Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - K-V Pharmaceutical Co | d8k.htm |
| EX-10.2 - REGISTRATION RIGHTS AGREEMENT, DATED AS OF FEBRUARY 14, 2011 - K-V Pharmaceutical Co | dex102.htm |
Exhibit 10.1
EXECUTION VERSION
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of February 14, 2011, by and among K-V Pharmaceutical Company, a Delaware corporation, with its principal offices at One Corporate Woods Drive, Bridgeton, Missouri 63044 (the “Company”), and the investors (individually, a “Buyer” and collectively, the “Buyers”) listed on the Schedule of Buyers attached hereto (the “Schedule of Buyers”).
WHEREAS:
A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B. Each Buyer, severally and not jointly, wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, that aggregate number of shares of the Class A Common Stock, par value $0.01 per share, of the Company (the “Common Stock”), set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate amount for all Buyers together shall be 9,950,000 shares of Common Stock and shall collectively be referred to herein as the “Common Shares”).
C. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit A (the “Registration Rights Agreement”) pursuant to which the Company has agreed to provide certain registration rights with respect to the Securities under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.
D. The Common Shares are also referred to herein as the “Securities”.
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES
(a) Purchase of Common Shares.
Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Closing Date (as defined below), the number of Common Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (the “Closing”).
(i) Closing. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York City time on February 17, 2011 (or such later date and time as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below at the offices of Thompson Coburn LLP, One US Bank Plaza, St. Louis, Missouri 63101.
(ii) Purchase Price. The aggregate purchase price for the Common Shares to be purchased by each such Buyer at the Closing (the “Purchase Price”) shall be the amount set forth opposite each Buyer’s name in column (4) of the Schedule of Buyers, which shall be equal to the amount of $3.25 per Common Share times the number of Common Shares purchased.
(b) Form of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase Price to the Company for the Common Shares to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions and (ii) the Company shall deliver to each Buyer the Common Shares (allocated in the amounts as such Buyer shall request) which such Buyer is then purchasing hereunder, in each case duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
2. BUYER’S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
(a) Organization and Good Standing. If the Buyer is an entity, such Buyer is a corporation, partnership or limited liability company duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.
(b) Authorization and Power. Each Buyer has the requisite power and authority to enter into and perform the Transaction Documents (as defined in Section 3(b)) to which such Buyer is a party and to purchase the Common Shares being sold to it hereunder. If Buyer is an entity, the execution, delivery and performance of the Transaction Documents to which such Buyer is a party by such Buyer and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of such Buyer or its Board of Directors, stockholders or partners, as the case may be, is required. The Transaction Documents to which such Buyer is a party have been duly authorized, executed and delivered by such Buyer and constitute, or shall constitute when executed and delivered, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with the terms thereof, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(c) No Public Sale or Distribution. Such Buyer is acquiring the Securities for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act and pursuant to the applicable terms of the Transaction
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Documents (as defined in Section 3(b)). Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. As used in this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
(d) Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(e) Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.
(f) Information and Exculpation.
(i) Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances, prospects and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer as it has deemed necessary or appropriate to conduct its due diligence investigation and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Such Buyer understands that its investment in the Securities involves a high degree of risk and is able to afford a complete loss of such investment. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(ii) Such Buyer acknowledges that it is making such investment based on the results of its own due diligence investigation of the Company, including the representations and warranties being made by the Company in this Agreement, and such Buyer has not relied on any information or advice furnished by or on behalf of the Agent (as defined below) in connection with the transactions contemplated hereby. Such Buyer acknowledges that Agent has not made, any representations and warranties with respect to the Company or the transactions contemplated hereby, and such Buyer will not rely on any statements made by Agent, orally or in writing, to the contrary. Such Buyer further acknowledges that Agent will not be responsible for the ultimate success of its investment in the Company. In light of the foregoing, to the fullest extent permitted by law, such Buyer releases Agent, its employees, officers and affiliates from any liability with respect to such Buyer’s participation in the transactions contemplated hereby.
(iii) Such Buyer and its advisors, if any, have had access to and opportunity to review all filings made by the Company with the SEC pursuant to the Securities
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Exchange Act of 1934, as amended (the “1934 Act”), on or after March 31, 2010 (the “1934 Act Filings”). Neither any inquiries of such Buyer pursuant to subparagraph (i) of this Section 2(f) nor any other due diligence investigation conducted by such Buyer shall modify, limit or otherwise affect such Buyer’s right to rely on the Company’s representations and warranties contained in this Agreement; provided, however, the Buyer acknowledges and agrees that all representations and warranties made by the Company in the Agreement are qualified by any and all disclosures made in the 1934 Act Filings, including, without limitation, those set forth under the heading “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”
(g) No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(h) Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined in Section 2(c)) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. The Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 2(h); provided, that such Buyer and its pledgees make such pledge in accordance with applicable laws.
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(i) Legends. Such Buyer understands that the certificates or other instruments representing the Securities, until such time as the resale of the Securities have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, except as set forth below, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if, unless otherwise required by state securities laws, (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of a law firm reasonably acceptable to the Company, in a form reasonably acceptable to the Company, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A.
(j) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
(k) Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.
(l) No General Solicitation. Each Buyer acknowledges that the Securities were not offered to such Buyer by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, website, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such Buyer was invited by any of the foregoing means of communications.
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(m) Independent Investment. Except as may be disclosed in any filings with the SEC by the Buyers under Section 13 and/or Section 16 of the 1934 Act, such Buyer has not agreed to act with any other Buyer for the purpose of acquiring, holding, voting or disposing of the Securities purchased hereunder for purposes of Section 13(d) under the 1934 Act, and such Buyer is acting independently with respect to its investment in the Shares.
(n) Brokers. No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company or any Subsidiary for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Buyer.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that, subject to the disclosures in the Company’s 1934 Act Filings:
(a) Organization and Qualification. Each of the Company and its “Subsidiaries” (which for purposes of this Agreement means any entity (i) in which the Company, directly or indirectly, owns not less than 25% of the capital stock or holds a corresponding equity or similar interest and (ii) which has operations) is duly incorporated or organized, as the case may be, and validly existing in good standing under the laws of the jurisdiction in which they are incorporated or organized, as applicable, and have the requisite power and authority to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents.
(b) Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Registration Rights Agreement and the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)) (collectively, the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Common Shares have been duly authorized by the Company’s Board of Directors and no further filing, consent or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
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(c) Issuance of Securities. The Common Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof and the Common Shares shall be fully paid and nonassessable with the holders being entitled to all rights accorded to a holder of Common Stock. Assuming the accuracy of each of the representations and warranties set forth in Section 2 of this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares) will not (i) result in a violation of any certificate of incorporation, certificate of formation, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or bylaws of the Company or any of its Subsidiaries, or (ii) except for the agreements set forth on Schedule 3(d) for which the Company has received signed consents to the transactions contemplated herein by the counterparties to such agreements, conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any applicable law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the New York Stock Exchange (the “Principal Market”)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the cases of clauses (ii) and (iii) such as would not reasonably be expected to have a Material Adverse Effect.
(e) Consents. Except for the consent of the counterparties to the agreements set forth on Schedule 3(d), which consents have been received by the Company, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof (other than (x) any consent, authorization or order that has been obtained as of the date hereof, (y) any filing or registration that has been made as of the date hereof or (z) any filings which may be required to be made by the Company with the SEC, state securities administrators or the Principal Market, subsequent to the Closing; provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of the Buyers herein).
(f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company, (ii) an
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“affiliate” of the Company or any of its Subsidiaries (as defined in Rule 144 of the 1933 Act), or (iii) to the knowledge of the Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.
(g) No General Solicitation; Placement Agent’s Fees. Neither the Company nor any of its Subsidiaries, or to the Company’s knowledge, any of its or their affiliates, nor 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) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. The Company acknowledges that it has engaged Jefferies & Company, Inc. as placement agent (the “Agent”) in connection with the sale of the Securities. Other than the Agent, neither the Company nor any of its Subsidiaries has engaged any other placement agent in connection with the sale of the Securities and no Person (other than the Agent) is entitled to any placement agent, financial advisory, finder’s or other fee arising from this transaction as a result of any agreement, arrangement or understanding entered into by or on behalf of the Company.
(h) No Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.
(i) Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation or the laws of the State of Delaware which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the
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Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company with respect to the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities.
(j) 1934 Act Filings and Historical Financial Statements. As of their respective filing dates, the 1934 Act Filings complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the 1934 Act Filings, and none of the 1934 Act Filings, at the time they were filed with the SEC (as the information contained in such 1934 Act Filings may have been amended, modified, supplemented, corrected, rescinded or otherwise withdrawn in subsequent material filed by the Company with the SEC), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The consolidated audited financial statements of the Company and its Subsidiaries for the Fiscal Year ended March 31, 2010 were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) in effect as of the date thereof and fairly present, in all material respects, the financial position, on a consolidated basis, of the Company and its Subsidiaries as at the date thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for the period then ended.
Each registration statement and any amendment thereto filed by the Company since January 1, 2009 pursuant to the 1933 Act and the rules and regulations thereunder, as of the date such statement or amendment became effective, complied as to form in all material respects with the 1933 Act and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein not misleading; and each prospectus filed by the Company since January 1, 2009 pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of any sale of securities pursuant thereto did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(k) Absence of Certain Changes. Since December 31, 2009, other than as set forth on Schedule 3(k) or as disclosed in the 1934 Act Filings, no event, circumstance or change has occurred that has caused or evidences, or could reasonably be expected to result in, either in any case or in the aggregate, a Material Adverse Effect.
(l) No Undisclosed Events, Liabilities, Developments or Circumstances. Except for the matters set forth on Schedule 3(k), no event, liability, development or circumstance has occurred or exists, or is contemplated to occur, with respect to the Company or its Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws in its reports under Section 13(a) or 15(d) of the 1934 Act and which has not been publicly announced.
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(m) Conduct of Business. Neither the Company nor any of its Subsidiaries (a) is in violation of any term of or in default under its Certificate of Incorporation or Bylaws or other organizational documents; (b) is in violation of any applicable laws that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; or (c) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(n) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
(o) Transactions With Affiliates. Except as set forth in the 1934 Act Filings, none of the officers, directors or employees of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.
(p) Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (x) 150,000,000 shares of Class A Common Stock, (y) 75,000,000 shares of Class B Common Stock, par value $0.01 per share (“Class B Common Stock”), and (z) 5,000,000 shares of Preferred Stock, par value $0.01, of which 840,000 are designated 7% Cumulative Convertible Preferred Stock, par value $0.01 (“Preferred Stock”). As of February 10, 2011, (1) 38,580,559 shares of Class A Common Stock, 11,280,285 shares of Class B Common Stock, and 40,000 shares of Preferred Stock are issued and outstanding, (2) 337,500 shares are reserved for issuance pursuant to conversion of the Preferred Stock, (3) 3,295,842 shares are reserved for issuance pursuant to the Company’s employee incentive plan and other options outstanding, (4) 12,578,511 shares are reserved for issuance pursuant to warrants outstanding, (5) 11,663,378 shares are reserved for issuance pursuant to a warrant that is expected to be issued February 28, 2011, and (6) 8,691,880 shares are reserved for issuance pursuant to other securities not described above that are exercisable or exchangeable for, or convertible into, shares of Common Stock. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as set forth above in this Section 3(p) or on Schedule 3(p), or as disclosed in the 1934 Act Filings: (i) none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens or
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encumbrances suffered or permitted by the Company; (ii) there are no outstanding options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement); (iv) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (v) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (vi) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (vii) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would not reasonably be expected to have a Material Adverse Effect.
(q) Material Contracts. Schedule 3(q) contains a true, correct and complete list of all the Material Contracts in effect on and as of the Closing Date. Except as described on Schedule 3(q), all such Material Contracts are in full force and effect and no defaults currently exist by the Company or any Subsidiary and, to the knowledge of the Company, to any other Person party thereto.
(r) Absence of Litigation. Except as set forth in Schedule 3(r) or as disclosed in the 1934 Act Filings, to the Company’s knowledge, there are no legal proceedings about to be commenced or threatened against the Company or any of its Subsidiaries except potential product liability claims which may be asserted in the ordinary course of business (but none of which would exceed, in the aggregate, the insurance coverage of the Company and its subsidiaries). To the Company’s knowledge, there are no legal proceedings about to be commenced or threatened against such the Company or its Subsidiaries that could reasonably be expected to result in, or has resulted in, a Material Adverse Effect.
(s) 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 and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.
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(t) Employee Relations. Neither the Company nor any of its Subsidiaries has knowledge of any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against the Company or any of its Subsidiaries, or to the knowledge of the Company, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against the Company or any of its Subsidiaries or to the knowledge of the Company, threatened against any of them, (b) no strike or work stoppage in existence or threatened involving the Company or any of its Subsidiaries, and (c) to the knowledge of the Company, no union representation question existing with respect to the employees of the Company or any of its Subsidiaries and, to the best knowledge of the Company, no union organization activity that is taking place, except such as is not reasonably likely to have a Material Adverse Effect.
(u) Title. Except for pursuant to the arrangements set forth on Schedule 3(u), the Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.
(v) Intellectual Property Rights. Attached hereto as Schedule 3(v) is a true, correct, and complete listing, as of the date hereof, of (i) all trademark registrations and pending trademark applications, copyright registrations, issued patents and pending patent applications and domain name registrations, as to which the Company or any Subsidiary is the owner (other than Intellectual Property registrations and applications owned by the Company or any Subsidiary that are either (A) expired or lapsed, (B) abandoned, or (C) Intellectual Property registrations or applications that the Company has instructed its applicable advisor, including in-house counsel, to abandon or allow to lapse), (ii) all Intellectual Property licenses to which the Company or any Subsidiary is a party (other than computer software licenses and confidentiality/non-disclosure agreements), and (iii) all litigation, and all U.S. oppositions or cancellation actions and material non-U.S. oppositions or cancellation actions, against the Company or any Subsidiary that are presently pending or, to the knowledge of the Company, threatened, contesting the validity, use, ownership, enforceability or registrability of any of the Intellectual Property owned by the Company or any of its Subsidiaries. The Company and each of the Subsidiaries exclusively own, free and clear of all liens, claims or encumbrances, other than any liens, claims or encumbrances to U.S. Healthcare I, L.L.C., U.S. Healthcare II, L.L.C. or Hologic, Inc., or have the right to use pursuant to a valid and enforceable written license set forth on Schedule 3(v) (other than computer software licenses), all Intellectual Property that is used in the conduct of their businesses. All Intellectual Property listed in Schedule 3(v) owned by the Company or any Subsidiary, is valid, subsisting and enforceable. Except as set forth on Schedule 3(v), (a) the operation of the Company and each Subsidiary’s businesses (including the commercialization of the Company’s Makena product), do not infringe, misappropriate or otherwise conflict with, any Intellectual Property rights or other rights of other persons in respect
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of any asset or product which currently generates revenue or is anticipated to generate revenue in the future or is material to the Company, and the Company is not, and none of the Subsidiaries are, aware of any facts which indicate a likelihood of any of the foregoing, and (b) the Company has not, and none of the Subsidiaries have, in the past two (2) years received any notices that could reasonably be expected to adversely affect the Company’s or any Subsidiary’s use or ownership of Intellectual Property (including any demand letters related to Intellectual Property or unsolicited offers to license patents from any other person), and (c) to the knowledge of the Company, no third party is currently infringing, misappropriating or otherwise conflicting with any of the Company’s or any of the Subsidiaries’ Intellectual Property rights
(w) FDA and Regulatory Matters.
(i) All approvals of New Drug Applications (“NDAs”) and Abbreviated New Drug Applications (“ANDAs”) and any supplements and amendments to such NDAs and ANDAs are valid and effective, all necessary reports and submissions have been made to the Food and Drug Administration (“FDA”), and all applicable fees with respect to such applications have been paid to FDA.
(ii) Except as set forth on Schedule 3(w), the Company and its Subsidiaries possess all permits, licenses, approvals, consents and other authorizations, including but not limited to, NDAs, ANDAs, and all supplements and amendments to such applications and appropriate state licenses, permits and registrations, submitted to the appropriate governmental entity necessary to conduct the business of the Company and its Subsidiaries, including without limitation, all such registrations, approvals, certificates, authorizations and permits required by the FDA, the United States Drug Enforcement Administration, Governmental Authority, and all such are in full force and effect. Each of the Company’s and its Subsidiaries’s products are and have been, since March, 2009, developed, manufactured, labeled, stored, tested and distributed by such Person for products distributed in the marketplace in compliance with all applicable laws, rules, regulations and orders of the FDA or of any applicable state or other Governmental Authority.
(iii) The manufacture of products by the Company and its Subsidiaries will be conducted in compliance with the applicable requirements of the FDA’s Current Good Manufacturing Practices and pursuant to the terms of the Consent Decree. All of the Company’s facilities are registered with the FDA and all of their products are listed with the FDA as required by the FDA’s regulations, 21 C.F.R. Part 207.
(iv) The Company and its Subsidiaries have complied with and will comply with, all the FDA post-approval commitments and reporting requirements, including but not limited to, adverse event reporting obligations.
(v) To the knowledge of the Company and its Subsidiaries, there are no facts or circumstances that could reasonably be construed as indicating that marketing approval for any of the Company’s or its Subsidiaries’s products will be withdrawn or that the Company and its Subsidiaries will not obtain approval for any products currently pending approval by the FDA or any Governmental Authority. The Company and its Subsidiaries shall use such prompt, substantial and persistent efforts to take, or cause to
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be taken, all actions, or to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws to obtain all consents and approvals of any Governmental Authority.
(vi) No Exclusion Affiliate (i) has any direct or indirect ownership or control interest (as defined in Section 1124(a)(3) of the SSA) in the Company or any of its Subsidiaries except to the extent expressly permitted by the HHS-OIG Agreements, (ii) serves as an officer, director, agent, managing employee or employee (as defined in Section 1126(b) of the SSA) of the Company or any of its Subsidiaries, directly or indirectly, officially or otherwise or (iii) furnishes any services as an independent contractor or consultant to the Company or any of its Subsidiaries. “Exclusion Affiliate” means the Company’s affiliates (as defined or applied under applicable law including the SSA) or Affiliates, including any natural Persons, trusts, or otherwise and including, for the avoidance of doubt, Marc Hermelin, in each case as to which exclusion actions or possible exclusion actions by HHS-OIG exist. “Affiliate” means as applied to any (i) Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person and (ii) the Company, Victor M. Hermelin or Marc S. Hermelin, or any of their direct descendants, any members of their family, or any trust or other similar entity formed for their benefit or for the benefit of their family. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 10% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. “SSA” means the Social Security Act of the United States. “HHS-OIG Agreements” means the HHS-OIG Agreement (Ethex) and the HHS-OIG Agreement (Hermelin). “HHS-OIG Agreement (Ethex)” means Divestiture Agreement entered into by and between the Office of Inspector General of the United States Department of Health and Human Services, K-V Pharmaceutical Corporation, and its subsidiary ETHEX Corporation, which agreement was entered into by the parties thereto, and became effective, on November 15, 2010. “HHS-OIG Agreement (Hermelin)” means that certain Settlement Agreement entered into by and among the Office of Inspector General of the United States Department of Health and Human Services, K-V Pharmaceutical Company, Sarah Weltscheff and Marc Hermelin, which agreement was entered into by the parties thereto, and became effective, on November 15, 2010, together with the Attachment A and Schedule of Divestitures thereto, as in effect on the Closing Date.
(vii) There has not occurred any event or condition the result of which could lead to an HHS-OIG Agreement ceasing to be operative.
(viii) Each of the Company’s representations set forth in any HHS-OIG Agreement and any document or agreement related thereto is true, accurate and complete in all respects, and the Company is not aware (after reasonable diligence and inquiry) of any fact or circumstance that could render any Person’s representations in such agreements to be false or misleading.
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(x) Environmental Laws. Except as described in the 1934 Act Filings, the Company and its Subsidiaries (i) are in compliance with any and all applicable Environmental Laws (as hereinafter defined), (ii) have received all certificates, permits, authorities, licenses or other approvals (collectively, “Permits”) required of them under applicable Environmental Laws to conduct their respective businesses as currently conducted and (iii) are in compliance with all terms and conditions of any such Permit where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, Permits, plans or regulations issued, entered, promulgated or approved thereunder.
(y) Subsidiary Rights. The Company has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company.
(z) Payment of Taxes. All federal and other material tax returns and reports of the Company and its Subsidiaries required to be filed by any of them have been timely filed, and all taxes shown on such tax returns to be due and payable and all assessments, fees and other governmental charges upon the Company and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable, except for such taxes which are being contested in good faith and for which adequate reserves have been established in accordance with GAAP. The Company knows of no proposed tax assessment against the Company or any of its Subsidiaries which is not being actively contested by the Company or such Subsidiary in good faith and by appropriate proceedings; provided, such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor.
(aa) Internal Controls. Except as disclosed in the 1934 Act Filings, the Company is unaware of any material weakness or significant deficiencies in its internal control over financial reporting
(bb) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in the SEC Documents and is not so disclosed.
(cc) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
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(dd) Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) other than the Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than the Agent, paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.
(ee) Disclosure. The Company confirms that neither it nor, to its knowledge, any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information (other than information relating to the offering of the Common Shares). The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company or any of its Subsidiaries, their business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company on or before the date hereof but which has not been so publicly announced or disclosed.
(ff) Acknowledgement Regarding Buyers’ Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding, but subject to and in reliance upon compliance by the Buyers with applicable law, it is understood and acknowledged by the Company (i) that none of the Buyers have been asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed with the Company or its Subsidiaries, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) that past or future open market or other transactions by any Buyer, including, without limitation, short sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) that any Buyer, and counter parties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) that each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that, subject to and in reliance upon compliance by the Buyers with applicable law, (a) one or more Buyers may engage in hedging and/or trading activities at various times during the period that the Securities are outstanding and (b) such hedging and/or trading activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging and/or trading activities are being conducted.
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(gg) U.S. Real Property Holding Corporation. The Company is not, nor has it ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Company shall so certify upon any Buyer’s request.
(hh) ERISA Compliance. The Company, each of its Subsidiaries and each of their respective ERISA Affiliates are in material compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan. “Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) which is or, within the last six years, was sponsored, maintained or contributed to by, or required to be contributed by, the Company, any of its Subsidiaries or, solely with respect to any Employee Benefit Plan covered under Title IV of ERISA, any of their respective ERISA Affiliates. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto. Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified and nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status. As of the date hereof, no liability to the PBGC (other than required premium payments and required minimum funding contributions), the Internal Revenue Service, any Employee Benefit Plan or any trust established under any Employee Benefit Plan is expected to be incurred by the Company, any of its Subsidiaries or any of their ERISA Affiliates and none of the foregoing entities maintains, contributes to or has any liability with respect to any Pension Plan or Multiemployer Plan. “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto. “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA. “Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA. No ERISA Event has occurred or is reasonably expected to occur which would result in material liability of the Company. “ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA. Except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of the Company or any of its Subsidiaries. “ERISA Affiliate” means, with respect to the Company or a subsidiary, any member of any group of organizations described in Sections 414(b),(c),(m) or (o) of the Code, and the regulations and published interpretations thereunder of which the Company or such subsidiary is a member.
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(ii) Money Laundering Laws. The operations of the Company and its subsidiaries are, and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.
(jj) OFAC. Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any director, officer, agent, employee, affiliate or Person acting on behalf of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person or entity, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the covenants and conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to any Buyer upon request. The Company, on or before the Closing Date, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken upon Buyer’s request. The Company shall make all filings and reports as it reasonably determines are necessary relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date; provided, however, the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction.
(c) Use of Proceeds. The Company will use the proceeds from the sale of the Securities for the repayment of outstanding indebtedness of the Company or any of its Subsidiaries and for general corporate purposes.
(d) Financial Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) until the date such Investor shall have sold all the Common Shares, (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within three (3) Business Days after the
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filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form, 10-Q, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, and (ii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders. As used herein, “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(e) Listing. The Company shall promptly secure the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Registrable Securities (as defined in the Registration Rights Agreement) from time to time issuable under the terms of the Transaction Documents. The Company shall maintain the Common Stock’s authorization for listing and trading on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(e).
(f) Certain Fees and Expenses. The Company shall pay all transfer agent fees, stamp or transfer taxes and other taxes (not including income or similar taxes) and duties levied in connection with the sale and issuance of the applicable Securities. Except as otherwise expressly set forth in the Transaction Documents (including Section 9(q) of this Agreement), each party to this Agreement shall bear its own fees and expenses in connection with the sale of the Securities to the Buyers (including, without limitation, each party’s legal, accounting and other expenses).
(g) Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by an Investor (as defined in the Registration Rights Agreement) in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(h) of this Agreement; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(h) of this Agreement in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor; provided that any and all costs to effect the pledge of the Common Shares are borne by the pledgor and/or pledgee and not the Company.
(h) Disclosure of Transactions and Other Material Information. On or before 9:30 a.m., New York City time, on the first Business Day following the date of this Agreement, the Company shall issue a press release describing certain terms of the transactions contemplated by the Transaction Documents and on or before 9:30 a.m., New York City time, on the second
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Business Day following the date of this Agreement, the Company shall file a Current Report on Form 8-K describing certain terms of the transactions contemplated by the Transaction Documents and attaching certain Transaction Documents (including, without limitation, this Agreement and the form of the Registration Rights Agreement) as exhibits to such filing as required by the 1934 Act (the “8-K Filing”). From and after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents, that is not disclosed in the 8-K Filing. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing with the SEC without the express written consent of such Buyer. Neither the Company, its Subsidiaries nor any Buyer shall issue any other press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that (A) the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with any of the material or information included in the 8-K Filing or (ii) as is required by applicable law and regulations, and (B) any Buyer may make any filings and disclosures required by applicable law, rule or regulation, including any filings and disclosures required under Section 13 or Section 16 of the 1934 Act. Without the prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or otherwise other than in connection with the Registration Statement, as contemplated pursuant to the Registration Rights Agreement, or unless such disclosure is required by law, regulation or the Principal Market.
(i) Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(j) Future Equity Offerings.
(i) Each Buyer shall have a right of first offer to purchase up to such Buyer’s Pro Rata Percentage of any offering for cash by the Company of shares of Common Stock or any other class or series of its capital stock (including its Class B Common Stock), or any other securities convertible or exercisable into or exchangeable for Common Stock or any other class or series of capital stock (including convertible stock and redeemable stock), but excluding any Exempt Securities. For purposes of this Section 4(j), the term (A) “Exempt Securities” means (i) options granted to employees, directors or consultants under the Company’s stock option plans, (ii) the conversion or exercise of convertible or exercisable securities outstanding on the date hereof, (iii) the issuance of shares in connection with debt financing or similar transactions that are primarily of a non-equity financing nature and approved by the Company’s Board of Directors, (iv) securities issued pursuant to acquisitions or strategic transactions approved by the Company’s Board of Directors, and (v) securities issued in exchange for outstanding debt, and (B)“Pro Rata Percentage” means, in respect of each Buyer, the percentage determined by dividing the number of Common Shares acquired by such Buyer pursuant to this Agreement by the number of Common Shares acquired by all of the Buyers pursuant to this Agreement.
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(ii) If the Company plans to undertake a financing subject to this Section 4(j), the Company shall provide written notice to each Buyer that the Company plans to undertake the financing (the “Financing Notice”), providing a general outline of the proposed structure and anticipated terms thereof and describing in reasonable detail all of the material terms of any such proposed financing. The date on which the Financing Notice is delivered shall be referred to as the “Notice Date”. Unless a Buyer provides the Company notice in writing within five (5) days of the Notice Date that it wishes to participate in such financing, such Buyer’s rights hereunder with respect to such proposed financing (but not with respect to any other future financing) shall be deemed waived. If Buyer notifies the Company that it wishes to participate in the financing, the Buyer shall negotiate such participation in good faith with the Company. If any Buyer fails to timely exercise its right of first offer to purchase its full Pro Rata Percentage of the securities subject to this Section 4(j) (each, an “Ineligible Over Allotment Buyer”), then within 10 days of the Notice Date the Company shall give written notice to the Buyers who indicated an intention to purchase their full pro rata share (each, an “Eligible Over Allotment Buyer”) of the number of securities of the Company subject to this Section 4(j) and not subscribed by the Ineligible Over Allotment Buyers (the “Shortfall Notice”), whereupon each Eligible Over Allotment Buyer shall have the right, but not the obligation, to elect, by written notice to the Company during the 5-day period following its receipt of such Shortfall Notice (the “Shortfall Notice Period”), to purchase any of the securities not so subscribed by the other Buyers (the allocation of such securities among the Eligible Over Allotment Buyers exercising the over allotment option shall be made pro rata among them based on their Pro Rata Percentages or in such other proportions as such participating Eligible Over Allotment Buyers shall unanimously determine in their sole discretion). Unless an Eligible Over Allotment Buyer provides the Company notice in writing within such five days of its receipt of a Shortfall Notice that it wishes to exercise its over allotment option, indicating the maximum number of securities it wishes to purchase, such Eligible Over Allotment Buyer’s right with respect to such over allotment option shall be deemed waived. The parties shall work in good faith to complete the financing within 30 days of the Notice Date (the “Completion Date”). If the proposed financing is not completed by the Completion Date, the Company shall, during the sixty (60) day period following the Completion Date, be permitted to sell the securities described in the Financing Notice on terms and conditions no less favorable than those set forth in the Financing Notice. If the Buyers do not elect to purchase all of the securities with respect to a proposed financing that is the subject of a Financing Notice, the Company shall, during the 90-day period following the Completion Date, be permitted to sell the securities not subscribed for by the Buyers on terms and conditions no less favorable than those set forth in the Financing Notice.
(iii) The rights and obligations established pursuant to this Section 4(j) shall terminate upon the 18- month anniversary of the Closing Date
5. REGISTRAR; TRANSFER AGENT INSTRUCTIONS.
(a) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.
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(b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent, to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Securities in such amounts as specified from time to time by each Buyer to the Company in the form of Exhibit B attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(h) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(h), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Securities sold, assigned or transferred pursuant to an effective registration statement or pursuant to Rule 144, the transfer agent shall issue such Securities to the Buyer, assignee or transferee, as the case may be, without any restrictive legend. The Irrevocable Transfer Agent Instructions shall also provide that, upon the Common Shares becoming freely tradable by a non-affiliate pursuant to Rule 144, the transfer agent shall reissue a certificate representing such Common Shares without legends upon receipt by such transfer agent of the legended certificates for such Common Shares, together with a customary representation by the Buyer that Rule 144 applies to the shares of Common Stock represented thereby.
(c) Breach. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5, that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.
(d) Additional Relief. If the Company shall fail for any reason or for no reason to issue to such holder unlegended certificates within five (5) Trading Days (as defined below) of receipt of documents necessary for the removal of legend set forth above as determined by the Company (the “Deadline Date”), then, in addition to all other remedies available to the holder, if on or after the Trading Day (as defined below) immediately following such five (5) Trading Day period, the holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the holder of shares of Common Stock that the holder anticipated receiving without legend from the Company (a “Buy-In”), then the Company shall, within five (5) Trading Days after the holder’s request and in the holder’s discretion, either (i) pay cash to the holder in an amount equal to the holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the holder a certificate or certificates representing such shares of
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Common Stock and pay cash to the holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) the number of such shares of Common Stock, times (B) the Closing Bid Price on the Deadline Date. “Closing Bid Price” means, for any security as of any date, the last closing price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price then the last bid price of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the holder. If the Company and the holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to the procedure that follows. The Company shall submit the disputed determinations or arithmetic calculations of the Closing Bid Price via facsimile within two (2) Business Days after the Deadline Date (if the Company did not otherwise deliver unlegended certificates pursuant to this Section 5) to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Closing Bid Price within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile the disputed determination of the Closing Bid Price to an independent, reputable investment bank selected by the Company and approved by the Holder. The Company shall cause at its expense the investment bank to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s determination or calculation shall be binding upon all parties absent demonstrable error. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period. “Trading Day” means any day on which the Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock are then traded; provided that “Trading Day” shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York time).
6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common Shares to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
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(ii) Such Buyer and each other Buyer shall have delivered to the Company the applicable Purchase Price for the Common Shares being purchased by the Buyers at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.
(iii) The representations and warranties of such Buyer shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Common Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company shall have duly executed and delivered to such Buyer (i) each of the Transaction Documents and (ii) the Common Shares (in such amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement.
(ii) Such Buyer shall have received the opinion of Thompson Coburn LLP, counsel for the Company (“Company Counsel”), dated as of the Closing Date, in substantially the form of Exhibit C attached hereto.
(iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit B attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
(iv) The Common Stock (I) shall be listed on the Principal Market and (II) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.
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(v) The Company shall have delivered to such Buyer a certificate, executed by the Secretary or Assistant Secretary of the Company and dated as of the Closing Date, in the form attached hereto as Exhibit D, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing.
(vi) The representations and warranties of the Company shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer, in the form attached hereto as Exhibit E.
8. TERMINATION. In the event that the Closing shall not have occurred with respect to a Buyer on or before fifteen (15) Business Days from the date hereof due to the Company’s or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of Common Shares representing at least a majority of the amount of the Common Shares, or, if prior to the Closing Date, the Buyers listed on the Schedule of Buyers as being obligated to purchase at least a majority of the amount of the Common Shares. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents or holders of Common Shares, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.
(f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
if to the Company:
K-V Pharmaceutical Company
One Corporate Woods Drive
Bridgeton, MO 63044
Attention: President and CEO
Phone: 314-645-6600
Fax: 314-646-3751
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with a copy (for informational purposes only) to:
Thompson Coburn LLP
One U.S. Bank Plaza
St. Louis, MO 63101
Attention: Thomas A. Litz
Phone: 314-552-6000
Fax: 314-552-7000
if to the Transfer Agent:
Computershare Trust Company, N.A.
250 Royal Street
Canton, MA 02021
Attn: Simone Harris
if to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers;
or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Common Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of at least a majority of the aggregate number of Registrable Securities (as defined in the Registration Rights Agreement) issued and issuable hereunder. A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
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(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that the Agent may rely upon the representations and warranties contained in Sections 2 and 3 hereof, and except that Section 2(f)(ii) shall inure to the benefit of the Agent, which shall be a third party beneficiary with respect thereto.
(i) Survival. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities hereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any certificate delivered by the Company hereunder, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any certificate delivered by the Company hereunder or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any certificate delivered by the Company hereunder, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of such Buyer or holder of the Securities as an investor in the Company. The Company will not be liable to any Buyer under this Agreement to the extent that a loss, claim, damage or liability is attributable to any Buyer’s breach of any of the representations, warranties, covenants or agreements made by such Buyer in this Agreement or in the other Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is
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permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 9(k) shall be the same as those set forth in Section 5 of the Registration Rights Agreement.
(l) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
(m) Remedies. Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.
(n) Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then at any time prior to performance by the Company of such obligation such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
(o) Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
(p) Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
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deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group, and the Company will not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. Notwithstanding the foregoing, nothing in this subsection (p) shall be construed to alter or affect the closing condition set forth in Section 6(ii) hereof.
(q) Knowledge. For purposes of this Agreement, whenever there is a reference to the Company’s knowledge, it shall mean the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.
[Signature Page Follows]
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IN WITNESS WHEREOF, each Buyer and the Company have caused its respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
| COMPANY: | ||
| K-V PHARMACEUTICAL COMPANY | ||
| By: | /s/ Gregory J. Divis, Jr. | |
| Name: Gregory J. Divis, Jr. | ||
| Title: President and Chief Executive Officer | ||
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
| BUYERS: | ||
| CADUCEUS CAPITAL MASTER FUND LIMITED | ||
| By: | /s/ Sven Borha | |
| Name: Sven Borha | ||
| Title: Partner | ||
| CADUCEUS CAPITAL II, L.P. | ||
| By: | /s/ Sven Borha | |
| Name: Sven Borha | ||
| Title: Partner | ||
| UBS EUCALYPTUS FUND, L.L.C. | ||
| By: | /s/ Sven Borha | |
| Name: Sven Borha | ||
| Title: Partner | ||
| PW EUCALYPTUS FUND, LTD | ||
| By: | /s/ Sven Borha | |
| Name: Sven Borha | ||
| Title: Partner | ||
| SUMMER STREET LIFE SCIENCES HEDGE FUND INVESTORS, LLC | ||
| By: | /s/ Sven Borha | |
| Name: Sven Borha | ||
| Title: Partner | ||
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
| BUYERS: | ||
| Visium Credit Master Fund, Ltd | ||
| By: | /s/ Mark Gottlieb | |
| Name: Mark Gottlieb | ||
| Title: Signatory | ||
| Visium Balanced Master Fund, Ltd | ||
| By: | /s/ Mark Gottlieb | |
| Name: Mark Gottlieb | ||
| Title: Signatory | ||
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
| BUYERS: | ||
| CAPITAL VENTURES INTERNATIONAL | ||
| By: | Heijub Capital Management, Inc., its authorized agent | |
| By: | /s/ Martin Kobinger | |
| Name: Martin Kobinger | ||
| Title: Investment Manager | ||
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
| BUYERS: | ||
| Hudson Bay Master Fund LTD | ||
| By: | /s/ Yoav Roth | |
| Name: Yoav Roth | ||
| Title: Authorized Signatory | ||
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.
| BUYERS: | ||
| PFM Healthcare Fund, LP | ||
| By: | /s/ Eric Moore | |
| Name: Eric Moore | ||
| Title: CFO | ||
| PFM Healthcare Principals Fund, LP | ||
| By: | /s/ Eric Moore | |
| Name: Eric Moore | ||
| Title: CFO | ||
| PFM Healthcare Offshore Fund, Ltd | ||
| By: | /s/ Eric Moore | |
| Name: Eric Moore | ||
| Title: CFO | ||
SCHEDULE OF BUYERS
| Buyer |
Number of Common Shares |
Purchase Price |
Address and Phone Number | |||||||
| CADUCEUS CAPITAL MASTER FUND LIMITED |
435,000 | 1,413,750 | 767 Third Avenue New York, NY 10017 212-739-6400 | |||||||
| CADUCEUS CAPITAL II, L.P. |
330,000 | 1,072,500 | 767 Third Avenue New York, NY 10017 212-739-6400 | |||||||
| UBS EUCALYPTUS FUND, L.L.C |
270,000 | 877,500 | 767 Third Avenue New York, NY 10017 212-739-6400 | |||||||
| PW EUCALYPTUS FUND, LTD |
17,000 | 55,250 | 767 Third Avenue New York, NY 10017 212-739-6400 | |||||||
| SUMMER STREET LIFE SCIENCES HEDGE FUND INVESTORS, LLC |
148,000 | 481,000 | 767 Third Avenue New York, NY 10017 212-739-6400 | |||||||
| Visium Credit Master Fund, Ltd |
1,828,528 | 5,942,716 | 950 Third Avenue New York, NY 10022 646-840-5800 | |||||||
| Visium Balanced Master Fund, Ltd |
1,296,472 | 4,213,534 | 950 Third Avenue New York, NY 10022 646-840-5800 | |||||||
| Capital Ventures International |
625,000 | 2,031,250 | 401 City Line Avenue Bala Cynwyd, PA 19004 415-403-6500 | |||||||
| Hudson Bay Master Fund LTD |
1,000,000 | 3,250,000 | 120 Broadway New York, NY 10271 212-571-1244 | |||||||
| PFM Healthcare Fund, LP |
2,128,976 | 6,919,172 | One Market Plaza San Francisco, CA 94105 415-281-1000 | |||||||
| PFM Healthcare Principals Fund, LP |
277,951 | 903,341 | One Market Plaza San Francisco, CA 94105 415-281-1000 | |||||||
| PFM Healthcare Offshore Fund, Ltd |
1,593,073 | 5,177,487 | One Market Plaza San Francisco, CA 94105 415-281-1000 | |||||||