
an existing Draw Down by delivering a Draw Down Cancellation Notice in the
manner required by Section 6.04 of this Agreement.
SECTION 5.10. DISCLOSURE OF MATERIAL INFORMATION. In the event that the
Company comes into possession of any material non-public information, the
Company shall make full and complete public disclosure at such times and by such
means as are required by applicable securities laws (including all common law
formulations thereof).
SECTION 5.11. ISSUANCE OF DRAW DOWN SHARES. The sale and issuance of the
Draw Down Shares shall be made in accordance with the provisions and
requirements of Section 4(2) of the Securities Act and any applicable state law.
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ARTICLE VI
CONDITIONS TO DELIVERY OF DRAW DOWN
NOTICES AND CONDITIONS TO SETTLEMENT
------------------------------------
SECTION 6.01. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
ISSUE AND SELL COMMON STOCK. The obligation hereunder of the Company to issue
and sell the Draw Down Shares to the Investor incident to each Settlement is
subject to the satisfaction, at or before each such Settlement, of each of the
conditions set forth below.
(a) Accuracy of the Investor's Representation and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made and as of the date of each such
Settlement as though made at each such time (except for representations and
warranties specifically made as of a particular date which shall be true and
correct in all material respects as of the date when made).
(b) Performance by the Investor. The Investor shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Settlement.
SECTION 6.02. CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER
A DRAW DOWN NOTICE. The right of the Company to deliver a Draw Down Notice
hereunder is subject to the satisfaction, on the date of delivery of such Draw
Down Notice, of each of the following conditions:
(a) Effective Registration Statement. As set forth in the Registration
Rights Agreement, the Registration Statement shall have previously been declared
effective and shall remain effective and sales of all of the Registrable
Securities (including all of the Draw Down Shares issued with respect to all
prior Draw Downs and all of the Draw Down Shares expected to be issued in
connection with the Draw Down specified by the current Draw Down Notice
(assuming for such purpose that the Purchase Price applicable to such Draw Down
is the Floor Price)) may be made by the Investor thereunder and (i) neither the
Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement or that the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement either, temporarily or permanently,
or intends or has threatened to do so, (ii) no other suspension of the use or
withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist and (iii) no event specified in Section 5.09 shall have
occurred and be continuing.
(b) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the applicable Draw Down
Date as though made at such time (except for representations and warranties
specifically made as of a particular date which shall be true and correct in all
material respects as of the date when made).
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(c) Performance by the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to
be performed, satisfied or complied with by the Company at or prior to such
date, nor shall there have occurred an Event of Default under this Agreement.
(d) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby that prohibits or directly and adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced that
may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(e) Material Adverse Changes. For the thirty (30) days preceding the date
of delivery of such Draw Down Notice, no event known to the Company that had or
is reasonably likely to have a Material Adverse Effect shall have occurred
(provided that any changes resulting from general economic or market conditions
or conditions affecting the biopharmaceutical industry in general shall not be
deemed to constitute a "Material Adverse Effect" for purposes hereof).
(f) No Suspension of Trading In or Delisting of Common Stock. The trading
of the Common Stock (including without limitation the Draw Down Shares) shall
not have been suspended by the Commission, the Principal Market or the NASD and
the Common Stock (including without limitation the Draw Down Shares) shall have
been approved for listing or quotation on and shall not have been delisted from
the Principal Market.
(g) Comfort Letter; Periodic Accountant's Report. The Comfort Letter(s) in
respect of the Registration Statement or any Form 8-K containing substantial
financial information incorporated by reference into the Registration Statement
shall have been delivered prior to the date of delivery of such Draw Down
Notice, satisfactory in form and substance to the Investors, and shall not have
been rescinded, and a Periodic Accountant's Report covering the Company's most
recently completed fiscal quarter (other than the fourth fiscal quarter) in
respect of which the Company has its results of operations shall have been
delivered prior to the date of delivery of such Draw Down Notice, satisfactory
in form and substance to the Investor, covering customary matters, and shall not
have been rescinded.
(h) No Knowledge. The Company shall have no knowledge of any event that
would reasonably be expected to have the effect of causing such Registration
Statement to be suspended or otherwise ineffective (which event is more likely
than not to occur within the five (5) Trading Days following the Trading Day on
which such Draw Down Notice is deemed delivered).
(i) Trading Cushion. A period of five (5) Trading Days shall have elapsed
since the delivery of the preceding Draw Down Notice.
(j) Maximum Share Amount. In no event may the Company issue a Draw Down
Notice to sell an Investment Amount to the extent that the sum of (x) the number
of shares of Common Stock represented by the quotient of (i) the requested
Investment Amount, divided by
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(ii) the Floor Price set forth in such Draw Down Notice, plus (y) the cumulative
total of all Common Shares issued under all previous Draw Downs effected
pursuant to this Agreement, would exceed the Maximum Share Amount.
(k) Prospectus Supplement. A supplement to the prospectus included in the
Registration Statement (the "Prospectus Supplement"), in form and substance to
be agreed upon by the parties, setting forth information regarding the Draw Down
including, without limitation, the Draw Down Date, the Investment Amount, the
number of shares sold to the Investor in connection with all previous Draw
Downs, if not previously disclosed in an SEC Document, and any additional
information required by SEC rules and regulations, including Item 507 of
Regulation S-K, shall have been filed with the Commission and sufficient copies
thereof delivered to the Investor on the Trading Day immediately following the
delivery of the Draw Down Notice.
(l) Outside Counsel Letter. A letter of outside counsel with respect to the
Registration Statement, rendered in form and substance in which "10b-5" letters
are typically delivered, shall have been delivered, dated as of the date of
delivery, which date shall not be earlier than the later to occur of (i) the
effective date of the Registration Statement, (ii) the date of any filing of a
Form 8-K by the Company subsequent to the effective date of the Registration
Statement and (iii) the date of filing by the Company subsequent to the
effective date of the Registration Statement of an Annual Report on Form 10-K;
provided, however, that in the case of clause (iii), if the Company shall
consummate an underwritten offering of securities at any time, the Company may
elect, at the time of such underwritten offering, to cause its outside counsel
to deliver such letter to the Investor at the time of such underwritten offering
in lieu of otherwise having to deliver a letter with respect to the next
subsequently filed Annual Report on Form 10-K.
SECTION 6.03. DOCUMENTS REQUIRED TO BE DELIVERED ON EACH DRAW DOWN DATE.
The Investor's obligation to purchase Common Shares pursuant to a Draw Down
hereunder shall additionally be conditioned upon the delivery to the Investor on
or before the Draw Down Date of a certificate in form and substance satisfactory
to the Investor, executed by an executive officer of the Company to the effect
that all conditions to the delivery of such Draw Down Notice shall have been
satisfied as at the date of such certificate (which certificate shall not be
required if the foregoing representations shall be set forth in the Draw Down
Notice):
SECTION 6.04. DRAW DOWN CANCELLATION.
(a) Mechanics of Draw Down Cancellation. If at any time during a Valuation
Period, (i) any of the events specified in Section 5.09 of this Agreement shall
occur, (ii) any of the conditions precedent to a Draw Down set forth in Section
6.02 shall no longer be satisfied as of any date during the Valuation Period or
(iii) the Company discovers that a document set forth in Section 6.03(a) or (b)
or the Comfort Letter(s) or the Periodic Accountant's Report covering the
Company's most recently completed fiscal quarter (other than the fourth fiscal
quarter) in respect of which the Company has announced its results of operations
would not be deliverable in the precise form so delivered if delivered as of
such date during the Valuation Period, then the Company shall cancel the Draw
Down (a "Draw Down Cancellation") immediately by delivering written notice to
the Investor specifying the reasons therefor (the "Draw Down Cancellation
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<PAGE> 25
Notice"), by facsimile (simultaneously sent by e-mail and with telephonic advice
of the sending (which requirement will be deemed satisfied by leaving of
recorded message)). The Draw Down Cancellation Notice shall be deemed delivered
on (i) the Trading Day it is received by facsimile or otherwise by the Investor
if such notice is received prior to 9:30 a.m., New York City time, or (ii) the
immediately succeeding Trading Day if it is received by facsimile or otherwise
after 9:30 a.m., New York City time, on a Trading Day, or at any time on a day
which is not a Trading Day. No Draw Down Cancellation Notice may be deemed
delivered on a day that is not a Trading Day. "Draw Down Cancellation Date"
shall be the date the Draw Down Cancellation Notice is deemed delivered pursuant
to the preceding sentence.
(b) Effect of Draw Down Cancellation. If a Draw Down Cancellation Notice
has been delivered to the Investor after a Draw Down Date, the Valuation Period
for such Draw Down shall (except as provided in the proviso to the succeeding
sentence) end on the Trading Day immediately preceding the Draw Down
Cancellation Date. In such event, the Investment Amount relating to such Draw
Down shall be reduced by one-fifth (1/5) with respect to each Trading Day during
the period beginning on and including the Draw Down Cancellation Date and ending
on the last Trading Day of such Valuation Period. Anytime a Draw Down
Cancellation Notice is delivered to the Investor, such Draw Down shall remain
effective as to the portion of the Investment Amount not canceled pursuant to
the preceding sentence.
ARTICLE VII
TERMINATION
-----------
SECTION 7.01. TERM; TERMINATION BY MUTUAL CONSENT. Subject to the
provisions of Section 7.02, the term of this Agreement shall run until the end
of the Commitment Period; provided that the right of the Company to effect any
Draw Downs under this Agreement may be terminated at any time by mutual consent
of the parties. Notwithstanding the foregoing, the Company may terminate this
Agreement at any time provided that, simultaneously with such termination, it
shall make any payment required by Section 9.13.
SECTION 7.02. TERMINATION BY THE INVESTOR. The Investor may terminate the
right of the Company to effect any Draw Downs under this Agreement upon one (i)
Trading Day's notice if any of the following events (each, an "Event of
Default") shall occur:
(a) The Company (i) fails to issue shares of Common Stock to the Investor
on any Settlement Date as provided herein, (ii) fails to remove any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any
certificate or any shares of Common Stock issued to the Investor as and when
required by this Agreement or the Registration Rights Agreement, or (iii) fails
to fulfill its obligations pursuant to this Agreement (or makes any
announcement, statement or threat that it does not intend to honor the
obligations described in this paragraph), and any such failure shall continue
uncured (or any announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for five (5) days after the Company shall
have been notified thereof in writing by the Investor;
(b) The Company fails to obtain effectiveness of the Registration Statement
within 180 days from the Closing Date, or fails to obtain the effectiveness of
any additional Registration Statement required to be filed pursuant to the
Registration Rights Agreement within sixty (60)
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days after the occurrence of the event that requires such filing, or any such
Registration Statement, after its initial effectiveness, lapses in effect or
sales of all of the Registrable Securities otherwise cannot be made thereunder
(whether by reason of the Company's failure to amend or supplement the
prospectus included therein in accordance with the Registration Rights
Agreement, the Company's failure to file and obtain effectiveness with the
Commission of an additional Registration Statement required pursuant to the
Registration Rights Agreement or otherwise) for more than fifteen (15)
consecutive Trading Days or more than thirty (30) Trading Days in any twelve
(12) month period after such Registration Statement becomes effective;
(c) The Company or any subsidiary shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for it or for all or substantially all of its property or business; or
such a receiver or trustee shall otherwise be appointed;
(d) Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company or any subsidiary of
the Company;
(e) The Company shall fail to maintain the listing of the Common Stock on a
Principal Market or trading in such Common Stock shall otherwise be halted or
suspended for a period of ten (10) consecutive Trading Days;
(f) The sale, conveyance or disposition of all or substantially all of the
assets of the Company, the effectuation by the Company of a transaction or
series of related transactions in which more than 50% of the voting power of the
Company is disposed of, or the consolidation, merger or other business
combination of the Company with or into any other Person or Persons when the
Company is not the survivor; or
(g) The Company breaches any material representation, warranty or covenant
contained in this Agreement or the other Transaction Documents.
ARTICLE VIII
NON-DISCLOSURE OF MATERIAL NON-PUBLIC INFORMATION
-------------------------------------------------
SECTION 8.01. NON-DISCLOSURE OF MATERIAL NON-PUBLIC INFORMATION.
(a) The Company covenants and agrees that it shall refrain from disclosing,
and shall cause its officers, directors, employees and agents to refrain from
disclosing, any material non-public information to the Investor, unless prior to
disclosure of such information the Company identifies such information as being
material non-public information and provides the Investor and its advisors and
representatives with the opportunity to accept or refuse to accept such material
non-public information for review.
(b) The Company acknowledges and understands that the Investor is entering
into this Agreement and the Registration Rights Agreement at the request of the
Company and in good faith reliance on (i) the Company's representation set forth
in this Agreement that neither it nor its agents have disclosed to the Investor
any material non-public information; and (ii) the
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Company's covenant set forth in this Agreement that if the Company comes into
possession of any material non-public information, the Company shall make full
and complete public disclosure of such information in accordance with all
applicable securities laws.
(c) Nothing herein shall require the Company to disclose material
non-public information to the Investor or its advisors or representatives, and
the Company represents that it does not disseminate material non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts; provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the Investor and its advisors and
representatives and, if any, underwriters, of the existence of any event or
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances in which they were made, not misleading.
ARTICLE IX
MISCELLANEOUS
-------------
SECTION 9.01. PRESS RELEASES AND DISCLOSURE. The Company shall issue a
press release describing the material terms of the transactions contemplated
hereby as soon as practicable following the Closing Date but in no event more
than five (5) days following the Closing Date, and shall file with the
Commission a Current Report on Form 8-K describing the material terms of the
transactions contemplated hereby. No party hereto shall issue any press release
or make any other public disclosure related to this Agreement or any of the
transactions contemplated hereby without the prior written approval of the other
party hereto, except as may be necessary or appropriate in the opinion of the
party seeking to make disclosure to comply with the requirements of applicable
law or stock exchange rules. If any such press release or public disclosure is
so required, the party making such disclosure shall consult with the other party
prior to making such disclosure, and the parties shall use all reasonable
efforts, acting in good faith, to agree upon a text for such disclosure that is
satisfactory to all parties.
SECTION 9.02. EXPENSES. The Company will pay the reasonable attorneys'
fees and expenses of the Investor in connection with the negotiation of the
Transaction Documents subject to a maximum of $35,000, $10,000 of which has been
paid and the balance of $25,000 of which shall be payable at the Closing.
SECTION 9.03. NOTICES. All notices, demands, requests, consents, approvals
or other communications required or permitted to be given hereunder or that are
given with respect to this Agreement shall be in writing and shall be personally
served or deposited in the mail, registered or certified, return receipt
requested, postage prepaid or delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice: (i) if to the Company, to: Biopure
Corporation, 11 Hurley Street Cambridge, MA,
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Attention: Francis H. Murphy, Facsimile No.: (617) 234-6507, with copies (which
shall not constitute notice) to: LeBoeuf, Lamb, Greene & MacRae LLP, 125 West
55th Street, New York, NY 10019, Attention: Joseph Ferraro, Facsimile No.: (212)
424-8500; and (ii) if to the Investor, Societe Generale c/o SG Cowen Securities
Corporation, 1221 Avenue of the Americas, New York, NY 10020 Attention:
Guillaume Pollet, Facsimile No.: (212) 278-5467, with copies (which shall not
constitute notice) to: Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New
York, NY 10022, Attention: J. Eric Maki, Facsimile No.: (212) 755-7306. Notice
shall be deemed given on the date of service or transmission if personally
served or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given on the third business day following the
date mailed or on the next business day following delivery of such notice to a
reputable air courier service.
SECTION 9.04. ENTIRE AGREEMENT. This Agreement (together with the other
Transaction Documents and all other documents delivered pursuant hereto and
thereto) constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
SECTION 9.05. AMENDMENT AND WAIVER. This Agreement may not be amended,
modified, supplemented, restated or waived except by a writing executed by the
party against which such amendment, modification or waiver is sought to been
enforced. Waivers may be made in advance or after the right waived has arisen or
the breach or default waived has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.
SECTION 9.06. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the rights, duties and obligations hereunder may not be assigned or delegated by
the Company or the Investor. Any purported assignment or delegation of rights,
duties or obligations hereunder made without the prior written consent of the
other party hereto shall be void and of no effect. This Agreement and the
provisions hereof shall be binding upon and shall inure to the benefit of each
of the parties and their respective successors. This Agreement is not intended
to confer any rights or benefits on any Persons other than as set forth above.
SECTION 9.07. SEVERABILITY. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 9.08. FURTHER ASSURANCES. Each party hereto, upon the request of
any other party hereto, shall do all such further acts and execute, acknowledge
and deliver all such further
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instruments and documents as may be necessary or desirable to carry out the
transactions contemplated by this Agreement.
SECTION 9.09. TITLES AND HEADINGS. Titles, captions and headings of the
sections of this Agreement are for convenience of reference only and shall not
affect the construction of any provision of this Agreement.
SECTION 9.10. GOVERNING LAW; SUBMISSION TO JURISDICTION; ETC. (A) THIS
AGREEMENT SHALL BE GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THE PARTIES HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK (UNLESS U.S. FEDERAL JURISDICTION IS LACKING, IN WHICH CASE
THE PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF ANY STATE COURT OF GENERAL
JURISDICTION SITTING IN NEW YORK COUNTY IN THE STATE OF NEW YORK) IN RESPECT OF
ANY ACTION, SUIT OR PROCEEDING IN CONNECTION WITH ANY OF THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT
THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT MATTERS RELATING TO
THE TRANSACTION DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN
OR BY SUCH COURTS.
(b) The Investor hereby irrevocably appoints SG Cowen Securities
Corporation, 1221 Avenue of the Americas, New York, NY 10020 as its agent for
the purposes specified in Section 9.10(a) above and covenants and agrees that
service of process in any such action, suit or proceeding may be made upon it at
the office of such agent.
SECTION 9.11. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, all of which taken
together shall constitute one and the same instrument.
SECTION 9.12. REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity
relied upon for the determination of the VWAP, trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
shall be Bloomberg Financial.
SECTION 9.13. COMMITMENT FEE PAYMENT. In the event Company shall not issue
Draw Down Shares for an aggregate Investment Amount of at least $18,000,000
prior to the termination of this Agreement, the Company shall pay the Investor
the amount of $900,000 (pro
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rated for issuances prior to the termination of this Agreement), payable two
business days following termination of this Agreement.
SECTION 9.14. ADJUSTMENTS FOR STOCK SPLITS, ETC. The Maximum Share Amount,
the minimum Floor Price and calculations of the Average Daily Trading Volume
shall be equitably adjusted to reflect stock splits, stock dividends, reverse
stock splits and similar events.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
BIOPURE CORPORATION
By: /s/ Francis H. Murphy
---------------------------------
Name: Francis H. Murphy
Title: CFO
By: /s/ Guillaume Pollet
---------------------------------
Name: Guillaume Pollet
Title: Managing Director
<PAGE> 32
EXHIBIT A
BIOPURE CORPORATION
DRAW DOWN NOTICE
[Date]
Societe Generale
c/o SG Cowen Securities Corporation
1221 Avenue of the Americas
New York, New York 10022
Attn: Guillaume Pollet/John Lee
Reference is made to the Equity Line Financing Agreement between Biopure
Corporation (the "Company") and Societe Generale dated as of June __, 2001. The
Company confirms that all conditions to the delivery of this Draw Down Notice
are satisfied as of the date hereof.
Effective Date of Delivery of Draw Down Notice (determined pursuant to Section
2.03(b)): ____________.
First Date of Valuation Period: ______________.
Last Date of Valuation Period: __________________.
Settlement Date: ___________________.
Draw Down Amount (not to exceed Maximum Draw Down Amount): ______________.
Calculation of Maximum Draw Down Amount: _________________.
Floor Price Limitation (if none specified, $13.00):_________________________.
BIOPURE CORPORATION
By:
-------------------------------------
Name:
Title: