ISTA » Topics » REPRESENTATIONS AND WARRANTIES

These excerpts taken from the ISTA 8-K filed Sep 30, 2008.

REPRESENTATIONS AND WARRANTIES

The Debtor hereby represents and warrants to the Secured Party that, as of the date of this Agreement:

3.1 Ownership of Collateral. The Debtor owns, or has valid rights as a licensee with respect to, the Collateral free and clear of any Liens except for Permitted Liens. Except as set forth in Schedule 3.1 hereto, no Lien with respect to all or any part of the Collateral is on file or of record in any government or public office, and the Debtor has not filed or consented to the filing of any such Lien, except Uniform Commercial Code financing statements naming the Secured Party as secured party.

3.2 Security Interests; Filings. This Agreement, together with (i) the filing of duly completed and executed Uniform Commercial Code financing statements naming the Debtor as debtor, the Secured Party as secured party, and describing the Collateral, in the jurisdictions set forth with respect to the Debtor on Schedule 3.2 hereto (which filing is hereby authorized by the Debtor) and (ii) to the extent required by applicable law, the filing of duly completed and executed assignments in the forms required by the U.S. Copyright Office or the U.S. Patent and Trademark Office, creates, and at all times shall constitute, a valid and perfected security interest in and Lien upon the Collateral in favor of the Secured Party superior and prior to the rights of all other Persons therein except as set forth on Schedule 3.2A.

3.3 Locations. Schedule 3.3 lists as to the Debtor, (i) its exact legal name, (ii) the jurisdiction of its incorporation and its federal tax identification number, (iii) the addresses of its chief executive office and each other place of business and (iv) the address of each location at which any of the Collateral Inventory or Collateral Equipment is kept, except for any new locations established in accordance with the provisions of Section 4.2. The Debtor does not presently conduct business under any prior or other corporate or company name or under any trade or fictitious names, and the Debtor has not entered into any contract or granted any Lien within the past five (5) years under any name other than its legal corporate name.

 

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3.4 No Violations. The signing, delivery and performance of this Agreement by the Debtor is not prohibited or limited by, and will not result in the breach of or a default under, any provision of the certificate of incorporation or bylaws of the Debtor or any legal requirement applicable to the Debtor. The execution, delivery and performance of this Agreement by the Debtor, the Debtor’s compliance with the terms and provisions hereof and the Secured Party’s exercise of any of its rights hereunder, do not and will not conflict with or result in a breach of any of the terms and provisions of or constitute a default or create a termination right under, with or without the passage of time and the giving of notice, any contract or other instrument or obligation binding or affecting the Debtor, the Royalty Products or the Collateral.

3.5 No Restrictions. There are no statutory or regulatory restrictions, prohibitions or limitations on the Debtor’s ability to grant to the Secured Party a Lien upon and security interest in the Collateral pursuant to this Agreement or on the exercise by the Secured Party of its rights and remedies hereunder (including any foreclosure upon or collection of the Collateral), and there are no contractual restrictions on the Debtor’s ability to grant such Lien and security interest.

3.6 Accounts. Each Collateral Account is, or at the time it arises will be, (i) a bona fide, valid and legally enforceable indebtedness of the account debtor according to its terms, arising out of or in connection with the sale, lease or performance of goods or services by the Debtor or any of them, (ii) subject to no offsets, discounts, counterclaims, contra accounts or any other defense of any kind and character, other than warranties and discounts customarily given by the Debtor in the ordinary course of business and warranties provided by applicable law, (iii) to the extent listed on any schedule of Collateral Accounts at any time furnished to the Secured Party, a true and correct statement of the amount actually and unconditionally owing thereunder, maturing as stated in such schedule and in the invoice covering the transaction creating such Collateral Account, and (iv) not evidenced by any other instrument; or if so, such other instrument (other than invoices and related correspondence and supporting documentation) shall promptly be duly endorsed to the order of the Secured Party and delivered to the Secured Party to be held as Collateral hereunder. To the knowledge of the Debtor, there are no facts, events or occurrences that would in any way impair the validity or enforcement of any Collateral Accounts except as set forth above.

REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of the Borrower. The Borrower represents and warrants as of the date hereof and as of each Disbursement Date as follows:

(a) The Borrower is a corporation duly incorporated and validly existing under the laws of the State of Delaware.

(b) The Borrower is conducting its business in compliance with its Organizational Documents. The Organizational Documents of the Borrower (including all amendments thereto) as currently in effect have been made available to the Lenders and remain in full force and effect with no defaults outstanding thereunder.

(c) The Borrower has full power and authority to enter into each of the Financing Documents and to make the borrowings and the other transactions contemplated thereby.

(d) All authorizations, consents, approvals, registrations, exemptions and licenses with or from Government Authorities or other Persons that are necessary for the conduct of its business as currently conducted and as proposed to be conducted, for the borrowing hereunder, the execution and delivery of the Financing Documents and the performance by the Borrower of the Obligations, have been obtained and are in full force and effect, except (i) for such registrations and filings in connection with the issuance of the Warrants and shares of Common Stock pursuant the Financing Documents necessary to comply with federal and state securities laws, rules and regulations, and (ii) to the extent that any failure to so obtain for the conduct of the business as currently and proposed to be conducted could not reasonably be expected to have a Material Adverse Effect; provided, however, that the failure to receive an approval from Government Authorities for the development or sale of any product shall not constitute a Material Adverse Effect or a violation of this Section 3.1(d).

(e) Each Financing Document has been duly authorized, executed and delivered by the Borrower and constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms, except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).

(f) No Default or Event of Default (or any other default or event of default, however described) has occurred under any of the Financing Documents.

 

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(g) Neither the entering into any of the Financing Documents nor the compliance with any of its terms conflicts with, violates or results in a breach of any of the terms of, or constitutes a default or event of default (however described) or requires any consent under, any agreement to which the Borrower is a party or by which it is bound, or violates any of the terms of the Organizational Documents or any judgment, decree, resolution, award or order or any statute, rule or regulation applicable to the Borrower or its assets.

(h) The Borrower is not engaged in or the subject of any litigation, arbitration, administrative regulatory compliance proceeding, or investigation, nor are there any litigation, arbitration, administrative regulatory compliance proceedings or investigations pending or, to the knowledge of the Borrower, threatened before any court or arbitrator or before or by any Government Authority against the Borrower, except for those that have been publicly disclosed in reports filed with the SEC and the Borrower is not aware of any facts reasonably likely to give rise to any such proceedings other than as may have been publicly disclosed in such reports.

(i) The Borrower (i) is capable of paying its debts as they fall due, is not unable and has not admitted its inability to pay debts as they fall due, (ii) is not bankrupt or insolvent and (iii) has not taken action, and no such action has been taken by a third party, for the Borrower’s winding up, dissolution, or liquidation or similar executory or judicial proceeding or for the appointment of a liquidator, custodian, receiver, trustee, administrator or other similar officer for the Borrower or any or all of its assets or revenues.

(j) No Lien exists on Borrower’s property, except for Permitted Liens.

(k) The obligation of the Borrower to make any payment under this Agreement (together with all charges in connection therewith) is absolute and unconditional, and there exists no right of setoff or recoupment, counterclaim, cross-claim or defense of any nature whatsoever to any such payment.

Section 3.2 Borrower Acknowledgment. The Borrower acknowledges that it has made the representations and warranties referred to in Section 3.1 with the intention of persuading the Lenders to enter into the Financing Documents and that the Lenders have entered into the Financing Documents on the basis of, and in full reliance on, each of such representations and warranties. The Borrower represents and warrants to the Lenders that none of such representations and warranties omits any matter the omission of which makes any of such representations and warranties misleading.

Section 3.3 Representations and Warranties of the Lenders. Each of the Lenders represents and warrants to the Borrower as of the date hereof and as of each date Warrants are granted pursuant to this Agreement that:

(a) It is acquiring the Warrants and the shares of Common Stock issued upon exercise of the Warrants (the “Exercise Shares”) solely for its account for investment and not with a view to or for sale or distribution of the Warrants or Exercise Shares or any part thereof. The entire legal and beneficial interests of the Warrants and Exercise Shares such Lender is acquiring is being acquired for, and will be held for, its account only.

 

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(b) The Warrants and the Exercise Shares have not been registered under the Securities Act on the basis that no distribution or public offering of the stock of the Borrower is to be effected. It realizes that the basis for the exemptions may not be present if, notwithstanding its representations, such Lender has a present intention of acquiring the securities for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. None of the Lenders has such present intention.

(c) The Warrants and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption for such registration is available.

(d) Neither the Warrants nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Borrower, the resale following the required holding period under Rule 144 and the number of shares being sold during any three month period not exceeding specified limitation.

(e) It will not make any disposition of all or any part of the Warrants or Exercise Shares until:

(i) The Borrower shall have received a letter secured by such Lender from the SEC stating that no action will be recommended to the SEC with respect to the proposed disposition;

(ii) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or

(iii) Such Lender shall have notified the Borrower of the proposed disposition and, in the case of a sale or transfer in a so-called “4(1) and a half” transaction, shall have furnished counsel for the Borrower with an opinion of counsel, substantially in the form annexed as Exhibit C to the Warrant. The Borrower agrees that it will not require an opinion of counsel with respect to transactions under Rule 144 of the Securities Act.

(f) It understands and agrees that all certificates evidencing the shares to be issued to the Lenders upon exercise of the Warrants may bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED “4(1) AND A HALF” SALE.”

 

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“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF SEPTEMBER 26, 2008, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

(g) Such Lender is an “accredited investor” as defined in Regulation D promulgated the Securities Act.

(h) Such Lender is a limited partnership duly organized and validly existing under the laws of the jurisdiction of its formation.

(i) Each Financing Document to which it is a party has been duly authorized, executed and delivered by such Lender and constitutes the valid and legally binding obligation of such Lender, enforceable in accordance with its terms, except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).

(j) Such Lender has full power and authority to make the Disbursements and to enter into and perform its other obligations under each of the Financing Documents and carry out the other transactions contemplated thereby. Such Lender has sufficient funds, and will at all times during the first year following the Agreement Date, have sufficient funds to make the Disbursements.

This excerpt taken from the ISTA 10-K filed Mar 15, 2005.

REPRESENTATIONS AND WARRANTIES

 

6.1. Representations and Warranties. Each Party hereby represents and warrants to the other Party as follows:

 

(a) Corporate Existence. Such Party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated.

 

(b) Authorization and Enforcement of Obligations. Such Party (a) has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder, and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms.

 

(c) Consents. All necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by such Party in connection with its performance of this Agreement have been obtained.

 

(d) No Conflict. The execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (a) do not conflict with or violate any requirement of Applicable Laws, and (b) do not conflict with, or constitute a default under, any material contractual obligation of such Party.

 

6.2. Insurance. Supplier shall maintain comprehensive general liability insurance, including product liability insurance against claims regarding the manufacture of the Product under this Agreement, in such amounts as it customarily maintains for similar products and activities, but in amounts not less that [    *    ] per occurrence and [    *    ] in the aggregate. Supplier shall maintain such insurance during the term of this Agreement with respect to the Product. Supplier shall cause Purchaser to be named as an additional insured under such insurance and shall provide Purchaser proof of such insurance upon request. Supplier shall notify Purchaser [    *    ] notice of any cancellation, termination or change in such insurance. Supplier may substitute a self insurance program on notice to Purchaser with information demonstrating the adequacy of such program. Purchaser shall maintain comprehensive general liability insurance, including product liability insurance against claims regarding the manufacture of the Product under this Agreement, in such amounts as it customarily maintains for similar products and activities, but in amounts not less that [    *    ] per occurrence and [    *    ] in the aggregate for product liability claims and [    *    ] per occurrence and [    *    ] in the aggregate for other covered claims. Purchaser shall also maintain insurance for Product released to Product Hold, in such amounts as it customarily maintains for Product in its possession. Purchaser shall maintain such insurance during the term of this Agreement with respect to the Product. Purchaser shall cause Supplier to be named as an additional insured under such insurance and shall provide Supplier proof of such insurance upon request. Purchaser shall notify Supplier within [    *    ] notice of any cancellation, termination or change in such insurance. Purchaser may substitute a self insurance program on notice to Supplier with information demonstrating the adequacy of such program.

 

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