EXHIBIT 10.30
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
March 31, 2005 among Ramp 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
(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 indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in
Section 3.1(j).
"Additional Investment Rights" or "AIRs" means the Additional
Investment Rights as described in Section 2.2(a)(iv), in the form of
Exhibit E attached hereto.
"Additional Investment Right Securities" or "AIR Securities"
means the Debentures and Warrants issuable upon exercise of the
Additional Investment Right.
"Additional Investment Right Conversion Shares" or "AIR
Conversion Shares" means the shares of Common Stock issuable upon
conversion and exercise, as applicable, of the Additional Investment
Right Securities.
"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 144 under the Securities Act. With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser
will be deemed to be an Affiliate of such Purchaser.
"AMEX" means the American Stock Exchange.
"AMEX Approval" shall mean the approval of the American Stock
Exchange to the transactions contemplated by this Agreement; provided,
however approval of the listing of the Securities for trading on AMEX
shall not be required to satisfy the foregoing.
"Closing Dates" means, collectively, the dates of the First
Closing and Second Closing.
"Closings" means collectively, the closings of the purchase
and sale of the Securities pursuant to Section 2.1, and any reference
to "Closing" or "Closings" shall be construed to include the First
Closing and the Second Closing unless a specific Closing is expressly
referred to.
"Closing Price" means on any particular date (a) the last
reported closing bid price per share of Common Stock on such date on
the Trading Market (as reported by Bloomberg L.P. at 4:15 PM (New York
time), or (b) if there is no such price on such date, then the closing
bid price on the Trading Market on the date nearest preceding such date
(as reported by Bloomberg L.P. at 4:15 PM (New York time) for the
closing bid price for regular session trading on such day), or (c) if
the Common Stock is not then listed or quoted on a Trading Market and
if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the closing bid price of the Common Stock for such date (or the
nearest preceding date) on the OTC Bulletin Board (as reported by
Bloomberg L.P. at 4:15 PM (New York time), (d) if the Common Stock is
not then listed or quoted on the Trading Market and if prices for the
Common Stock are then reported in the "pink sheets" published by the
Pink Sheets LLC (formerly the National Quotation Bureau Incorporated
(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 (e) if the shares of Common Stock are not then
publicly traded the fair market value of a share of Common Stock as
determined by a qualified independent appraiser selected in good faith
by the Company, with the consent of the Purchasers of a majority in
interest of the Shares then outstanding, which consent shall not be
unreasonably withheld.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par
value $0.001 per share, and any securities into which such common stock
shall be reclassified or exchanged into.
"Common Stock Equivalents" means any securities of the Company
or the Subsidiaries which would entitle the holder thereof to acquire
Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.
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"Company Counsel" means Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx, LLP
with offices at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Conversion Price" shall have the meaning ascribed to such
term in the Debentures.
"Debentures" means, the 8% Senior Convertible Debentures
issued by the Company to the Purchasers hereunder, in the form of
Exhibit A.
"December Transactions" means (i) the transactions
contemplated in connection with that certain Note Purchase Agreement
dated November 22, 2004 by and among the Company and the purchasers of
notes party thereto, and (ii) the transactions contemplated in
connection with those certain Securities Exchange Agreements dated as
of December 6, 2004, by and between the Company and each of the
investor parties thereto.
"Definitive Proxy Statement" means the definitive proxy
statement of the Company to obtain Shareholder Approval as filed with
the Commission on XXXXX.
"Disclosure Schedules" shall have the meaning ascribed to such
term in Section 3.1.
"Effective Date" means the date that the initial Registration
Statement filed by the Company pursuant to the Registration Rights
Agreement is first declared effective by the Commission.
"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.
"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 by a majority of the
non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors
established for such purpose, or a majority of the stockholders of the
Company present in person or by proxy at a meeting of stockholders, (b)
securities upon the exercise of or conversion of (i) any securities
issued hereunder, (ii) convertible securities, convertible notes or
debentures, options or warrants 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 or conversion price of any such
securities, (c) securities to vendors, consultants, attorneys or
accountants of the Company in connection with settlements of the
Company's outstanding commitments and obligations or to be performed or
in connection with services to be performed, (d) securities issued
pursuant to a merger, acquisition, consolidation or strategic
transactions, provided that, solely with respect to acquisitions, any
such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company 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
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business is investing in securities, (e) securities issued pursuant to
a bona fide firm underwritten public offering of the Company's
securities with an aggregate initial public offering price of at least
$5,000,000 with a nationally recognized underwriter for a per share
purchase price not less than the then exercise price of the Warrants,
(f) securities issued in connection with strategic license agreements
or other partnering arrangements so long as such issuances are not for
the purpose of raising capital, (g) any securities issued to the
Company's placement agent for the transactions contemplated by this
Agreement, (h) any securities issued upon the conversion or exercise of
any other securities issued in a Subsequent Financing (provided no
subsequent adjustment has occurred to the exercise or conversion price
thereof), (i) securities issued or to be issued in connection with the
December Transactions, (j) shares of Common Stock to be issued in
connection with the Company's acquisition of substantially all of the
assets of Xxxxx Medical Systems, Inc., (k) securities issued as
consideration for marketing agreements for the Caregiver products, (l)
shares of Common Stock to be issued to the purchasers in connection
with the conversion or redemption of the Company's convertible
debentures, exercise of warrants, or exercise of additional investment
rights pursuant to that certain Securities Purchase Agreement, dated as
of January 12, 2005, by and among the Company and the purchasers which
are a party thereto, (m) shares of Common Stock issued in connection
with an "equity line" of credit financing arrangement by the Company in
an amount of up to $25 million with a sale price of Common Stock equal
to up to eighty percent (80%) of the average of the closing prices for
a certain period immediately prior to or following the put date under
such credit financing arrangement, as determined by the Company in its
sole discretion.
"First Closing" shall have the meaning ascribed to such term
in Section 2.1 hereof.
"First Closing Date" means the date of the First Closing.
"GAAP" shall have the meaning ascribed to such term in Section
3.1(h).
"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).
"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.
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"Participation Maximum" shall have the meaning ascribed to
such term in Section 4.13.
"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.
"Pre-Notice" shall have the meaning ascribed to such term in
Section 4.13.
"Proceeding" means an action, claim, suit or proceeding,
whether commenced or threatened in writing.
"Purchaser Party" shall have the meaning ascribed to such term
in Section 4.9.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit B attached hereto.
"Registration Statement" means a registration statement
meeting the requirements set forth in the Registration Rights
Agreement.
"Required Approvals" shall have the meaning ascribed to such
term in Section 3.1(e).
"Required Minimum" means, as of any date, one hundred and ten
percent 110% the maximum aggregate number of shares of Common Stock
then issued or potentially issuable in the future pursuant to the
Transaction Documents, including any Underlying Shares issuable upon
exercise or conversion in full of all Warrants and Debentures
(including Underlying Shares issuable as payment of interest), ignoring
any conversion or exercise limits set forth therein, and assuming that
the Conversion Price is at all times on and after the date of
determination 85% of the average of the 22 Closing Prices immediately
prior to the date of determination.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time
to time.
"SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).
"Second Closing" shall have the meaning ascribed to such term
in Section 2.1 hereof.
"Second Closing Date" means the date of the Second Closing.
"Securities" means the Debentures, the Warrants, the Warrant
Shares, the Underlying Shares the Additional Investment Rights, the
Additional Investment Right Securities and the Additional Investment
Right Conversion Shares.
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"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder Approval" means such approval as may be required
by the applicable rules and regulations of the Trading Market (or any
successor entity) from the stockholders of the Company with respect to
the transactions contemplated by the Transaction Documents, including
the issuance of all of the Underlying Shares and shares of Common Stock
issuable upon exercise of the Warrants in excess of 19.99% of the
issued and outstanding Common Stock on the First Closing Date.
"Short Sales" shall include, without limitation, all "short
sales" as defined in Rule 3b-3 of the Exchange Act.
"Subscription Amount" means, as to each Purchaser, the amounts
set forth below such Purchaser's signature block on the signature pages
hereto and next to the headings "First Closing Subscription Amount" and
"Second Closing Subscription Amount", in United States Dollars and in
immediately available funds.
"Subsequent Financing" shall have the meaning ascribed to such
term in Section 4.13.
"Subsequent Financing Notice" shall have the meaning ascribed
to such term in Section 4.13.
"Subsidiary" means any subsidiary of the Company as set forth
on Schedule 3.1(a).
"Trading Day" means a day on which the Common Stock is traded
on a Trading Market
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date any
determination is made under this Agreement: the Nasdaq SmallCap Market,
the American Stock Exchange, the New York Stock Exchange or the Nasdaq
National Market.
"Transaction Documents" means this Agreement, the Debentures,
the Warrants, the Additional Investment Rights, the Registration Rights
Agreement and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
"Underlying Shares" means the shares of Common Stock issuable
upon conversion of the Debentures, upon exercise of the Warrants,
issued and issuable in lieu of the cash payment of interest on the
Debentures and the Additional Investment Right Conversion Shares.
"Warrants" means collectively the Common Stock purchase
warrants to purchase Common Stock, in the form of Exhibit C delivered
to the Purchasers at the First Closing
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in accordance with Section 2.2(a) hereof, which Warrants shall be
exercisable immediately and have a term of exercise equal to 5 years.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closings. The Company agrees to sell, and each Purchaser agrees to
purchase in the aggregate, severally and not jointly, up to $6,000,000 of
principal amount of Debentures and Warrants. The Closings shall take place in
two tranches as set forth below (respectively, the "First Closing", and the
"Second Closing"). Upon satisfaction of the conditions set forth in Section 2.2,
each Closing shall occur at the offices of Company Counsel, or such other
location as the parties shall mutually agree.
(a) First Closing. The First Closing shall be for an aggregate
Subscription Amount of up to $3,000,000, and shall occur simultaneously
upon the execution of this Agreement.
(b) Second Closing. The Second Closing shall be for an
aggregate Subscription Amount of up to $3,000,000, and shall occur
within 5 Trading Days following the Effective Date.
2.2 Deliveries.
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a) At or prior to each Closing, unless otherwise indicated
below, the Company shall deliver or cause to be delivered
to each Purchaser the following:
(i) as to the First Closing only, this Agreement duly
executed by the Company;
(ii) a Debenture with a principal amount equal to such
Purchaser's Subscription Amount, for the
applicable Closing, registered in the name of such
Purchaser;
(iii) a Warrant registered in the name of such Purchaser
to purchase up to a number of shares of Common
Stock equal to 100% of such Purchaser's
Subscription Amounts divided by $1.25, with an
exercise price equal to $1.25, subject to
adjustment as set forth therein;
(iv) as to the First Closing only, an Additional
Investment Right, registered in the name of such
Purchaser, pursuant to which such Purchaser shall
have the right to purchase up to a principal
amount of debentures equal to 33.33% of all of
such Purchaser's
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Subscription Amounts along with additional
warrants to purchase up to a number of shares of
Common Stock equal to 33.33% of the Warrant Shares
issuable to such Purchaser under the Warrants,
otherwise on the same terms, prices and conditions
of the Debenture and Warrants issued hereunder;
(v) as to the First Closing only, the Registration
Rights Agreement duly executed by the Company; and
(vi) as to the First Closing only, a legal opinion of
Company Counsel, in the form of Exhibit D attached
hereto.
b) At or prior to each Closing, unless otherwise indicated
below, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) as to the First Closing only, this Agreement duly
executed by such Purchaser;
(ii) such Purchaser's Subscription Amount, for the
applicable Closing, by wire transfer to the
account as specified in writing by the Company;
and
(iii) as to the First Closing only, the Registration
Rights Agreement duly executed by such Purchaser.
2.3 Closing Conditions.
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a) The obligations of the Company hereunder in connection
with each Closing are subject to the following conditions
being met:
(i) the accuracy in all material respects when made
and on each Closing Date of the representations
and warranties of the Purchasers contained herein;
(ii) all obligations, covenants and agreements of the
Purchasers required to be performed at or prior to
each Closing Date shall have been performed; and
(iii) the delivery by the Purchasers of the items set
forth in Section 2.2(b) of this Agreement.
b) The respective obligations of the Purchasers hereunder in
connection with each Closing are subject to the following
conditions being met:
(i) the accuracy in all material respects on each
Closing Date of the representations and warranties
of the Company contained herein;
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(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to
each 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 each Closing Date, trading
in the Common Stock shall not have been suspended
by the Commission (except for any suspension of
trading of limited duration, which suspension
shall be terminated prior to each Closing), and,
at any time prior to each Closing Date, trading in
securities generally as reported by Bloomberg
Financial Markets 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.
c) As to the Second Closing only, the Company shall have
filed with the Commission the Registration Statement
registering all of the Underlying Shares and, on or before
the six month anniversary of the date hereof, such
Registration Statement shall have been declared effective
by the Commission as to all such securities and been
maintained effective since such date and no Event of
Default shall have occurred since the date hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the disclosure schedules delivered to the
Purchasers concurrently herewith (the "Disclosure Schedules") which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.
(a) Subsidiaries. All of the direct and indirect subsidiaries
of the Company are set forth on Schedule 3.1(a). The Company owns,
directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all 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.
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(b) Organization and Qualification. Each of the Company and
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 or 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 have or reasonably be expected to result in (i) a material
adverse effect on the legality, validity or enforceability of any
Transaction Documents, (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 its
obligations under any Transaction Documents (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 and
otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of the Company and
no further action is required by the Company in connection therewith
other than in connection with the Required Approvals. Each Transaction
Documents has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement
of creditors' rights generally and (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other
equitable remedies.
(d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the other transactions contemplated 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, or (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
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party or by which any property or asset of the Company or any
Subsidiary is bound or affected, 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 not have or reasonably be expected to
result in 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) filings
required pursuant to Section 4.6, (ii) the filing with the Commission
of the Registration Statement, (iii) the notice and/or application(s)
to each applicable Trading Market for the issuance and sale of the
Debentures, the Warrants, the Additional Investment Rights, the
Additional Investment Right Securities and the listing of the
Underlying Shares for trading thereon in the time and manner required
thereby, (iv) the filing of Form D with the Commission and such filings
as are required to be made under applicable state securities laws and
(vi) Shareholder Approval (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 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. The Company has reserved from its duly authorized capital
stock a number of shares of Common Stock for issuance of the Underlying
Shares at least equal to the Required Minimum on the date hereof.
(g) Capitalization. The capitalization of the Company is as
described in the Company's most recent periodic report filed with the
Commission. The Company has not issued any capital stock since such
filing other than pursuant to the issuance of Common Stock and the
exercise of employee stock options under the Company's stock option and
stock incentive plans, the issuance of shares of Common Stock to
employees pursuant to the Company's employee stock purchase plan and
pursuant to the conversion or exercise of outstanding Common Stock
Equivalents. 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, there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into 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
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is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents. 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 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 for
Required Approvals, 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. 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 filed
all reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such reports) (the foregoing
reports, including the exhibits thereto, 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 Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, 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 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, year-end audit
adjustments.
(i) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as
specifically disclosed 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
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not required to be reflected in the Company's financial statements
pursuant to GAAP or required to be 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
stock option or stock incentive plans or as otherwise disclosed on the
SEC Reports. The Company does not have pending before the Commission
any request for confidential treatment of information.
(j) Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened in writing 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) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, is or has been 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, which
(i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or
(ii) could, if there were an unfavorable decision, have or reasonably
be expected to result in a Material Adverse Effect. 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.
(l) Compliance. 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 except in each
case as could not have a Material Adverse Effect.
(m) Regulatory Permits. 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
-13-
described in the SEC Reports, except where the failure to possess such
permits could not have or 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, subject to ordinary wear and tear, that is material to
the business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except 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 of which the Company and the Subsidiaries are in
compliance.
(o) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or
material for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have could
have a Material Adverse Effect (collectively, the "Intellectual
Property Rights"). Neither the Company nor any Subsidiary has received
a written notice that 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.
(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 at least equal to the aggregate Subscription Amount. To the
best of Company's knowledge, such insurance contracts and policies 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 set
forth 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
-14-
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 $60,000 other than (i) for
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and (iii)
for other employee benefits, including stock option agreements under
any stock option plan of the Company.
(r) Xxxxxxxx-Xxxxx. The Company is in material compliance with
all provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are applicable
to it as of each Closing Date. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company,
including its Subsidiaries, is made known to the certifying officers by
others within those entities. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as
of the date prior to the filing date of the most recently filed
periodic report under the Exchange Act (such date, the "Evaluation
Date"). The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Except
as set forth in the SEC Reports, since the Evaluation Date, there have
been no significant changes in the Company's internal controls (as such
term is defined in Item 307(b) of Regulation S-K under the Exchange
Act) or, to the Company's knowledge, in other factors that could
significantly affect the Company's internal controls.
(s) Certain Fees. No brokerage or finder's fees or commissions
are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this
Agreement. The Purchasers shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due
in connection with the transactions contemplated by this Agreement.
(t) Private Placement. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and
sale of the Securities by the Company to the Purchasers as contemplated
hereby. Subject to obtaining Requisite Approvals, the issuance and sale
of the Securities hereunder, when issued by the Company, will not
contravene the rules and regulations of the Trading Market.
(u) Investment Company. The Company is not, and is not an
Affiliate of, and immediately after receipt of payment for the
Securities, will not be or be an Affiliate of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not
become subject to the Investment Company Act.
-15-
(v) Registration Rights. No Person has any right to cause the
Company to effect the registration under the Securities Act of any
securities of the Company.
(w) Listing and Maintenance Requirements. The Company's Common
Stock is registered pursuant to Section 12(b) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the date
hereof, received notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such
Trading Market. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance with
all such listing and maintenance requirements.
(x) Application of Takeover Protections. 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 similar charter documents) or the laws
of its state of incorporation that is or could become applicable to the
Purchasers as a result of the Purchasers and the Company fulfilling
their obligations or exercising their rights under the Transaction
Documents, including without limitation as a result of the Company's
issuance of the Securities and the Purchasers' ownership of the
Securities.
(y) Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that constitutes material,
nonpublic information. The Company understands that the Purchasers will
rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to
the Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this
Agreement, furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with
respect to such representations and warranties and do 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 light of the
circumstances under which they were made, not misleading. The Company
acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section
3.2 hereof.
(z) No Integrated Offering. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section 3.2,
neither the Company, nor any of its affiliates, nor any Person acting
on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of the
Securities Act or any applicable
-16-
shareholder 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.
(aa) Solvency. The Company does not intend to incur debts
beyond its ability to pay such debts, in cash or, if permitted by the
applicable debt instrument, in shares of Common Stock, as they mature
(taking into account the timing and amounts of cash to be payable on or
in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from each Closing Date. The
SEC Reports set forth as of the dates thereof all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary, or for
which the Company or any Subsidiary has commitments. For the purposes
of this Agreement, "Indebtedness" shall mean (a) 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), (b) 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;
and (c) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with GAAP.
Neither the Company nor any Subsidiary is in default with respect to
any Indebtedness.
(bb) Form S-3 Eligibility. The Company is eligible to register
the resale of the Underlying Shares for resale by the Purchaser on Form
S-3 promulgated under the Securities Act.
(cc) Tax Status. Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect, the Company and each Subsidiary
has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and
the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company or any Subsidiary.
(dd) No General Solicitation. Neither the Company nor any
person acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general advertising.
The Company has offered the Securities for sale only to the Purchasers
and certain other "accredited investors" within the meaning of Rule 501
under the Securities Act.
(ee) Foreign Corrupt Practices. Neither the Company, nor to
the knowledge of the Company, any agent or other person acting on
behalf of the Company, has (i) directly or indirectly, used any corrupt
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity,
(ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to
-17-
disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended
(ff) Accountants. The Company's accountants are set forth on
Schedule 3.1(ff) of the Disclosure Schedule. To the Company's
knowledge, such accountants, who the Company expects will express their
opinion with respect to the financial statements to be included in the
Company's Annual Report on Form 10-K for the year ending December 31,
2004 are a registered public accounting firm as required by the
Securities Act.
(gg) Seniority. As of each Closing Date, no indebtedness or
other equity of the Company is senior to the Debentures in right of
payment, whether with respect to interest or upon liquidation or
dissolution, or otherwise, other than indebtedness secured by purchase
money security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior only as
to the property covered thereby).
(hh) No Disagreements with Accountants and Lawyers. There are
no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the accountants and
lawyers formerly or presently employed by the Company and the Company
is current with respect to any fees owed to its accountants and
lawyers.
(ii) Acknowledgment Regarding Purchasers' Purchase of
Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm's length
purchaser with respect to the Transaction Documents and the
transactions contemplated hereby. The Company further represents to
each Purchaser that the Company's decision to enter into this Agreement
has been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of each Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or
similar action on the part of such Purchaser. Each Transaction
Documents to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the
terms hereof, will
-18-
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it 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)
insofar as indemnification and contribution provisions may be limited
by applicable law.
(b) No Conflict. The execution, delivery and performance of
the Transaction Documents by such Purchaser and the consummation by
such Purchaser of the transactions contemplated thereby and hereby do
not and will not (i) violate any provision of such Purchaser's charter
or organizational documents, (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, mortgage,
deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which such Purchaser is a party or by which
such Purchaser's respective properties or assets are bound, or (iii)
result in a violation of any federal, state, local or foreign statute,
rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to such Purchaser or
by which any property or asset of such Purchaser are bound or affected,
except, in all cases, other than violations pursuant to clauses (i) or
(iii) (with respect to federal and state securities laws) above, for
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, materially and adversely affect such Purchaser's ability to
perform its obligations under the Transaction Documents.
(c) Acquisition for Own Account. Such Purchaser is purchasing
the Securities and will purchase any Shares solely for its own account
and not with a view to or for sale in connection with distribution.
Such Purchaser does not have a present intention to sell any of the
Securities, nor a present arrangement (whether or not legally binding)
or intention to effect any distribution of any of the Securities to or
through any person or entity; provided, however, that by making the
representations herein, such Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with
Federal and state securities laws applicable to such disposition. Such
Purchaser acknowledges that it (i) has such knowledge and experience in
financial and business matters that such Purchaser is capable of
evaluating the merits and risks of Purchaser's investment in the
Company, (ii) is able to bear the financial risks associated with an
investment in the Securities and (iii) has been given full access to
such records of the Company and the Subsidiaries and to the officers of
the Company and the Subsidiaries as it has deemed necessary or
appropriate to conduct its due diligence investigation.
(d) Rule 144. Such Purchaser understands that the Securities
must be held indefinitely unless such Securities are registered under
the Securities Act or an exemption from registration is available. Such
Purchaser acknowledges that such person is familiar with Rule 144 of
the rules and regulations of the Commission, as amended, promulgated
-19-
pursuant to the Securities Act ("Rule 144"), and that such Purchaser
has been advised that Rule 144 permits resales only under certain
circumstances. Such Purchaser understands that to the extent that Rule
144 is not available, such Purchaser will be unable to sell any
Securities without either registration under the Securities Act or the
existence of another exemption from such registration requirement.
(e) General. Such Purchaser understands that the Securities
are being offered and sold in reliance on a transactional exemption
from the registration requirements of federal and state securities laws
and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of such Purchaser set forth herein in order to determine
the applicability of such exemptions and the suitability of such
Purchaser to acquire the Securities. Such Purchaser understands that no
United States federal or state agency or any government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities.
(f) No General Solicitation. Such Purchaser acknowledges that
the Securities were not offered to such Purchaser 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, or similar media, or broadcast over television or
radio, or (ii) any seminar or meeting to which such Purchaser was
invited by any of the foregoing means of communications. Such
Purchaser, in making the decision to purchase the Securities, has
relied upon independent investigation made by it and has not relied on
any information or representations made by third parties.
(g) Accredited Investor. Such Purchaser is either: (i) an
"accredited investor" (as defined in Rule 501 of Regulation D), or (ii)
a "qualified institutional buyer" as defined in Rule 144A(a) under the
Securities Act and such Purchaser has such experience in business and
financial matters that it is capable of evaluating the merits and risks
of an investment in the Securities. Such Purchaser is not required to
be registered as a broker-dealer under Section 15 of the Exchange Act
and such Purchaser is not a broker-dealer. Such Purchaser acknowledges
that an investment in the Securities is speculative and involves a high
degree of risk. Such Purchaser has completed or caused to be completed
the Investor Questionnaire Certification attached hereto as Exhibit G
certifying as to its status as an "accredited investor," if applicable,
and understands that the Company is relying upon the truth and accuracy
of such information set forth therein to determine the suitability of
such Purchaser to acquire the Securities.
(h) Certain Fees. The Purchasers have not employed any broker
or finder or incurred any liability for any brokerage or investment
banking fees, commissions, finders' structuring fees, financial
advisory fees or other similar fees in connection with the Transaction
Documents.
(i) Independent Investment. No Purchaser has agreed to act
with any other Purchaser for the purpose of acquiring, holding, voting
or disposing of the Securities
-20-
purchased hereunder for purposes of Section 13(d) under the Exchange
Act, and each Purchaser is acting independently with respect to its
investment in the Securities. The Company acknowledges that for reasons
of administrative convenience only, the Transaction Documents have been
prepared by counsel for one of the Purchasers and such counsel does not
represent all of the Purchasers but only such Purchaser and the other
Purchasers have retained their own individual counsel with respect to
the transactions contemplated hereby. The Company acknowledges that it
has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.
(j) Short Sales. Such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, executed any Short Sales in the
securities of the Company (including, without limitations, any Short
Sales involving the Company's securities) since 9 P.M. (New York Time)
on March 17, 2005 which was the time that such Purchaser was first
contacted regarding an investment in the Company until the date hereof
("Discussion Time").
(k) Patriot Act. Such Purchaser certifies that, to the best of
its knowledge, it has not been designated, and is not owned or
controlled, by a "suspected terrorist" as defined in Executive Order
13224. Purchaser hereby acknowledges that the Company seeks to comply
with all applicable laws concerning money laundering and related
activities. In furtherance of those efforts, the Purchaser hereby
represents, warrants and covenants that: (i) none of the cash or
property that the Purchaser will pay to the Company has been or shall
be derived from, or related to, any activity that is deemed criminal
under United States law; and (ii) no payment by the Purchaser to the
Company, to the extent that they are within the Purchaser's control
shall cause the Company to be in violation of the United States Bank
Secrecy Act, the United States International Money Laundering Control
Act of 1986 or the United States International Money Laundering
Abatement and Anti-Terrorist Financing Act of 2001. Purchaser shall
promptly notify the Company if any of these representations ceases to
be true and accurate.
(l) Substantial Dilution. Such Purchaser acknowledges and
understands that, simultaneously with the transactions contemplated
under this Agreement, the Company entered into an Amendment No. 1 to
the Securities Purchase Agreement (the "Amendment"), dated as of
January 12, 2005, with each of the purchasers a party thereto, which
Amendment has been reviewed by such Purchaser. Such Purchaser
acknowledges and understands that the Amendment provides, among other
things, for the reduction of the initial conversion price of the
convertible debentures, warrant, and additional investment rights
granted to the purchasers in the January 2005 Transaction from $2.40 to
$1.25.
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The Company acknowledges and agrees that each Purchaser does
not make or has not made any representations or warranties with respect
to the transactions contemplated hereby other than those specifically
set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
----------------------
(a) The Securities may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement
or Rule 144, to the Company or to an affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company
may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall
have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities
in the following form:
[NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from
time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of
the Securities to a financial institution that is an "accredited
investor" as defined in Rule 501(a) under the Securities Act and who
agrees
-22-
to be bound by the provisions of this Agreement and the Registration
Rights Agreement and, if required under the terms of such arrangement,
such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser's expense, the Company will
execute and deliver such reasonable documentation as a pledgee or
secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are
subject to registration pursuant to the Registration Rights Agreement,
the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) under the Securities Act or other applicable provision
of the Securities Act to appropriately amend the list of Selling
Stockholders thereunder.
(c) Certificates evidencing the Underlying Shares shall not
contain any legend (including the legend set forth in Section 4.1(b)
hereof): (i) while a registration statement (including the Registration
Statement) covering the resale of such security is effective under the
Securities Act, or (ii) following any sale of such Underlying Shares
pursuant to Rule 144, or (iii) if such Underlying Shares are eligible
for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal
opinion to the Company's transfer agent promptly after the Effective
Date if required by the Company's transfer agent to effect the removal
of the legend hereunder. If all or any portion of a Debenture, the
Warrant or Additional Investment Rights Securities are converted or
exercised (as applicable) at a time when there is an effective
registration statement to cover the resale of the Underlying Shares, or
if such Underlying Shares may be sold under Rule 144(k) or if such
legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations thereof) then such
Underlying Shares shall be issued free of all legends. The Company
agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 4.1(c), it will, no later than
three Trading Days following the delivery by a Purchaser to the Company
or the Company's transfer agent of a certificate representing
Underlying Shares, as applicable, issued with a restrictive legend
(such third Trading Day, the "Legend Removal Date"), deliver or cause
to be delivered to such Purchaser a certificate representing such
shares that is free from all restrictive and other legends.
Certificates for Securities subject to legend removal hereunder shall
be transmitted by the transfer agent of the Company to the Purchasers
by crediting the account of the Purchaser's prime broker with the
Depository Trust Company System.
(d) In addition to such Purchaser's other available remedies,
the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares
(based on the VWAP of the Common Stock on the date such Securities are
submitted to the Company's transfer agent) delivered for removal of the
restrictive legend and subject to Section 4.1(c) above, $5 per Trading
Day (increasing to $10 per Trading Day 10 Trading Days after such
damages have begun to
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accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit
such Purchaser's right to pursue actual damages for the Company's
failure to deliver certificates representing any Securities as required
by the Transaction Documents, and such Purchaser shall have the right
to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive
relief.
(e) Each Purchaser, severally and not jointly with the other
Purchasers, agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4.1
is predicated upon the Company's reliance that the Purchaser will sell
any Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.
(f) Until the date that the Purchasers collectively hold less
than 50% of the Debentures in the aggregate purchased hereunder by such
Purchaser, the Company shall not undertake a reverse stock split of the
Common Stock without the prior written consent of the Purchasers
holding a majority in principal amount outstanding of the Debentures.
4.2 [Intentionally Deleted].
4.3 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
4.4 Integration. Subject to Requisite Approvals, the Company shall not
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market.
4.5 Conversion and Exercise Procedures. The form of Notice of Exercise
included in the Warrants, the form of Notice of Conversion included in the
Debentures and the form of Notice of Exercise or Conversion set forth in the
Additional Investment Rights and Additional Investment Right Securities set
forth the totality of the procedures required of the Purchasers in order to
exercise the Warrants, convert the Debentures or convert or exercise the
Additional Investment Rights and Additional Investment Right Securities. No
additional legal opinion or
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other information or instructions shall be required of the Purchasers to
exercise the Warrants, convert the Debentures or convert or exercise the
Additional Investment Rights and Additional Investment Right Securities. The
Company shall honor exercises of the Warrants and the Additional Investment
Rights and conversions of the Debentures and Additional Investment Right
Securities and shall deliver the Additional Investment Securities and the
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.
4.6 Securities Laws Disclosure; Publicity. The Company shall, by 8:30
a.m. Eastern time on the Trading Day following the date hereof, issue a press
release reasonably acceptable to each Purchaser disclosing the material terms of
the transactions contemplated hereby and within 2 Trading Days of the date
hereof, a Current Report on Form 8-K, which shall have attached thereto the
Transaction Documents. The Company and each Purchaser shall consult with each
other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any Purchaser, or
without the prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under subclause
(i) or (ii).
4.7 Shareholder Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring Person" under any shareholder rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers. The Company shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.
4.8 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.9 Use of Proceeds. Except as set forth on Schedule 4.9 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and not for the satisfaction of any
portion of the Company's debt (other than payment
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of trade payables in the ordinary course of the Company's business and prior
practices), to redeem any Common Stock or Common Stock Equivalents or to settle
any outstanding litigation.
4.10 [INTENTIONALLY DELETED].
4.11 Indemnification of Purchasers. Subject to the provisions of this
Section 4.11, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, partners, employees and agents (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation collectively, (collectively, "Loss") that any such
Purchaser Party may suffer or incur as a result of or relating to (a) any breach
of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or (b) any
action instituted against a Purchaser, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of such
Purchaser, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser's representation, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser may have with any
such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing. Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser
Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Purchaser Party. The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected without the Company's prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations, warranties, covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.
4.12 Reservation and Listing of Securities.
(a) The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.
(b) If, on any date, the number of authorized but unissued
(and otherwise unreserved) shares of Common Stock is less than the
Required Minimum on such date, then the Board of Directors of the
Company shall use commercially reasonable efforts to
-26-
amend the Company's certificate of incorporation to increase the number
of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event not
later than the 75th day after such date.
(c) The Company shall, if applicable: (i) in the time and
manner required by the Trading Market, prepare and file with such
Trading Market an additional shares listing application covering a
number of shares of Common Stock at least equal to the Required Minimum
on the date of such application, (ii) take all steps necessary to cause
such shares of Common Stock to be approved for listing on the Trading
Market as soon as possible thereafter, (iii) provide to the Purchasers
evidence of such listing, and (iv) maintain the listing of such Common
Stock on any date at least equal to the Required Minimum on such date
on such Trading Market or another Trading Market. In addition, the
Company shall hold a special meeting of shareholders (which may also be
at the annual meeting of shareholders) at the earliest practical date
after the date the number of shares of Common Stock issuable pursuant
to this Agreement exceeds 15% of the issued and outstanding shares of
Common Stock on each Closing Date for the purpose of obtaining
Shareholder Approval, with the recommendation of the Company's Board of
Directors that such proposal be approved, and the Company shall solicit
proxies from its shareholders in connection therewith in the same
manner as all other management proposals in such proxy statement and
all management-appointed proxyholders shall vote their proxies in favor
of such proposal.
4.13 Participation in Future Financing. From the date hereof until the
24 month anniversary of the First Closing Date, upon any financing by the
Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents
(a "Subsequent Financing"), each Purchaser shall have the right to participate
in up to 100% of the Subsequent Financing (the "Participation Maximum"). At
least 5 Trading Days prior to the closing of the Subsequent Financing, the
Company shall deliver to each Purchaser a written notice of its intention to
effect a Subsequent Financing ("Pre-Notice"), which Pre-Notice shall ask such
Purchaser if it wants to review the details of such financing (such additional
notice, a "Subsequent Financing Notice"). Upon the request of a Purchaser, and
only upon a request by such Purchaser, for a Subsequent Financing Notice, the
Company shall promptly, but no later than 1 Trading Day after such request,
deliver a Subsequent Financing Notice to such Purchaser. The Subsequent
Financing Notice shall describe in reasonable detail the proposed terms of such
Subsequent Financing, the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent Financing is proposed to be effected, and
attached to which shall be a term sheet or similar document relating thereto. If
by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the
Purchasers have received the Pre-Notice, notifications by the Purchasers of
their willingness to participate in the Subsequent Financing (or to cause their
designees to participate) is, in the aggregate, less than the total amount of
the Subsequent Financing, then the Company may effect the remaining portion of
such Subsequent Financing on the terms and to the Persons set forth in the
Subsequent Financing Notice. If the Company receives no notice from a Purchaser
as of such 5th Trading Day, such Purchaser shall be deemed to have notified the
Company that it does not elect to participate. Notwithstanding anything herein
to the contrary, in the event the Purchasers do not elect to participate in a
Subsequent Financing for at least, in the aggregate among the Purchasers, 25% of
such Subsequent Financing and such Subsequent
-27-
Financing is consummated, the Purchasers shall no longer have a right to
participate in future Subsequent Financings. The Company must provide the
Purchasers with a second Subsequent Financing Notice, and the Purchasers will
again have the right of participation set forth above in this Section 4.13, if
the Subsequent Financing subject to the initial Subsequent Financing Notice is
not consummated for any reason on the terms set forth in such Subsequent
Financing Notice within 60 Trading Days after the date of the initial Subsequent
Financing Notice. In the event the Company receives responses to Subsequent
Financing Notices from Purchasers seeking to purchase more than the aggregate
amount of the Subsequent Financing, each such Purchaser shall have the right to
purchase their Pro Rata Portion (as defined below) of the Participation Maximum.
"Pro Rata Portion" is the ratio of (x) the Subscription Amount of Securities
purchased by a participating Purchaser and (y) the sum of the aggregate
Subscription Amount of all participating Purchasers. Notwithstanding the
foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance
other than clause (k) therein, except that no Variable Rate Transaction or MFN
Transaction shall be an Exempt Issuance.
4.14 Subsequent Equity Sales.
------------------------
(a) From the date hereof until 65 days after the Effective
Date, neither the Company nor any Subsidiary shall issue shares of
Common Stock or Common Stock Equivalents; provided, however, the 65 day
period set forth in this Section 4.14(a) shall be extended for the
number of Trading Days during such period in which (y) trading in the
Common Stock is suspended by any Trading Market, or (z) following the
Effective Date, the Registration Statement is not effective or the
prospectus included in the Registration Statement may not be used by
the Purchasers for the resale of the Underlying Shares.
(b) From the date hereof until such time as no Purchaser holds
any of the Debentures, the Company shall be prohibited from effecting
or entering into an agreement to effect any Subsequent Financing
involving a "Variable Rate Transaction" or an "MFN Transaction" (each
as defined below). The term "Variable Rate Transaction" shall mean a
transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for,
or include the right to receive additional shares of Common Stock
either (A) at a conversion, exercise or exchange rate or other price
that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the initial
issuance of such debt or equity securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security
or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the
Common Stock. The term "MFN Transaction" shall mean a transaction in
which the Company issues or sells any securities in a capital raising
transaction or series of related transactions which grants to an
investor the right to receive additional shares based upon future
transactions of the Company on terms more favorable than those granted
to such investor in such offering.
(c) Unless Shareholder Approval has been obtained and deemed
effective by
-28-
AMEX, the Company shall not make any issuance whatsoever of Common
Stock or Common Stock Equivalents which would cause any adjustment of
the Conversion Price to the extent the holders of Debentures would not
be permitted, pursuant to Section 4(c)(i) of the Debentures, to convert
their respective outstanding Debentures and exercise their respective
Warrants in full, ignoring for such purposes any other conversion or
exercise limitations therein. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.
(d) Notwithstanding anything in this Section 4.14 to the
contrary, this Section 4.14 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction or MFN Transaction
shall be an Exempt Issuance.
4.15 Equal Treatment of Purchasers. 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 is
also offered to all of the parties to the Transaction Documents. Further, the
Company shall not make any payment of principal or interest on the Debentures in
amounts which are disproportionate to the respective principal amounts
outstanding on the Debentures at any applicable time. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended to
treat for the Company the Debenture holders as a class and shall not in any way
be construed as the Purchasers acting in concert or as a group with respect to
the purchase, disposition or voting of Securities or otherwise.
4.16 Short Sales. Each Purchaser covenants that neither it nor any
affiliates acting on its behalf or pursuant to any understanding with it will
execute any Short Sales during the period from the Discussion Time until prior
to the time that the transactions contemplated by this Agreement are first
publicly announced as described in Section 4.6. Notwithstanding the foregoing,
no Purchaser makes any representation, warranty or covenant hereby that it will
not engage in Short Sales in the securities of the Company after the time that
the transactions contemplated by this Agreement are first publicly announced as
described in Section 4.6. Additionally, each Purchaser understands and
acknowledges, severally and not jointly with any other Purchaser, that the SEC
currently takes the position that coverage of short sales of shares of the
Common Stock "against the box" prior to the Effective Date of the Registration
Statement with the Underlying Shares issuable hereunder is a violation of
Section 5 of the Securities Act, as set forth in Item 65, Section 5 under
Section A, of the Manual of Publicly Available Telephone Interpretations, dated
July 1997, compiled by the Office of Chief Counsel, Division of Corporation
Finance.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by any Purchaser, by
written notice to the other parties, if the First Closing has not been
consummated on or before April 15, 2005; provided that no such termination will
affect the right of any party to xxx for any breach by the other party (or
parties).
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5.2 Fees and Expenses. The Company shall deliver, prior to the First
Closing, a completed and executed copy of the Closing Statement, attached hereto
as Annex A. Except as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all transfer agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities.
5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
5.5 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
5.6 Headings The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 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.
5.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Purchasers holding at least 66% of the
Securities (measured on a fully converted and exercised basis ignoring for such
purposes any conversion or exercise limitations therein) then outstanding.
Notwithstanding anything herein to the contrary, any assignment of this
Agreement or any of the
-30-
other Transaction Documents must either be pursuant to an effective registration
statement under the Securities Act or pursuant to an available exemption
therefrom, or in a transaction not subject to the registration requirements of
the Securities Act and in accordance with applicable state securities laws as
evidenced by a legal opinion of counsel to the assignor to such effect, the
substance of which shall be reasonably acceptable to the Company.
Notwithstanding anything herein to the contrary, other than a transfer,
assignment or succession to an Affiliate of a Purchaser, Sections 4.13, 4.14(a)
and 4.14(b) shall not inure to the benefit of a Purchaser's permitted assigns.
5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.11.
5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City 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 (including with respect to the enforcement of any of the Transaction
Documents), 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 improper
or inconvenient venue for such proceeding. 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 via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for 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. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.10 Survival. The representations and warranties contained herein
shall survive each Closing and the delivery, exercise and/or conversion of the
Securities, as applicable for the applicable statue of limitations.
5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become
-31-
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.
5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Documents and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser 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; provided,
however, in the case of a rescission of a conversion of a Debenture, exercise of
a Warrant or conversion and/or exercise of an Additional Investment Right
Securities, the Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded conversion or exercise notice.
5.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Documents or a
Purchaser enforces or exercises its rights 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
-32-
law (including, without limitation, any bankruptcy law, 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.
5.17 Usury. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction
Documents. Notwithstanding any provision to the contrary contained in any
Transaction Documents, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "Maximum Rate"), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date forward, unless such
application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser's election.
5.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Documents. Nothing contained herein or in any
Transaction Documents, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers.
5.19 Liquidated Damages. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of
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the Company and shall not terminate until all unpaid partial liquidated damages
and other amounts have been paid notwithstanding the fact that the instrument or
security pursuant to which such partial liquidated damages or other amounts are
due and payable shall have been canceled.
5.20 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
RAMP CORPORATION Address for Notice:
By:_______________________________________
Name:
Title:
With a copy to (which shall not constitute notice):
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGES TO RCO SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name of Purchaser: _____________________________________________________________
Signature of Authorized Signatory of Purchaser: ________________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Purchaser:________________________________________________
Address for Notice of Purchaser:
Address for Delivery of Securities for Purchaser (if not same as above):
First Closing Subscription Amount:
Second Closing Subscription Amount:
Warrant Shares:
AIR Debenture:
AIR Warrant Shares:
EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]
[SIGNATURE PAGES CONTINUE]
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Annex A
CLOSING STATEMENT FOR FIRST CLOSING
Pursuant to the attached Securities Purchase Agreement, dated as of the
date hereto, the purchasers shall purchase up to $6,000,000 of Debentures,
Warrants and Additional Investment Rights from Ramp Corporation, a Delaware
corporation (the "Company"), up to $3,000,000 of which shall be purchased at the
First Closing. All funds will be wired into a trust account maintained by
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx, LLP, counsel to the Company, whose wiring
instructions are as follows:
Attorney Trust Account
XX Xxxxxx Chase
1211 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Account Name: Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Account Number: 323231195
ABA # 000000000
Remark: Ramp Corporation/[FUND NAME]
All funds will be disbursed in accordance with this Closing Statement.
Disbursement Date: March 31, 2005
________________________________________________________________________________
I. PURCHASE PRICE
--------------
Gross Proceeds to be Received in Trust $3,000,000
II. DISBURSEMENTS
-------------
[COMPANY WIRE INSTRUCTIONS]
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