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S-1/A - NEPHROS INC | v205870_s1a.htm |
EX-23.1 - NEPHROS INC | v205870_ex23-1.htm |
Exhibit
10.58
Execution
Document
PURCHASE
AGREEMENT
This
PURCHASE AGREEMENT (this “Agreement”), dated as
of October 1, 2010, is by and between Nephros, Inc., a Delaware corporation
(the “Company”), and Lambda
Investors LLC (“Purchaser”).
WITNESSETH:
WHEREAS,
the Company proposes pursuant to the Rights Offering Registration Statement (as
defined herein), to commence a rights offering (the “Rights Offering”) to
the holders of record (the “Record Holders”) of
its common stock, par value $0.001 per share (the “Common Stock”), as of
5:00 p.m. Eastern Time on the record date established for the Rights Offering
(the “Record
Date”) of non-transferable subscription rights (the “Subscription Rights”)
to purchase units (the “Units”) at a
subscription price (the “Subscription Price”)
of $0.02 per Unit, each Unit consisting of one share of Common Stock and a
warrant to purchase 0.924532845 shares of Common Stock at the exercise price of
$0.02 per share;
WHEREAS,
pursuant to the Rights Offering, the Company will distribute to each such Record
Holder, at no charge, one Subscription Right for each share of Common Stock held
by such Record Holder as of the Record Date, and each Subscription Right will
entitle the holder to purchase 4.185496618 Units from the Company (with
fractional Units rounded down to the nearest whole number) at the Subscription
Price (the “Basic
Subscription Privilege”);
WHEREAS,
each holder of Rights who exercises in full such its Basic Subscription
Privilege will be entitled to subscribe for additional Units at the Subscription
Price and on the terms set forth in the Rights Offering Registration Statement
to the extent that other holders of Rights do not exercise all of their Basic
Subscription Privileges (the “Over-Subscription
Privilege”);
WHEREAS,
the Company has agreed to issue and sell to Purchaser, and Purchaser has agreed
to purchase from the Company in a private placement, subject to the terms of
this Agreement and satisfaction of the conditions as set forth in that certain
Senior Secured Note of the Company, dated October 1, 2010, issued to the
Purchaser (the “Note”), that number of Units that is set forth herein and that
would otherwise be available for purchase by Purchaser pursuant to the exercise
of Purchaser’s Basic Subscription Privilege and, if and to the extent exercised
by Purchaser, its Over-Subscription Privilege in the Rights Offering;
and
WHEREAS,
Purchaser is an existing stockholder of the Company, with two representatives
serving on the Company’s board of directors, one of whom is currently serving as
Acting Chief Executive Officer of the Company.
NOW
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, the parties hereto hereby agree as follows:
Section 1.
Definitions.
The following terms used herein shall have the meanings set forth
below:
“Agreement” shall have
the meaning set forth in the preamble hereof.
“Basic Subscription
Privilege” shall have the meaning set forth in the recitals
hereof.
“Closing” shall have
the meaning set forth in Section 3 hereof.
“Closing Date” shall
have the meaning set forth in Section 3 hereof.
“Commission” shall
mean the United States Securities and Exchange Commission, or any successor
agency thereto.
“Common Stock” shall
have the meaning set forth in the recitals hereof.
“Company” shall have
the meaning set forth in the preamble hereof.
“Exchange Act” shall
mean the Securities Exchange Act of 1934 and the rules and regulations
promulgated by the Commission thereunder, as amended.
“Note” shall have the
meaning set forth in the recitals hereof.
“Over-Subscription
Privilege” shall have the meaning set forth in the recitals
hereof.
“Person” shall mean an
individual, corporation, partnership, association, joint stock company, limited
liability company, joint venture, trust, governmental entity, unincorporated
organization or other legal entity.
“Purchaser” shall have
the meaning set forth in the preamble hereof.
“Record Date” shall
have the meaning set forth in the recitals hereof.
“Registration Rights
Agreement” shall mean the registration rights agreement between the
Company and Purchaser substantially in the form filed as Exhibit 10.57 to the
Rights Offering Registration Statement.
“Rights Offering”
shall have the meaning set forth in the recitals hereof.
“Rights Offering
Prospectus” shall mean the prospectus relating to the Common Stock
included with the Rights Offering Registration Statement.
“Rights Offering Registration
Statement” means the Company’s Registration Statement on Form S-1 under
the Securities Act or such other appropriate form under the Securities Act,
pursuant to which the shares of Common Stock underlying the Rights will be
registered pursuant to the Securities Act.
“Securities Act” shall
mean the Securities Act of 1933 and the rules and regulations promulgated by the
Commission thereunder, as amended.
“Purchaser” shall have
the meaning set forth in the preamble hereof.
“Securities” shall
have the meaning set forth in Section 4 hereof.
“Subscription Price”
shall have the meaning set forth in the recitals hereof.
“Subscription Rights”
shall have the meaning set forth in the recitals hereof.
“Units” shall have the
meaning set forth in the recitals hereof.
Section 2.
Purchase
Commitment. (a) Purchaser hereby agrees, subject to satisfaction by the
Company of each of the conditions set forth under clause 7(n) of the Note, to
purchase from the Company, and the Company hereby agrees to sell to Purchaser,
at the Subscription Price, 60,194,226 Units, which amount equals the number of
Units that would otherwise be available for purchase by Purchaser pursuant to
its Basic Subscription Privilege.
(b) In
the event that Purchaser agrees to purchase the 60,194,226 Units specified in
Section 2(a) above, Purchaser shall have the right, but not the obligation, to
purchase from the Company, at the Subscription Price, under this Agreement and
not under the Rights Offering Registration Statement, such additional number of
Units as would otherwise be available for purchase by Purchaser pursuant to its
Over-Subscription Privilege.
(c) Purchaser
agrees not to exercise its Basic Subscription Privilege or Over-Subscription
Privilege in the Rights Offering.
Section 3.
The Closing. As
soon as practicable following the closing of the Rights Offering, the Company
shall (a) establish to Purchaser’s satisfaction that each of the conditions set
forth under clause 7(n) of the Note has been satisfied, (b) execute and deliver
to Purchaser the Registration Rights Agreement and (c) notify Purchaser of the
number of Units to be purchased by Purchaser pursuant to Section 2 hereof.
The delivery of and payment for the Units shall take place at the offices of
Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone Trail, Suite 300,
Raleigh, North Carolina, at 10:00 a.m., Eastern time, on a date that is
within five business days of receipt of the foregoing notification (the “Closing Date” and the
consummation of the transaction being referred to as the “Closing”).
Section 4.
Delivery of the
Securities. At the Closing, the shares of Common Stock and warrants to
purchase shares of Common Stock underlying the Units (the “Securities”) to be
purchased by Purchaser hereunder, registered in the name of Purchaser, shall be
delivered by or on behalf of the Company to Purchaser, for Purchaser’s account,
against delivery by Purchaser of the purchase price therefor in immediately
available funds in the form of one or more federal funds checks or a wire
transfer to an account designated by the Company.
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Section 5.
Representations and
Warranties of the Company. The Company represents and warrants to
Purchaser as follows:
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted.
(b) This
Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes a binding obligation of the Company enforceable against
it in accordance with its terms.
(c) All
of the Securities will have been duly authorized for issuance prior to issuance,
and, when issued and distributed as set forth in the Rights Offering Prospectus,
will be validly issued, fully paid and non-assessable; and none of the
Securities will have been issued in violation of the preemptive rights of any
security holders of the Company arising as a matter of law or under or pursuant
to the Company’s Amended and Restated Certificate of Incorporation, the
Company’s Amended and Restated By-laws, or any agreement or instrument to which
the Company is a party or by which it is bound.
Section 6.
Representations and
Warranties of Purchaser. Purchaser represents and warrants to the Company
as follows:
(a) This
Agreement has been duly and validly authorized, executed and delivered by
Purchaser and constitutes a binding obligation of Purchaser enforceable against
it in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws or equitable principles affecting
the enforcement of creditors’ rights
generally.
(b) Purchaser
will have sufficient cash funds on hand to purchase the Units on the terms and
conditions contained in this Agreement on the Closing Date.
(c) Purchaser
is familiar with the business in which the Company is engaged, and Purchaser is
familiar with an investment of the type that Purchaser is undertaking pursuant
to the terms of this Agreement; Purchaser is aware of the problems and risks
involved in making an investment of this type; and based upon Purchaser’s
knowledge and experience in financial and business matters, Purchaser is capable
of evaluating the merits and risks of this investment. Purchaser is able to
afford a complete loss of such investment. Purchaser acknowledges that, prior to
executing this Agreement, Purchaser has received or has had full access to all
the information it considers necessary or appropriate for deciding whether to
purchase the Units and has had an opportunity to ask questions and receive
answers regarding the terms and conditions of the Units. Purchaser has consulted
with such attorneys and financial and tax advisors on any aspects of the
transaction as it deems necessary, including the risks thereof.
(d) Purchaser
is not acting in concert and is not a member of any “group” (within the meaning
of Section 13(d)(3) of the Exchange Act) with respect to
Company.
(e) Purchaser
is an “accredited investor” within the meaning of Rule 501(a) under the
Securities Act and is acquiring the Units for investment for its own account,
with no present intention of dividing its participation with others or reselling
or otherwise distributing the same in violation of the Securities Act or any
applicable state securities laws.
(f) Purchaser
understands that: (i) the Securities, when acquired by Purchaser under this
Agreement, will not have been registered under the Securities Act or any
applicable state securities laws, and such Securities may not be sold or
otherwise transferred by it unless (a) the Securities are sold or
transferred pursuant to an effective registration statement under the Securities
Act, (b) at the Company’s request, such Purchaser shall have delivered to
the Company an opinion of counsel (which opinion shall be in form, substance and
scope reasonably satisfactory to the Company’s counsel) to the effect that the
Units to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (c) the Securities are sold pursuant to
Rule 144 promulgated under the Securities Act; and (ii) any sale of
such Securities made in reliance on Rule 144 under the Securities Act may
be made only in accordance with the terms of such rule. Purchaser acknowledges
that a restrictive legend will be placed on the certificate or certificates
representing the Securities that are purchased pursuant to this Agreement in a
form substantially similar to the legend set forth below (and a stop-transfer
order may be placed against transfers of the certificates evidencing such
Units):
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE CORPORATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO COMPLY WITH ALL SUCH RESTRICTIONS ON TRANSFER.
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Section 7.
Public
Statements. Neither the Company nor Purchaser shall issue any public
announcement, statement or other disclosure with respect to this Agreement or
the transactions contemplated hereby without the prior consent of the other
party hereto, which consent shall not be unreasonably withheld or delayed,
except if such public announcement, statement or other disclosure is required by
applicable law or applicable stock market regulations, in which case the
disclosing party shall consult in advance with respect to such disclosure with
the other party to the extent reasonably practicable.
Section 8.
Termination.
Purchaser may terminate this Agreement if the Rights Offering is terminated or
at any time after January 30, 2011 if the conditions set forth under clause 7(n)
of the Note have not been satisfied by such date.
Section 9.
Notices. All
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing (which shall include notice by facsimile
transmission) and shall be deemed to have been duly made and received when
personally served, or when delivered by Federal Express or a similar overnight
courier service, expenses prepaid, or by facsimile communications equipment
(with confirmation of receipt by recipient), addressed as set forth
below:
If to
Purchaser:
Lambda
Investors LLC
Attn:
Arthur Amron
c/o
Wexford Capital LP
Wexford
Plaza
411 West
Putnam Avenue
Greenwich,
CT 06830
Tel:
(203) 862-7012
Fax:
(203) 862-7312
Copy to
(which will not constitute notice):
Akin Gump
Strauss Hauer & Feld LLP
Attn:
Seth R. Molay, P.C.
1700
Pacific Avenue, Suite 4100
Dallas,
TX 75201
Tel:
(214) 969-4780
Fax:
(214) 969-4343
If to the
Company:
Nephros,
Inc.
Attn:
Gerald J. Kochanski, Chief Financial Officer
41 Grand
Ave.
River
Edge, NJ 07661
Tel:
(201) 343-5202
Fax:
(201) 343-5207
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Copy to
(which will not constitute notice):
Wyrick
Robbins Yates & Ponton LLP
Attn:
Alexander M. Donaldson, Esq.
4101 Lake
Boone Trail, Suite 300
Raleigh,
NC 27607
Tel:
(919) 781-4000
Fax:
(919) 781-4865
Section 10.
Assignment.
This Agreement will be binding upon, and will inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, the rights and obligations of the Company and
Purchaser under this Agreement shall not be assigned or delegated without the
prior written consent of the other (which consent may be withheld in such
party’s sole discretion).
Section 11.
Amendment. This
Agreement may be amended only by a written instrument executed by the Company
and Purchaser that specifically references this Agreement and the provisions
hereof to be amended.
Section 12.
Governing Law.
This Agreement and any claim, controversy or dispute arising under or related to
this Agreement, the relationship of the parties, and/or the interpretation and
enforcement of the rights and duties of the parties shall be governed by and
construed in accordance with the internal laws of the State of Delaware
(excluding the conflict of law rules thereof).
Section 13.
Severability.
If any provision of this Agreement or the application thereof to any person or
circumstances is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid, void or unenforceable, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the
parties.
Section 14.
Headings. The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning of this Agreement.
Section 15.
Counterparts.
This Agreement may be executed simultaneously in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. The exchange of copies of this Agreement and of signature
pages by facsimile transmission (whether directly from one facsimile device to
another by means of a dial-up connection or whether otherwise transmitted via
electronic transmission), by electronic mail in “portable document format”
(“.pdf”) form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, or by a combination of
such means, shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of an original Agreement for all
purposes. Signatures of the parties transmitted by facsimile or other electronic
transmission shall be deemed to be original signatures for all purposes under
this Agreement.
[Remainder
of this page intentionally left blank.]
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and
delivered as of the date first above written.
NEPHROS,
INC.
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By:
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/s/ Gerald J. Kochanski | |||
Name:
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Gerald J. Kochanski | |||
Title:
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Chief Financial Officer | |||
LAMBDA
INVESTORS LLC
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By:
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/s/ Arthur Amron | |||
Name: Arthur
Amron
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Title: Vice
President
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