EXHIBIT
10.2
EXECUTION COPY
SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement
(this “ Agreement ”) is dated as of December 8,
2008, between EpiCept Corporation, a Delaware corporation (the
“ Company ”), and each purchaser identified on
the signature pages hereto (each, including its successors and
assigns, a “ Purchaser ” and collectively, the
“ Purchasers ”).
WHEREAS, subject to the terms and
conditions set forth in this Agreement and pursuant to Section 4(2)
of the Securities Act of 1933, as amended (along with the rules and
regulations promulgated thereunder, the “ Securities
Act ”), and Rule 506 promulgated thereunder, the Company
desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of
the mutual covenants contained in this Agreement, and for other
good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions . In addition to the terms defined elsewhere in
this Agreement: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the
Debentures (as defined herein), and (b) the following terms have
the meanings set forth in this Section 1.1:
“ Acquiring Person
” shall have the meaning ascribed to such term in Section
4.5.
“ Action ” shall
have the meaning ascribed to such term in Section
3.1(j).
“ Affiliate ”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“ Board of Directors
” means the board of directors of the Company.
“ Business Day ”
means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or
required by law or other governmental action to close.
“ Closing ” means
the closing of the purchase and sale of the Securities pursuant to
Section 2.1.
“ Closing Date ”
means the second Trading Day following the date of this
Agreement.
“ Commission ”
means the United States Securities and Exchange
Commission.
“ Common Stock ”
means the common stock of the Company, par value $0.0001 per share,
and any other class of securities into which such securities may
hereafter be reclassified or changed into.
“ Common Stock
Equivalents ” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof, pursuant to
the terms of such securities, to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“ Company Counsel
” means Weil Gotshal & Manges LLP, with offices located
at 767 Fifth Avenue, New York, NY 10153.
“ Conversion Price
” shall have the meaning ascribed to such term in the
Debentures.
“ Debentures ”
means the Subordinated Convertible Debentures issued by the Company
to the Purchasers hereunder, in the form of Exhibit A attached hereto.
“ Discussion Time
” shall have the meaning ascribed to such term in Section
3.2(h).
“ Evaluation Date
” shall have the meaning ascribed to such term in Section
3.1(r).
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“ Exempt Issuance
” means the issuance of (a) shares of Common Stock or options
to employees, officers or directors of the Company pursuant to any
stock or option plan duly adopted for such purpose, by a majority
of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established
for such purpose, (b) securities upon the exercise or exchange of
or conversion of any Securities issued hereunder and/or other
securities (as well as the loan made by Hercules) exercisable or
exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the
exercise, exchange or conversion price of such securities and (c)
securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a
Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company
and in which the Company
receives benefits in addition to the
investment of funds, but shall not include a transaction in which
the Company is issuing securities primarily for the purpose of
raising capital or to an entity whose primary business is investing
in securities.
“ FWS ” means
Feldman Weinstein & Smith LLP with offices located at 420
Lexington Avenue, Suite 2620, New York, New York
10170-0002.
“ GAAP ” shall
have the meaning ascribed to such term in Section
3.1(h).
“ Hercules ”
means Hercules Technology Growth Capital, Inc. and its
affiliates.
“ Indebtedness ”
means (i) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business) and (ii) all guaranties,
endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business.
“ Intellectual Property
Rights ” shall have the meaning ascribed to such term in
Section 3.1(o).
“ Legend Removal Date
” shall have the meaning ascribed to such term in Section
4.1(c).
“ Legend Removal Date
Notice ” shall have the meaning ascribed to such term in
Section 4.1(c).
“ Liens ” means a
lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
“ Material Adverse
Effect ” shall have the meaning assigned to such term in
Section 3.1(b).
“ Material Permits
” shall have the meaning ascribed to such term in Section
3.1(m).
“ Maximum Rate ”
shall have the meaning ascribed to such term in Section
5.17.
“ Person ” means
an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“ Principal Amount
” means, as to each Purchaser, the amounts set forth below
such Purchaser’s signature block on the signature pages
hereto next to the heading “Principal Amount,” in
United States Dollars, which shall equal such Purchaser’s
Subscription Amount multiplied by 1.1125.
“ Proceeding ”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“ Purchaser Party
” shall have the meaning ascribed to such term in Section
4.8.
“ Required Approvals
” shall have the meaning ascribed to such term in Section
3.1(e).
“ Rule 144 ”
means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
“ SEC Reports ”
shall have the meaning ascribed to such term in Section
3.1(h).
“ Securities ”
means the Debentures and the Underlying Shares.
“ Securities Act
” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
“ Short Sales ”
means all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of
Common Stock).
“ Subscription Amount
” means, as to each Purchaser, the aggregate amount to be
paid for Debentures purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and
next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.
“ Subsidiary ”
means any subsidiary of the Company and shall, where applicable,
also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.
“ Trading Day ”
means a day on which the principal Trading Market is open for
trading.
“ Trading Market
” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in
question: the American Stock Exchange, The Nasdaq Capital Market,
The Nasdaq Global Market, The Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Bulletin Board.
“ Transaction Documents
” means this Agreement, the Debentures, all exhibits thereto
and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
“ Transfer Agent
” means American Stock Transfer & Trust Company, the
current transfer agent of the Company, with a mailing address of
6201 15th Avenue, 3rd Fl., Brooklyn, NY 11219 and a facsimile
number of 718-921-8327, and any successor transfer agent of the
Company.
“ Underlying Shares
” means the shares of Common Stock issued and issuable upon
conversion of the Debentures.
“ VWAP ” means,
for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price
of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or
quoted for trading as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York City time)); (b) if the OTC Bulletin Board is not a
Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board; (c) if the Common Stock is not then listed or
quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets”
published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most
recent bid price per share of the Common Stock so reported; or
(d) in all other cases, the fair market value of a share of
Common Stock as determined by an independent appraiser selected in
good faith by the Purchasers of a majority in interest of the
Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.
ARTICLE II.
PURCHASE AND SALE
2.1
Closing . On the Closing Date, upon the terms and
subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the
parties hereto, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, Debentures for an
aggregate Subscription Amount of up to $1,000,000 (and an aggregate
Principal Amount of up to $1,112,500). Each Purchaser shall deliver
to the Company via wire transfer immediately available funds equal
to its Subscription Amount and the Company shall deliver to each
Purchaser its respective Debenture pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set
forth in Section 2.2 deliverable at the Closing. Upon satisfaction
of the conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of FWS or such other location as the
parties shall mutually agree.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to
be delivered to each Purchaser the following:
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(i)
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this Agreement duly executed by the
Company;
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(ii) a
Debenture with a principal amount equal to such Purchaser’s
Subscription Amount multiplied by 1.1125, registered in the name of
such Purchaser; and
(b) On
or prior to the Closing Date, each Purchaser shall deliver or cause
to be delivered to the Company the following:
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(i)
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this Agreement duly executed by such
Purchaser; and
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(ii) such
Purchaser’s Subscription Amount by wire transfer to the
account as specified in writing by the Company;
(a) The
obligations of the Company hereunder in connection with the Closing
as to any Purchaser are subject to the following conditions being
met:
(i) the
accuracy in all material respects and on the Closing Date of the
representations and warranties of such Purchase contained herein
(unless as of a specific date therein);
(ii) all
obligations, covenants and agreements of such Purchaser required to
be performed at or prior to the Closing Date shall have been
performed; and
(iii) the
delivery by such Purchaser of the items set forth in Section 2.2(b)
of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection
with the Closing are subject to the following conditions being
met:
(i) the
accuracy in all material respects when made and on the Closing Date
of the representations and warranties of the Company contained
herein (unless as of a specific date therein);
(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(v) from
the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the
Company’s principal Trading Market (except for any suspension
of trading of limited duration
agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as
reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared
either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change from the
date hereof in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or
inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND
WARRANTIES
3.1
Representations and Warranties of the Company . Except as
set forth in the SEC Reports, which SEC Reports shall be deemed a
part hereof and shall qualify any representation or warranty
otherwise made herein to the extent of such disclosure contained
therein, the Company hereby makes the following representations and
warranties to each Purchaser as of the date hereof and as of the
Closing Date:
(a)
Subsidiaries . The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens (except for Liens held by Hercules),
and all of the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b)
Organization and Qualification . The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not
reasonably be expected to result in: (i) a material adverse effect
on the legality, validity or enforceability against the Company of
any Transaction Document with respect to the Company, (ii) a
material adverse effect on the results of operations, assets,
business, or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect
on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “ Material Adverse
Effect ”) and no Proceeding has been instituted in any
such
jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
(c)
Authorization; Enforcement . The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to
which it is a party and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, its board of
directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals.
Each Transaction Document to which it is a party has been (or upon
delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) that rights to indemnification
and contribution provisions may be limited by federal or state
securities laws or public policy relating thereto.
(d)
No Conflicts . The execution, delivery and performance by
the Company of the Transaction Documents, the issuance and sale of
the Securities and the consummation by the Company of the other
transactions contemplated hereby and thereby do not and will not:
(i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected (except
as may have been waived), or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could reasonably be
expected to have a Material Adverse Effect.
(e)
Filings, Consents and Approvals . The Company is not
required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental
authority or other Person in connection with the execution,
delivery and performance by the
Company of the Transaction
Documents, other than: (i) the filings required pursuant to Section
4.6 of this Agreement, (ii) the notice and/or application(s) to
each applicable Trading Market for the issuance and sale of the
Securities and the listing of the Underlying Shares for trading
thereon in the time and manner required thereby and (iii) such
filings as are required to be made under applicable federal and
state securities laws, FINRA and the Trading Market (collectively,
the “ Required Approvals ”).
(f)
Issuance of the Securities . The Securities are duly
authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than any restrictions on transfer provided for
in the Transaction Documents. The Underlying Shares, when issued in
accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. The Company shall
reserve from its duly authorized capital stock the maximum number
of shares of Common Stock issuable pursuant to this
Agreement.
(g)
Capitalization . The capitalization of the Company is as
described in the SEC Reports. The Company has not issued any
capital stock since its most recently filed periodic report under
the Exchange Act, other than as described in the SEC Reports or
pursuant to the exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee
stock purchase plans and pursuant to the conversion and/or exercise
of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person
has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as a
result of the purchase and sale of the Securities and as described
in the SEC Reports, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common
Stock, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents.
Except as described in the SEC Reports, the issuance and sale of
the Securities will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. All of the outstanding shares
of capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Except as set forth in the
Agreement, no further approval or authorization of any stockholder,
the board of directors of the Company or others is required for the
issuance and sale of the Securities. Except as described in the SEC
Reports, there are no stockholders agreements, voting agreements or
other similar
agreements with respect to the
Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the
Company’s stockholders.
(h)
SEC Reports; Financial Statements . The Company has complied
in all material respects with requirements to file all reports,
schedules, forms, statements and other documents required to be
filed by the Company under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the one year period immediately
preceding the date hereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “ SEC
Reports ”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects
with the requirements of the Exchange Act, and none of the SEC
Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“ GAAP
”), except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and
fairly present in all material respects the financial position of
the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.
(i)
Material Changes; Undisclosed Events, Liabilities or
Developments . Since the date of the latest audited financial
statements included within the SEC Reports, except as described in
the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses incurred in the ordinary course
of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued
any equity securities to any officer, director or Affiliate, except
pursuant to existing Company equity compensation plans. The Company
does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of
the Securities contemplated by this Agreement or as described in
the SEC Reports, no event, liability or development has occurred or
exists with respect to the Company or its
Subsidiaries or their respective
business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed
made that has not been publicly disclosed prior to the date of this
Agreement. As of the date of this Agreement, the Company is not an
issuer subject to Rule 144(i) under the Securities Act.
(j)
Litigation . Except as described in the SEC Reports, there
is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“ Action ”) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) would, if there
were an unfavorable decision, reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary,
nor any director or officer thereof, is the subject of any Action
involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty. There
has not been, and to the knowledge of the Company, there is not
pending or contemplated, any investigation by the Commission of the
Company or any current or former director or officer of the Company
in their capacity as an officer or director of the Company. To the
knowledge of the Company, the Commission has not issued any stop
order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under
the Exchange Act or the Securities Act.
(k)
Labor Relations . No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of
the employees of the Company, which could reasonably be expected to
result in a Material Adverse Effect. No executive officer, to the
knowledge of the Company, is in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant, and to the
Company’s knowledge, the continued employment of each such
executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with
all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the
failure to be in compliance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(l)
Compliance . Except as described in the SEC Reports, neither
the Company nor any Subsidiary: (i) is in default under or in
violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any order of any court, arbitrator or
governmental body or (iii) is or has
been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business and all
such laws that affect the environment, except in each case as could
not reasonably be expected to have a Material Adverse
Effect.
(m)
Regulatory Permits . Except as described in the SEC Reports,
the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not reasonably be
expected to result in a Material Adverse Effect (“
Material Permits ”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(n)
Title to Assets . The Company and the Subsidiaries have good
and marketable title in fee simple to all real property owned by
them that is material to the business of the Company and the
Subsidiaries and good and marketable title in all personal property
owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except
for Liens in favor of Hercules and for Liens as do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and Liens for the payment of federal,
state or other taxes, the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance.
(o)
Patents and Trademarks . Except as described in the SEC
Reports, the Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property
rights currently employed by them and similar rights as necessary
or material for use in connection with the business currently
operated by them that are necessary for use in the conduct of their
respective businesses except where the failure to so have could not
reasonably be expected to have a Material Adverse Effect
(collectively, the “ Intellectual Property Rights
”). Neither the Company nor any Subsidiary has received a
notice (written or otherwise) that any of the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes
upon the rights of any Person. To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual
Property Rights of others. The Company and its Subsidiaries have
taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(p)
Insurance . The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as
are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged,
including, but not limited to, directors and officers insurance
coverage. To the knowledge of the Company, such insurance contracts
are accurate and complete. 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 without a significant increase in
cost.
(q)
Transactions With Affiliates and Employees . Except as
described in the SEC Reports, none of the officers or directors of
the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner, in each case in excess of $120,000 other than
for: (i) payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option
agreements or any other similar arrangements under any equity
compensation plan of the Company.
(r)
Sarbanes-Oxley; Internal Accounting Controls . The Company
is in material compliance with all provisions of the Sarbanes-Oxley
Act of 2002 which are applicable to it as of the Closing Date. The
Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP
