EXHIBIT 10.1
EXECUTED COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of May 16,
2003, by and among Midway Games Inc., a Delaware corporation, with headquarters
located at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the "COMPANY"), and
the investors listed on the Schedule of Buyers attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT").
B. The Company has authorized the following new series of its
preferred stock, par value $0.01 per share: the Company's Series C Convertible
Preferred Stock (the "PREFERRED STOCK"), which shall be convertible into shares
of the Company's common stock, par value $0.01 per share (the "COMMON STOCK")
(as converted, the "CONVERSION SHARES"), in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Series C
Convertible Preferred Stock, in the form attached hereto as EXHIBIT A (the
"CERTIFICATE OF DESIGNATIONS").
C. The Buyers severally wish to purchase, upon the terms and
conditions stated in this Agreement, initially (i) an aggregate of 3,500 shares
of Preferred Stock (the "INITIAL PREFERRED SHARES") in the respective amounts
set forth opposite each Buyer's name on the Schedule of Buyers and (ii) warrants
(the "WARRANTS") to purchase up to 326 shares of Common Stock (as exercised
collectively, the "WARRANT SHARES") for each Initial Preferred Share purchased
by such Buyer on the Initial Closing Date (as defined below), such Warrants to
be substantially in the form attached hereto as EXHIBIT B.
D. The Buyers will have the option, subject to the terms and
conditions stated in this Agreement, to purchase in the aggregate up to an
additional 1,250 shares of Preferred Stock (the "ADDITIONAL PREFERRED SHARES")
(pro-rata based on the number of Initial Preferred Shares that each Buyer
purchased in relation to the total number of Initial Preferred Shares issued).
The Initial Preferred Shares and the Additional Preferred Shares collectively
are referred to in this Agreement as the "PREFERRED SHARES."
E. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as EXHIBIT C (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
F. The location of defined terms in this Agreement is set forth on
the Index of Terms attached hereto.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.
a. PURCHASE OF PREFERRED SHARES AND WARRANTS. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a)
below, the Company shall issue and sell to each Buyer, and each Buyer severally
agrees to purchase from the Company, the respective number of Initial Preferred
Shares, together with the related Warrants, set forth opposite such Buyer's name
on the Schedule of Buyers (the "INITIAL CLOSING"). Subject to the terms stated
herein, within twelve (12) months following the Initial Closing Date (as defined
below), subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6(b) and 7(b) below, each Buyer in its sole discretion may notify the
Company (the "ADDITIONAL PREFERRED SHARES EXERCISE NOTICE") that it wishes to
purchase up to its pro rata share of the Additional Preferred Shares (the
maximum pro rata share amount is listed opposite each Buyer's name on the
Schedule of Buyers) and the Company shall issue and sell to such Buyer such
number of Additional Preferred Shares (each, an "ADDITIONAL CLOSING"). The
Initial Closing and each Additional Closing are each sometimes referred to
herein as a "CLOSING." The purchase price (the "PURCHASE PRICE") of (i) each
Initial Preferred Share and related Warrants at the Initial Closing shall be
$10,000 per Initial Preferred Share and related Warrants and (ii) each
Additional Preferred Share at an Additional Closing shall be $10,000 per
Additional Preferred Share. Notwithstanding the foregoing, in the event that at
any time following the effective date of the Registration Statement filed
pursuant to Section 2(a) of the Registration Rights Agreement, the Conditions to
Cancellation of Right to Purchase Additional Preferred Shares (as defined below)
are satisfied, then the Company shall have the right to send a written notice to
the Buyers on the Business Day (as defined below) immediately after the
Measuring Period (as defined below) indicating that the right of the Buyers to
further exercise their option to purchase any Additional Preferred Shares will
terminate on the twentieth (20th) trading day (the "ADDITIONAL PREFERRED SHARE
PURCHASE CANCELLATION DATE") following receipt of such written notice as to the
Additional Preferred Shares for which the Buyer has not delivered an Additional
Preferred Shares Exercise Notice as of such termination date. "CONDITIONS TO
CANCELLATION OF RIGHT TO PURCHASE ADDITIONAL PREFERRED SHARES" means the
following conditions: (i) on each day during the period beginning on the first
day of the Measuring Period and ending on the Additional Preferred Share
Purchase Cancellation Date, the Registration Statement registering the Initial
Registrable Securities (as defined in the Registration Rights Agreement) shall
be effective and available for the sale of at least all of the Registrable
Securities required to be included in such Registration Statement and there
shall not have been any Grace Periods (as defined in the Registration Rights
Agreement); (ii) on each day during the period beginning on the Initial Issuance
Date (as defined in the Certificate of Designations) and ending on the
Additional Preferred Share Purchase Cancellation Date, the Common Stock is
designated for listing on The New York Stock Exchange, Inc. (the "NYSE") or
quotation on the NASDAQ National Market ("NASDAQ") and shall not have been
suspended from trading on such exchange or market (other than suspensions of not
more than one day and occurring prior to the Additional Preferred Share Purchase
Cancellation Date due to business announcements by the Company; (iii) during the
period beginning on the first day of the Measuring Period and ending on the
Additional Preferred Share Purchase Cancellation Date, there shall not have
occurred (A) an event constituting a Triggering Event (as defined in the
Certificate of Designations), (B) an event that with the passage of time and
without being cured would constitute a Triggering Event, or (C) the public
announcement of a pending, proposed or intended Change of Control (as
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defined in the Certificate of Designations), unless such pending, proposed or
intended Change of Control has been terminated, abandoned or consummated and the
Company has publicly announced such termination, abandonment or consummation of
such Change of Control; (iv) during the period beginning on the Initial Issuance
Date and ending on and including the Additional Preferred Share Purchase
Cancellation Date, the Company shall have delivered Conversion Shares upon
conversion of the Preferred Shares and Warrant Shares upon exercise of the
Warrants to the holders on a timely basis as set forth in Section 2(d) of the
Certificate of Designations and Sections 2(a) and 2(b) of the Warrants,
respectively; provided, however, that for purposes of this Section 1(a) only,
the Company shall be deemed to have satisfied the conditions set forth in this
clause (iv) if on not more than two occasions prior to the Additional Preferred
Share Purchase Cancellation Date the Company has failed to meet the requirements
set forth in Section 2(d)(ii) of the Certificate of Designations and Sections
2(a) and 2(b) of the Warrants by no more than three days; (v) the Company shall
have received the Stockholder Approval (as defined below) or satisfied the
holders of the Preferred Shares that the Stockholder Approval is not required in
connection with the 19.99% Rule (as defined below); (vi) the Company shall not
have failed to timely make any payments within 5 Business Days of when such
payment is due, whether as interest or penalty payments, pursuant to this
Agreement, the Certificate of Designations, the Registration Rights Agreement or
the Warrants; and (vii) the Weighted Average Price (as defined in the
Certificate of Designations) of the Common Stock for any ten (10) consecutive
trading days after the effectiveness of the Registration Statement (the
"MEASURING PERIOD") is equal to or greater than $7.58 (subject to adjustment for
stock splits, stock dividends, recapitalizations, combinations, reverse stock
splits or other similar events).
b. THE CLOSINGS. The date and time of the Initial Closing
(the "INITIAL CLOSING DATE") shall be 10:00 a.m., New York City time, on May 16,
2003, and the date and time of each Additional Closing shall be on the third
Business Day following receipt by the Company of the applicable Additional
Preferred Shares Exercise Notice (or such later date as is mutually agreed to by
the Company and the applicable Buyer or Buyers)(each, an "ADDITIONAL CLOSING
DATE"), in each case subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6(a) and 7(a), or 6(b) and 7(b), as applicable. The
Initial Closing Date and each Additional Closing Date each shall be referred to
as a "CLOSING DATE." Each Closing shall occur on the applicable Closing Date at
the offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. "BUSINESS DAY" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York or in Chicago, Illinois are
authorized or required by law to remain closed.
c. FORM OF PAYMENT. On each Closing Date, (A) each Buyer
shall pay the Purchase Price to the Company for the Preferred Shares and, in the
case of the Initial Closing, the related Warrants to be issued and sold to such
Buyer on such Closing Date by wire transfer of immediately available funds in
accordance with the Company's written wire instructions, less any amount
withheld at the Initial Closing for expenses pursuant to Section 4(l), and (B)
the Company shall deliver to each Buyer stock certificates (in the denominations
as such Buyer shall request) (the "PREFERRED STOCK CERTIFICATES") representing
such number of the Preferred Shares which such Buyer is then purchasing
hereunder, along, in the case of the Initial Closing, with warrants representing
the related Warrants, in each case, duly executed on behalf of the Company and
registered in the name of such Buyer.
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2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the
Preferred Shares and the Warrants, (ii) upon conversion of the Preferred Shares
owned by it, will acquire the Conversion Shares then issuable and (iii) upon
exercise of the Warrants held by it, will acquire the Warrant Shares issuable
upon exercise thereof (the Preferred Shares, the Conversion Shares, the Warrants
and the Warrant Shares collectively are referred to herein as the "SECURITIES")
for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold any
of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time, provided further, however, that such
disposition shall be in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D under the
1933 Act.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
d. INFORMATION. Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Buyer. Such Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations conducted by
such Buyer or its advisors, if any, or its representatives shall modify, amend
or affect such Buyer's right to rely on the Company's representations and
warranties contained in this Agreement.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall
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have delivered to the Company an opinion of counsel, in a form reasonably
acceptable to the Company, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) such Buyer provides the Company with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule
thereto) ("RULE 144"); (ii) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of the Securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. The Securities may be pledged in connection with a bona
fide margin account or other loan secured by the Securities. As used herein,
"Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
g. LEGENDS. Such Buyer understands that the certificates or
other instruments representing the Preferred Shares and Warrants and, until such
time as the sale of the Conversion Shares and the Warrant Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS OR (B) AN OPINION OF COUNSEL, IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, (i) such Securities are registered for resale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a form reasonably acceptable to the
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Company, to the effect that a public sale, assignment or transfer of the
Securities may be made without registration under the 1933 Act, or (iii) such
holder provides the Company with reasonable assurances that the Securities can
be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold.
h. AUTHORIZATION; ENFORCEMENT; VALIDITY. This Agreement and
the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of such Buyer and are valid and binding
agreements of such Buyer enforceable against such Buyer in accordance with their
terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. RESIDENCY. Such Buyer is a resident of that country or
state specified in its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest which ownership entitles the Company to elect a majority of the
board of directors or similar governing body of such entity) are corporations or
limited liability companies duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate or other power and authorization to own their properties and
to carry on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation or limited liability
company to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, properties, assets, operations, results of operations,
prospects or financial condition of the Company and its Subsidiaries, if any,
taken as a whole, or on the transactions contemplated hereby or by the
agreements and instruments to be entered into in connection herewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below) or the Certificate of Designations. A
complete list of entities in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest is set forth on SCHEDULE
3(a).
b. AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Warrants, the Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5)
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the "TRANSACTION DOCUMENTS"), and to issue the Securities in accordance with the
terms hereof and
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thereof. The execution and delivery of the Transaction Documents by the Company
and the execution and filing of the Certificate of Designations by the Company
and the consummation by it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Preferred Shares, the
reservation for issuance and the issuance of the Conversion Shares issuable upon
conversion thereof, the issuance of the Warrants and the reservation for
issuance and the issuance of the Warrant Shares issuable upon exercise of the
Warrants, have been duly authorized by the Company's Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors or its stockholders (except to the extent that stockholder approval
may be required pursuant to the rules of the NYSE for the issuance of a number
of Conversion Shares and the Warrant Shares in connection with the transactions
contemplated by this Agreement greater in the aggregate than 19.99% of the
number of shares of Common Stock outstanding immediately prior to the Initial
Closing Date (the "19.99% RULE")). The Transaction Documents have been duly
executed and delivered by the Company. The Transaction Documents constitute the
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Certificate of Designations has been filed on or prior to the Initial Closing
Date with the Secretary of State of the State of Delaware and will be in full
force and effect, enforceable against the Company in accordance with its terms
and shall not have been amended unless in compliance with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (i) 100,000,000 shares of Common Stock,
of which as of the date hereof 46,469,310 shares are issued and outstanding,
125,000 shares are issued to Xxxxx Xxxxxx as restricted stock under his
restricted stock agreement, 2,930,000 shares are held in treasury, 14,001,669
shares are reserved for issuance pursuant to the Company's stock option,
retirement, purchase and employee benefit plans, and 3,848,794 shares are
issuable and reserved for issuance pursuant to securities (other than the
Preferred Shares and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock of which 1,857,312 relate to the Series
B Convertible Preferred Stock and will cease to be reserved upon redemption of
such stock, (ii) 5,000,000 shares of preferred stock, of which as of the date
hereof, 5,512.5 shares are designated as Series B Convertible Preferred Stock
(the "Series B Preferred Stock"), of which 1,312.5 shares are issued and
outstanding and being redeemed concurrently herewith. All of such outstanding
shares have been, or upon issuance or when restrictions lapse will be, validly
issued fully paid and nonassessable. Except as disclosed in SCHEDULE 3(c), (A)
no shares of the Company's capital stock are subject to preemptive rights or any
other similar rights (arising under Delaware law, Illinois law, the Company's
Certificate of Incorporation or By-laws or any agreement or instrument to which
the Company is a party) or any liens or encumbrances granted or created by the
Company; (B) there are no outstanding debt securities issued by the Company; (C)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital
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stock of the Company or any of its Subsidiaries; (D) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement); (E) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (F) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (G) the Company does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to each Buyer true and
correct copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "CERTIFICATE OF INCORPORATION"), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"BY-LAWS"), and the terms of all securities convertible into or exercisable or
exchangeable for Common Stock and the material rights of the holders thereof in
respect thereto except for stock options granted under any benefit plan or stock
option plan of the Company approved by the Board of Directors of the Company.
d. ISSUANCE OF SECURITIES. The Preferred Shares and the
Warrants are duly authorized and, upon issuance in accordance with the terms
hereof, shall be (i) validly issued, fully paid and non-assessable, (ii) free
from all taxes, liens and charges with respect to the issuance thereof and (iii)
as to the Preferred Shares, entitled to the rights and preferences set forth in
the Certificate of Designations. As of the Initial Closing, at least 16,552,170
shares of Common Stock (subject to adjustment pursuant to the Company's covenant
set forth in Section 4(f) below) will have been duly authorized and reserved for
issuance upon conversion of the Preferred Shares and exercise of the Warrants.
Upon conversion or issuance in accordance with the Certificate of Designations
or the Warrants, as applicable, the Conversion Shares and the Warrant Shares, as
the case may be, will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock.
Based, in part, on reliance on the representations and warranties of each of the
Buyers in the Transaction Documents, the issuance by the Company of the
Securities is exempt from registration under the 1933 Act.
e. NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company, the performance by the Company of its
obligations under the Certificate of Designations and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the reservation for issuance and issuance of the Conversion Shares
and the Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation or the By-laws; (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 material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party; (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market (as defined below)) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is
in violation of any term of its Certificate of Incorporation or its By-laws or
their
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organizational charter or by-laws, respectively, other than with respect to the
holding of annual shareholder and/or Board of Directors meetings of Subsidiaries
(which violations would not result, either individually or in the aggregate, in
a Material Adverse Effect). Except as disclosed in SCHEDULE 3(e), neither the
Company nor any of its Subsidiaries is in violation of any term of or in default
under any contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable to the
Company or its Subsidiaries, except where such violations and defaults would not
result, either individually or in the aggregate, in a Material Adverse Effect.
The business of the Company and its Subsidiaries is not being conducted, and
shall not be conducted, in violation of any law, ordinance or regulation of any
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect. Except as
specifically contemplated by this Agreement, as required under the 1933 Act, as
required by Blue Sky filings or as required by the 19.99% Rule, the Company is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency or any regulatory
or self-regulatory agency in order for it to execute, deliver or perform any of
its obligations under or contemplated by the Transaction Documents or to perform
its obligations under the Certificate of Designations in accordance with the
terms hereof or thereof. Except as disclosed in SCHEDULE 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing. The
Company is not in violation of the listing requirements of the Principal Market,
and has no actual knowledge of any facts which would reasonably lead to
delisting or suspension of the Common Stock by the Principal Market in the
foreseeable future.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31,
2001, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 ACT")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
DOCUMENTS"). As of the date of filing of such SEC Documents, such SEC Documents,
as it may have been subsequently amended by filings made by the Company with the
SEC prior to the date hereof, complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, as of the date filed and as they may have been subsequently amended
by filings made by the Company with the SEC prior to the date hereof, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of
- 9 -
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf of
the Company to the Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(d), contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are or were made, not misleading. Neither the Company nor any of its
Subsidiaries nor any of their officers, directors, employees or agents have
provided the Buyers with any material, nonpublic information. As of the date
hereof, the Company meets the requirements for use of Form S-3 for registration
of the resale of Registrable Securities (as defined in the Registration Rights
Agreement). The Company is not required to file and will not be required to file
any agreement, note, lease, mortgage, deed or other instrument entered into
prior to the date hereof and to which the Company is a party or by which the
Company is bound which has not been previously filed as an exhibit to its
reports filed with the SEC under the 1934 Act.
g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002 or
Quarterly Report on Form 10-Q for the period ended March 31, 2003, since
December 31, 2002, there has been no change or development that has had or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. Other than the Series B Preferred Stock
dividend paid on April 1, 2003 and except as disclosed in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002 or the Quarterly Report
on Form 10-Q for the period ended March 31, 2003, since December 31, 2002, the
Company has not declared or paid any dividends, and as of the date hereof, has
not sold any assets, individually or in the aggregate, in excess of $500,000
outside of the ordinary course of business or had capital expenditures,
individually or in the aggregate, in excess of $6,000,000 and, as of any
Additional Closing, except as disclosed in the Company's Annual Report on Form
10-K and or its Quarterly Report on Form 10-Q most recently filed prior to the
Additional Closing, the Company shall not have sold any assets, individually or
in the aggregate, in excess of $500,000 outside of the ordinary course of
business or had capital expenditures, individually or in the aggregate, in
excess of $6,000,000.
h. ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, except as expressly set forth in SCHEDULE 3(h) or,
with respect to the Company and its Subsidiaries, to the extent that any such
action or threatened action does not set forth potential liability, claims or
charges individually in excess of $500,000, or in the aggregate in excess of
$2,000,000. Except as set forth in SCHEDULE 3(h), to the knowledge of the
Company, none of the directors or officers of the Company have been a party to
any securities related litigation during the past five years.
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i. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES.
The Company acknowledges and agrees that each of the Buyers is acting solely in
the capacity of an arm's length purchaser with respect to the Transaction
Documents and the Certificate of Designations and the transactions contemplated
hereby and thereby. The Company further acknowledges that each Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the Certificate of
Designations and the transactions contemplated hereby and thereby and any advice
given by any of the Buyers or any of their respective representatives or agents
in connection with the Transaction Documents and the Certificate of Designations
and the transactions contemplated hereby and thereby is merely incidental to
such Buyer's purchase of the Securities. The Company further represents to each
Buyer that the Company's decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its
representatives.
j. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. Except for the issuance of the Preferred Shares and the Warrants
contemplated by this Agreement, no event, liability, development or circumstance
has occurred or exists, or is contemplated to occur, with respect to the Company
or its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws and which has not been publicly disclosed.
k. NO GENERAL SOLICITATION. Neither the Company, nor any of
its affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
l. NO INTEGRATED OFFERING. 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 require registration of the
issuance by the Company of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or, except as set forth on SCHEDULE 3(l),
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of the issuance by the Company of any of the Securities
under the 1933 Act or, except as set forth on SCHEDULE 3(l), cause the offering
of the Securities to be integrated with other offerings.
m. EMPLOYMENT MATTERS; ERISA MATTERS. (i) Neither the
Company nor any of its Subsidiaries is involved in any union labor dispute nor,
to the knowledge of the Company or any of its Subsidiaries, is any such dispute
threatened. None of the Company's or its Subsidiaries' employees is a member of
a union which relates to such employee's relationship with the Company, neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer (as defined in Rule 501(f)
of the 0000 Xxx) has notified the Company that such officer intends to leave the
Company or otherwise terminate such
- 11 -
officer's employment with the Company. No executive officer, to the best
knowledge of the Company and its Subsidiaries, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters.
(ii) The Company and its Subsidiaries are in compliance with
all federal, state, local and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours, except where failure to be in compliance would not, either individually
or in the aggregate, have a Material Adverse Effect. There are no pending
investigations involving the Company or any of its subsidiaries by the U.S.
Department of Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and regulations. There
is no unfair labor practice charge or complaint against the Company or any of
its Subsidiaries pending before the National Labor Relations Board or any
strike, picketing, boycott, dispute, slowdown or stoppage pending or threatened
against or involving the Company or any of its Subsidiaries. No representation
question exists respecting the employees of the Company or any of its
subsidiaries, and no collective bargaining agreement or modification thereof is
currently being negotiated by the Company or any of its Subsidiaries. No
grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company or any of its Subsidiaries. No
material labor dispute with the employees of the Company or any of its
Subsidiaries exists or, to the knowledge of the Company, is imminent. SCHEDULE
3(m)(ii) sets forth a list of every employee benefit plan (whether or not
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained or contributed to by the Company or any of member of its
controlled group (determined in accordance with Section 4001(a)(14) of ERISA)
(collectively the "PLANS"). Except for such failures that would not, either
individually or in the aggregate, result in a Material Adverse Effect, each of
the Plans have been maintained and administered in accordance with their terms,
ERISA, the Internal Revenue Code of 1986, as amended (the "CODE"), and other
applicable laws. None of the Plans is subject to Title IV of ERISA and no Plan
is a multiemployer plan (within the meaning of Section 3(37) of ERISA). Each
Plan intended to qualify under Section 401(a) or 501(c)(9) of the Code has
received a favorable determination or approval letter from the Internal Revenue
Service regarding its qualification under such section and no event has occurred
which cause any such Plan to lose its qualification.
n. INTELLECTUAL PROPERTY RIGHTS. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights necessary
to conduct their respective businesses as now conducted, except where the
failure to own or possess such rights would not result, either individually or
in the aggregate, in a Material Adverse Effect. None of the Company's
trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets or other intellectual property rights
have expired or terminated, or are expected to expire or terminate within two
years from the date of this Agreement, except where such expiration or
termination would not result, either individually or
- 12 -
in the aggregate, in a Material Adverse Effect. Except as would not have a
Material Adverse Effect, the Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries of trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, trade secrets or other
intellectual property rights of others, or of any development of similar or
identical trade secrets or technical information by others and, except as set
forth on SCHEDULE 3(n), and except as would not have a Material Adverse Effect,
there is no claim, action or proceeding being made or brought against, or to the
knowledge of the Company, being threatened against, the Company or its
Subsidiaries regarding its trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, trade secrets, or infringement of other intellectual property rights.
The Company and its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their intellectual
properties.
o. TITLE. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in SCHEDULE 3(o) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and facilities by the
Company and its Subsidiaries.
p. ENVIRONMENTAL LAWS. (i) The Company and its Subsidiaries
(A) are in compliance with any and all Environmental Laws (as defined below),
(B) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses, and
(C) are in compliance with all terms and conditions of any such permit, license
or approval, except in each case where the failure of the Company and its
subsidiaries would not, either individually or in the aggregate, have a Material
Adverse Effect. Except as would not have a Material Adverse Effect, with respect
to the Company and/or its Subsidiaries (1) there are no past or present releases
of any material into the environment, actions, activities, circumstances,
conditions, events, incidents, or contractual obligations which may give rise to
any common law environmental liability or any liability under any Environmental
Law and (2) neither the Company nor any of its Subsidiaries has received any
notice with respect to the foregoing, nor is any action pending or, to the
knowledge of the Company, threatened in connection with the foregoing. The term
"ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic
or hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
- 13 -
(ii) Except as set forth on SCHEDULE 3(p)(ii), other than
those that are or were stored, used or disposed of in compliance with applicable
law, to the knowledge of the Company, no Hazardous Materials are contained on or
about any real property currently owned, leased or used by the Company or any of
its Subsidiaries, and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, leased or used by the
Company or any of its Subsidiaries.
(iii) To the knowledge of the Company, there are no underground
storage tanks on or under any real property owned, leased or used by the Company
or any of its Subsidiaries that are not in compliance with applicable law.
q. INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such 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 at a cost that would not have a Material Adverse Effect.
r. REGULATORY PERMITS. Except for Permits (as defined below)
the absence of which would not result, either individually or in the aggregate,
in a Material Adverse Effect, the Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses (the "PERMITS"), and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such Permit.
s. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
t. DILUTIVE EFFECT. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the Preferred
Shares will increase in certain circumstances. The Company further acknowledges
that its obligation to issue Conversion Shares upon conversion of the Preferred
Shares in accordance with this Agreement and Certificate of Designations is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the company.
- 14 -
u. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
v. TAX STATUS. The Company and each of its Subsidiaries (i)
has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes), (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and for which the Company has made appropriate reserves for on its
books, and (iii) has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations (referred to in clause (i) above) apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
w. TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 3(w) and in the SEC Documents, and other than the grant of stock
options described on SCHEDULE 3(c), none of the officers, directors or employees
of the Company is presently a party to any transaction with the Company or any
of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
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 Certificate of Incorporation or the laws of
the state of its incorporation which is or could become applicable to the Buyers
as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company's issuance of the Securities and the Buyers'
ownership of the Securities.
y. RIGHTS AGREEMENT. Except as set forth on Schedule 3(y),
the Company has not adopted a shareholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company.
z. NO OTHER AGREEMENTS. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
- 15 -
aa. INVESTMENT COMPANY STATUS. The Company is not, and upon
consummation of the sale of the Securities will not be, an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
bb. FOREIGN CORRUPT PRACTICES. To the Company's knowledge,
neither the Company nor any of its Subsidiaries, nor any director, officer,
agent, employee or other person acting on behalf of the Company or any
Subsidiary has, in the course of his actions for, or on behalf of, the Company
or any Subsidiary used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
cc. SOLVENCY. The Company individually and together with its
Subsidiaries on a consolidated basis (both before and after giving effect to the
transactions contemplated by the Transaction Documents) is solvent (i.e., its
assets have a fair market value in excess of the amount required to pay its
probable liabilities on its existing debts as they become absolute and matured)
and currently the Company has no information that would lead it to reasonably
conclude that the Company would not have, nor does it intend to take any action
that would impair, its ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
dd. XXXXXXXX-XXXXX ACT. The Company is in compliance with any
and all applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are
effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof, except where such noncompliance would not have, individually or in the
aggregate, a Material Adverse Effect.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. FORM D AND BLUE SKY. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall, on or
before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to
qualify the Securities for, sale to the Buyers at each of the Closings pursuant
to this Agreement under applicable securities or "Blue Sky" laws of the states
of the United States, and shall provide evidence of any such action so taken to
the Buyers on or prior to each of the Closing Dates. The Company shall make all
filings and reports relating to the offer and sale of the Securities required
under applicable securities or "Blue Sky" laws of the states of the United
States following each of the Closing Dates.
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c. REPORTING STATUS. Until the later of (i) the date which
is one year after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Conversion Shares and the
Warrant Shares without restriction pursuant to Rule 144(k) promulgated under the
1933 Act (or successor thereto) and (ii) the date on which (A) the Investors
shall have sold all the Conversion Shares and the Warrant Shares and (B) none of
the Preferred Shares or Warrants is outstanding (the "Reporting Period"), the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would otherwise permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from
the sale of the Preferred Shares for substantially the same purposes and in
substantially the same amounts as indicated in SCHEDULE 4(d).
e. FINANCIAL INFORMATION. The Company agrees to send the
following to each Investor (as that term is defined in the Registration Rights
Agreement) during the Reporting Period: (i) within two (2) days after the filing
thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly
Reports on Form 10-Q, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933
Act, provided that if any such report is not filed with the SEC through XXXXX
then the Company shall deliver a copy of such report to each Investor by
facsimile on the same day it is filed with the SEC; (ii) on the same day as the
release thereof, facsimile copies of all press releases issued by the Company or
any of its Subsidiaries; and (iii) copies of any notices and other information
made available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.
f. RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than the sum of 150% of the number of shares of Common Stock
needed to provide for the issuance of the shares of Common Stock upon conversion
of all outstanding Initial Preferred Shares (without regard to any limitations
on conversions), (ii) 150% of the number of shares of Common Stock needed to
provide for the issuance of the shares of Common Stock upon conversion of all
outstanding Additional Preferred Shares (without regard to any limitations on
conversions) and (iii) 125% of the number of shares of Common Stock needed to
provide for the issuance of the shares of Common Stock upon exercise of all
outstanding Warrants (without regard to any limitations on exercises).
g. LISTING. The Company shall promptly secure the listing of
all of the Registrable Securities upon each national securities exchange and
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents and the Certificate of Designations. So long as any
Securities are outstanding, the Company shall maintain the Common Stock's
authorization for listing on the NYSE or quotation on the NASDAQ (as applicable,
the "PRINCIPAL MARKET"). Until five (5) years from the date of this Agreement
and other than in connection with Organic Changes (as
- 17 -
defined in the Certificate of Designations), neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of the Common Stock from the Principal Market.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(g).
h. FILING OF FORM 8-K. On or before 8:30 a.m., New York City
time, on the Business Day following the Initial Closing Date, the Company shall
file a Current Report on Form 8-K with the SEC describing the terms of the
transactions contemplated by the Transaction Documents and including as exhibits
to such Current Report on Form 8-K this Agreement, the Certificate of
Designations, the form of Warrants and the Registration Rights Agreement, and
the schedules hereto and thereto in the form required by the 1934 Act. On or
before 8:30 a.m., New York City time, on the Business Day following each
Additional Closing Date, if any, the Company shall file a Current Report on Form
8-K with the SEC describing the transaction consummated on such Additional
Closing Date.
i. PROXY STATEMENT. Unless the Company shall have provided
the Buyers with evidence satisfactory to the Buyers that the Stockholder
Approval is not required by the Principal Market in connection with the 19.99%
Rule, the Company shall provide each stockholder entitled to vote at a special
meeting of stockholders of the Company, which meeting shall occur on or before
October 31, 2003 (the "STOCKHOLDER MEETING DEADLINE"), a proxy statement, which
has been previously reviewed by the Buyers and a counsel of their choice,
soliciting each such stockholder's affirmative vote at such stockholder meeting
for approval of the Company's issuance of all of the Securities as described in
this Agreement in accordance with applicable law and the rules and regulations
of the Principal Market (such affirmative approval being referred to herein as
the "STOCKHOLDER APPROVAL"), and the Company shall use its best efforts to
solicit its stockholders' approval of such issuance of the Securities and to
cause the Board of Directors of the Company to recommend to the stockholders
that they approve such proposal. If the Company fails to hold a meeting of its
stockholders by the Stockholder Meeting Deadline, then, as partial relief (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Preferred Shares an amount in
cash per Preferred Share convertible into Conversion Shares that would violate
the provisions of the 19.99% Rule equal to the product of (i) $10,000;
multiplied by (ii) .02; multiplied by (iii) the quotient of (x) the number of
days after the Stockholder Meeting Deadline that a meeting of the Company's
stockholders is not held, divided by (y) 30. The Company shall make the payments
referred to in the immediately preceding sentence within five days of the
earlier of (I) the holding of the meeting of the Company's stockholders, the
failure of which resulted in the requirement to make such payments, and (II) the
last day of each 30-day period beginning on the Stockholder Meeting Deadline. In
the event the Company fails to make such payments in a timely manner, such
payments shall bear interest at the rate of 1.5% per month (pro rated for
partial months) until paid in full.
j. CORPORATE EXISTENCE. So long as a Buyer beneficially owns
any Preferred Stock, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company's assets, except in the
event of a merger or consolidation or sale of all or substantially all of the
Company's assets, (x) which is a Cash Transaction (as defined in the Certificate
of Designations) pursuant to which the Company has made a Cash Transaction
Redemption Election (as defined in the Certificate of Designations) and for
which the Company
- 18 -
has delivered the Cash Transaction Redemption Price (as defined in the
Certificate of Designations) or (y) where the surviving or successor entity in
such transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) such
surviving or successor entity or its parent into whose stock the Preferred
Shares and Warrants will be convertible or exercisable is a publicly traded
corporation whose common stock is listed for trading on or quoted on the NYSE or
NASDAQ.
k. PLEDGE OF SECURITIES. The Company acknowledges and agrees
that the Securities may be pledged in compliance with applicable securities laws
by an Investor in connection with a bona fide margin agreement or other loan
secured by the Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement, any other Transaction Document or the Certificate of
Designations, including, without limitation, Section 2(f) of this Agreement;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such reasonable documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to such pledgee
by an Investor.
l. EXPENSES. Subject to Section 9(l) below, at the Initial
Closing, the Company shall pay all legal fees and airfare expenses, to the
extent incurred, up to $50,000 to Portside Growth and Opportunity Fund (a
Buyer), which amount, less any amount paid prior to the Initial Closing, shall
be withheld by such Buyer from its Purchase Price to be paid at the Initial
Closing.
m. ADDITIONAL PREFERRED STOCK. So long as any Preferred
Shares remain outstanding, the Company shall not create, authorize or issue (x)
any Preferred Stock other than to the Buyers as contemplated hereby or (y) any
other securities of the Company other than in compliance with Sections 9 and 11
of the Certificate of Designations.
n. TRANSACTIONS WITH AFFILIATES. So long as Preferred Shares
with an aggregate Stated Value (as defined in the Certificate of Designations)
of no less than $1 million are outstanding, the Company shall not, and shall
cause each of its Subsidiaries not to, enter into, amend, modify or supplement,
or permit any Subsidiary to enter into, amend, modify or supplement, any
agreement, transaction, commitment or arrangement with any of its or any
Subsidiary's officers, directors, person who were officers or directors at any
time during the previous two years, stockholders who beneficially own 5% or more
of the Common Stock, or their affiliates, or with any individual related by
blood, marriage or adoption to any such individual or with any entity in which
any such entity or individual owns a 5% or more beneficial interest (each, a
"RELATED PARTY"), except for (a) customary employment arrangements and benefit
programs on reasonable terms, (b) any agreement, transaction, commitment or
arrangement which is approved by a majority of the disinterested directors of
the Company or (c) any agreement, transaction, commitment or arrangement on an
arm's-length basis on terms no less favorable than terms which would have been
obtainable from a Person other than such Related Party. For purposes hereof, any
director who is also an officer of the Company or any Subsidiary of the Company
shall not be a disinterested director with respect to any such
- 19 -
agreement, transaction, commitment or arrangement. "AFFILIATE" for purposes
hereof means, with respect to any Person, another Person that, directly or
indirectly, (i) has a 5% or more equity interest in that Person, (ii) has 5% or
more common ownership with that Person, (iii) controls that Person, or (iv)
shares common control with that Person. "CONTROL" or "CONTROLS" for purposes
hereof means that a Person has the power, direct or indirect, to conduct or
govern the policies of another Person.
o. ACQUISITIONS. So long as any Preferred Shares remain
outstanding, other than in connection with business acquisitions where the
aggregate cash consideration paid for all such transactions does not exceed $15
million, the Company covenants and agrees that it will not enter into or
complete any business acquisitions, whether stock or asset transactions, where
any portion of the acquisition price will be paid in cash.
p. INDEBTEDNESS. So long as any Preferred Shares remain
outstanding, the Company covenants and agrees that it shall not, and the Company
shall not permit any of its Subsidiaries to, directly or indirectly, incur,
guarantee, assume, suffer to exist, repay, prepay, redeem, defease or otherwise
make any payment on any Indebtedness (other than (x) Permitted Indebtedness, (y)
Purchase Money Indebtedness and (z) Capitalized Lease Obligations incurred in
the ordinary course of business in an amount not to exceed an aggregate of
$5,000,000). For purposes of this Agreement: (v) "INDEBTEDNESS" of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease ("CAPITALIZED LEASE OBLIGATIONS"), (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, change, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (w) "CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (x)
"PERMITTED INDEBTEDNESS" means Indebtedness incurred in an amount not to exceed
$40 million at any one time outstanding; PROVIDED, HOWEVER, that if (i) the
Closing Sale
- 20 -
Price of the Common Stock (as defined in the Certificate of Designations) for
any ten consecutive trading days after the eighteen (18) month anniversary of
the Closing Date (the "PERMITTED INDEBTEDNESS CANCELLATION MEASURING PERIOD") is
equal to or greater than $8.00 (subject to adjustment for stock splits, stock
dividends, recapitalizations, combinations, reverse stock splits or other
similar events), and (ii) on each day during the period beginning on the first
day of the Permitted Indebtedness Cancellation Measuring Period and ending on
the last day of the Permitted Indebtedness Cancellation Measuring Period, all
Registration Statements registering any Registrable Securities shall be
effective and available for the sale of at least all of the Registrable
Securities required to be included in such Registration Statements and there
shall not have been any Grace Periods, then there shall be no limit on Permitted
Indebtedness; and (y) "PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the
Company or any Subsidiary incurred in the ordinary course of business solely for
the purpose of financing all or any part of the purchase price of equipment,
furniture or fixtures or the cost of construction or improvement of any
property; PROVIDED, HOWEVER, that the aggregate principal amount of any such
Indebtedness does not exceed the lesser of the fair market value of such
property, as determined in the good faith judgment of the Company's Board of
Directors, or such purchase price or cost, including any refinancing of such
Indebtedness that does not increase the aggregate principal amount (or accreted
amount, if less) thereof as of the date of refinancing.
q. FOREIGN SUBSIDIARIES. Notwithstanding Section 7(a)(x) to
the contrary, the Company shall deliver to the Buyers as soon as practicable
following the Initial Closing, a certificate evidencing the incorporation and
good standing of each non-U.S. Subsidiary in such entity's state of
incorporation or organization issued by the Secretary of State of such state of
incorporation or organization.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer
agent, and any subsequent transfer agent, to issue certificates or credit shares
to the applicable balance accounts at DTC, registered in the name of each Buyer
or its respective nominee(s), for the Conversion Shares and Warrant Shares in
such amounts as specified from time to time by each Buyer to the Company upon
conversion of the Preferred Shares, or exercise of the Warrants, as applicable
(the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"), a form of which is attached as
EXHIBIT D hereto. Prior to registration of the Conversion Shares and the Warrant
Shares under the 1933 Act, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5 and stop transfer instructions to give effect to Section 2(f)
hereof (in the case of the Conversion Shares and the Warrant Shares, prior to
registration of the Conversion Shares and the Warrant Shares under the 0000 Xxx)
will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement, the Warrants and the Registration
Rights Agreement. If a Buyer provides the Company with an opinion of counsel, in
a form reasonably acceptable to the Company, to the effect that a public sale,
assignment or transfer of Securities may be made without registration under the
1933 Act or the Buyer provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold, the Company shall permit the transfer, and, in the case of the
- 21 -
Conversion Shares and the Warrant Shares, promptly instruct its transfer agent
to issue one or more certificates, or credit shares to one or more balance
accounts at DTC, in such name and in such denominations as specified by such
Buyer and without any restrictive legend. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyers by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section
5, that the Buyers shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. THE INITIAL CLOSING. The obligation of the Company to
issue and sell the Initial Preferred Shares and the Warrants to each Buyer at
the Initial Closing is subject to the satisfaction, at or before the Initial
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
(i) Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company.
(ii) The Certificate of Designations shall have been
filed with the Secretary of State of the State of Delaware;
(iii) Such Buyer shall have delivered to the Company
the Purchase Price (less in the case of Portside Growth & Opportunity Fund,
the amounts withheld pursuant to Section 4(l)) for the Initial Preferred
Shares and the Warrants being purchased by such Buyer at the Initial
Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided by the Company.
(iv) The representations and warranties of such Buyer
shall be true and correct as of the date when made and as of the Initial
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Buyer at or prior to the Initial Closing Date.
(v) Such Buyer shall have delivered to the Company
such other documents relating to the transactions contemplated by this
Agreement as the Company or its counsel may reasonably request.
(vi) Each holder of any shares of Series B Preferred
Stock and any holder of warrants (the "SERIES B WARRANTS") that were issued
in connection with the issuance of the Series B Preferred Stock shall have
signed a waiver of any anti-dilution protection set forth in the
Certificate of Designations, Preferences and Rights of the
- 22 -
Series B Convertible Preferred Stock (the "SERIES B CERTIFICATE OF
DESIGNATIONS") and in the Series B Warrants that may be triggered in
connection with the issuance of the Preferred Stock and Warrants, in the
form of EXHIBIT E attached hereto (the "ANTI-DILUTION WAIVERS").
b. THE ADDITIONAL CLOSINGS. The obligation of the Company
hereunder to issue and sell the Additional Preferred Shares to a Buyer at an
Additional Closing for such Buyer is subject to the satisfaction, at or before
the applicable Additional Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing such Buyer
with prior written notice thereof:
(i) Such Buyer shall have delivered to the Company
the Purchase Price for the Additional Preferred Shares being purchased by
such Buyer at such Additional Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.
(ii) The representations and warranties of such Buyer
shall be true and correct as of the date when made and as of such
Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and such
Buyer shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by such Buyer at or prior to such
Additional Closing Date.
(iii) Such Buyer shall have delivered to the Company
such other documents relating to the transactions contemplated by this
Agreement as the Company or its counsel may reasonably request.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. THE INITIAL CLOSING. The obligation of each Buyer
hereunder to purchase the Initial Preferred Shares and the Warrants from the
Company at the Initial Closing is subject to the satisfaction, at or before the
Initial Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:
(i) The Company shall have executed each of the
Transaction Documents and delivered the same to such Buyer.
(ii) The Certificate of Designations shall have been
filed with the Secretary of State of the State of Delaware, and a copy
thereof certified by the Secretary of State of the State of Delaware shall
have been delivered to such Buyer.
(iii) The Common Stock (x) shall be designated for
quotation or listed on the Principal Market and (y) shall not have been
suspended by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or
- 23 -
the Principal Market have been threatened either (A) in writing by the SEC
or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market; and the Conversion Shares
issuable upon conversion of the Initial Preferred Shares (without regard to
any limitations on conversions) and the Warrant Shares issuable upon
exercise of the Warrants (without regard to any limitations on exercises)
shall be listed (subject to official notice of issuance) upon the Principal
Market.
(iv) The representations and warranties of the Company
shall be true and correct as of the date when made and as of the Initial
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Initial Closing Date.
Such Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Initial Closing Date, to
the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer, including, without limitation, an update as of the
Initial Closing Date regarding the representation contained in Section 3(c)
above.
(v) Such Buyer shall have received the opinion of
Shack Xxxxxx Xxxx & Xxxxxxxx P.C., dated as of the Initial Closing Date, in
the form of EXHIBIT F-1, attached hereto, and an opinion of the General
Counsel to the Company as to contracts and agreements not attached to the
SEC Documents, in the form of EXHIBIT F-2, attached hereto.
(vi) The Company shall have executed and delivered to
such Buyer the Preferred Stock Certificates and Warrants (in such
denominations as such Buyer shall request) for the Initial Preferred Shares
and the Warrants being purchased by such Buyer at the Initial Closing.
(vii) The Board of Directors of the Company shall have
adopted resolutions consistent with Section 3(b) above and in a form
reasonably acceptable to such Buyer (the "RESOLUTIONS").
(viii) As of the Initial Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Initial Preferred Shares,
and the exercise of the Warrants, at least 12,839,294 shares of Common
Stock.
(ix) The Irrevocable Transfer Agent Instructions, in
the form of EXHIBIT D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the Company
and each U.S. Subsidiary in such entity's state of incorporation or
organization issued by the Secretary
- 24 -
of State of such state of incorporation or organization as of a date within
ten days of the Initial Closing Date.
(xi) The Company shall have delivered a good standing
certificate to such Buyer, certifying the Company's qualification to do
business and the good standing of the Company in the State of Illinois as
certified by the Secretary of State of the State of Illinois as of a date
within ten days of the Initial Closing Date.
(xii) The Company shall have delivered to such Buyer a
certified copy of the Certificate of Incorporation as certified by the
Secretary of State of the State of Delaware as of a date within ten days of
the Initial Closing Date.
(xiii) The Company shall have delivered to such Buyer a
secretary's certificate, dated as of the Initial Closing Date, certifying
as to (A) the Resolutions, (B) the Certificate of Incorporation and (C) the
By-laws, each as in effect at the Initial Closing.
(xiv) The Company shall have made all filings under all
applicable federal and state securities laws necessary to consummate the
issuance of the Securities pursuant to this Agreement in compliance with
such laws.
(xv) The Company shall have delivered to such Buyer a
letter from the Company's transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five days of the Initial
Closing Date.
(xvi) The Company shall have delivered to the Buyers
such other documents relating to the transactions contemplated by the
Transaction Documents as the Buyers or their counsel may reasonably
request.
(xvii) The Company shall have redeemed all outstanding
shares of Series B Preferred Stock for an amount per each share of Series B
Preferred Stock equal to the Maturity Date Redemption Price (as such term
is defined in the Series B Certificate of Designations).
(xviii) All holders of Series B Preferred Stock and
Series B Warrants shall have executed the Anti-Dilution Waivers.
(xix) The Company (and its rights agent) shall have
executed an amendment to its Amended and Restated Rights Agreement in the
form of EXHIBIT G attached hereto.
b. THE ADDITIONAL CLOSINGS. The obligation of each Buyer
hereunder to purchase the Additional Preferred Shares from the Company at any
Additional Closing is subject to the satisfaction, at or before such Additional
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion (and, provided that the Company has acted in
good faith and has used its best efforts to satisfy the below conditions by not
taking any action or omitting to take any action necessary to satisfy the below
conditions, the failure of the
- 25 -
representations and warranties to be true or the failure of the Company to
fulfill these conditions on the applicable Additional Closing Date shall only
permit a Buyer to elect not to close, the failure to meet such conditions in
itself shall not constitute a breach):
(i) The Certificate of Designations shall be in full
force and effect and shall not have been amended since the Initial Closing
Date, and a copy thereof certified by the Secretary of State of the State
of Delaware shall have been delivered to such Buyer.
(ii) The Common Stock (x) shall be designated for
quotation or listed on the Principal Market and (y) shall not have been
suspended by the SEC or the Principal Market from trading on or delisted
from the Principal Market nor shall delisting or suspension by such
Principal Market have been threatened either (A) in writing by the SEC or
the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market; and all of the Conversion
Shares issuable upon conversion of the applicable Additional Preferred
Shares (without regard to any limitations on conversions) shall be listed
(subject to official notice of issuance) upon the Principal Market.
(iii) The representations and warranties of the Company
shall be true and correct as of the date when made and as of such
Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents or the
Certificate of Designations to be performed, satisfied or complied with by
the Company at or prior to such Additional Closing Date. Such Buyer shall
have received a certificate, executed by the Chief Executive Officer of the
Company, dated as of such Additional Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such Buyer,
including, without limitation, an update as of such Additional Closing Date
regarding the representation contained in Section 3(c) above.
(iv) Such Buyer shall have received the opinions of
Shack Xxxxxx Xxxx & Xxxxxxxx P.C. dated as of such Additional Closing Date,
in the form of EXHIBIT F-1, attached hereto, and an opinion of the General
Counsel to the Company as to contracts and agreements not attached to the
SEC Documents, in the form of EXHIBIT F-2, attached hereto, with such
changes to such opinions as are reasonably acceptable to such Buyer.
(v) The Company shall have executed and delivered to
such Buyer the Preferred Stock Certificates (in such denominations as such
Buyer shall request) for the Additional Preferred Shares being purchased by
such Buyer at such Additional Closing.
(vi) The Board of Directors of the Company shall have
adopted, and shall not have amended, the Resolutions.
- 26 -
(vii) As of such Additional Closing Date, the Company
shall have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares and
exercise of the Warrants, a number of shares of Common Stock equal to at
least the sum (A) 150% of the number of shares of Common Stock which would
be issuable upon conversion in full of the then outstanding Initial
Preferred Shares (without regard to any limitations on conversions), (B)
150% of the number of shares of Common Stock which would be issuable upon
conversion in full of the Additional Preferred Shares to be outstanding
after such Additional Closing Date (without regard to any limitations on
conversions) and (C) 125% of the number of shares of Common Stock which
would be issuable upon exercise in full of the then outstanding Warrants
(without regard to any limitations on exercises).
(viii) The Irrevocable Transfer Agent Instructions shall
remain in effect as of such Additional Closing Date and the Company shall
cause its Transfer Agent to deliver a letter to the Buyers to that effect.
(ix) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the Company
and each Subsidiary in the state of such entity's state of incorporation or
organization issued by the Secretary of State of such state of
incorporation or organization as of a date within ten days of such
Additional Closing Date.
(x) The Company shall have delivered a good standing
certificate to such Buyer, certifying the Company's qualification to do
business and the good standing of the Company in the State of Illinois as
certified by the Secretary of State of the State of Illinois as of a date
within ten days of the Additional Closing Date.
(xi) The Company shall have delivered to such Buyer a
certified copy of the Certificate of Incorporation as certified by the
Secretary of State of the State of Delaware as of a date within ten days of
the Additional Closing Date.
(xii) The Company shall have delivered to such Buyer a
secretary's certificate, dated as of such Additional Closing Date,
certifying as to (A) the Resolutions, (B) the Certificate of Incorporation
and (C) the Bylaws, each as in effect at such Additional Closing.
(xiii) The Company shall have delivered to such Buyer a
letter from the Company's transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five days of such Additional
Closing Date.
(xiv) The Company shall have made all filings required
to be made on or prior to the applicable Additional Closing Date under all
applicable federal and state securities laws necessary to consummate the
issuance of the Securities pursuant to this Agreement in compliance with
such laws.
(xv) The Company shall have delivered to such Buyer
such other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
- 27 -
8. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents and the Certificate of Designations, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents, the Certificate of Designations or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any breach of any covenant, agreement or obligation of the Company contained in
the Transaction Documents, the Certificate of Designations or any other
certificate, instrument or document contemplated hereby or thereby, (c) any
cause of action, suit or claim brought or made against such Indemnitee (other
than a cause of action, suit or claim which is (x) brought or made by the
Company and (y) is not a shareholder derivative suit) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents, the Certificate of Designations or any other certificate,
instrument or document contemplated hereby or thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities or (iii) the status of such Buyer or
holder of the Securities as an investor in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
Except as otherwise set forth herein, the mechanics and procedures with respect
to the rights and obligations under this Section 8 shall be the same as those
set forth in Sections 6(a) and (d) of the Registration Rights Agreement,
including, without limitation, those procedures with respect to the settlement
of claims and the Company's rights to assume the defense of claims.
9. MISCELLANEOUS.
a. GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
- 28 -
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. COUNTERPARTS. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes
all other prior oral or written agreements between each Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended or waived other than by an instrument in writing signed
by the Company and the holders of at least 80% of the Preferred Shares then
outstanding. No such amendment shall be effective to the extent that it applies
to less than all of the holders of the Preferred Shares then outstanding. 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 or
the Certificate of Designations unless the same consideration also is offered to
all of the parties to the Transaction Documents or holders of Preferred Shares,
as the case may be.
f. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
- 29 -
If to the Company:
Midway Games Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
With a copy to:
Shack Xxxxxx Xxxx & Xxxxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Transfer Agent:
The Bank of New York
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
If to a Buyer, to it at the address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least 80% of the Preferred Shares then
outstanding, including by merger or consolidation, except pursuant to a Change
of Control (as defined in Section 4(b) of the Certificate of Designations) with
respect to which the Company is in compliance with Section 4 of the Certificate
of Designations and Section 4(j) of this Agreement. A Buyer may assign some or
all of its rights hereunder without
- 30 -
the consent of the Company; provided, however, that the transferee has agreed in
writing to be bound by the applicable provisions of this Agreement. The Buyers
shall be entitled to pledge the Securities in connection with a bona fide margin
account or other loan secured by the Securities.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8,
shall survive the Closings. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
j. PUBLICITY. The Company and each Buyer shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. TERMINATION. In the event that the Initial Closing shall
not have occurred with respect to a Buyer on or before five (5) Business Days
from the date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6(a) and 7(a) above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching party
shall have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, that if this Agreement is terminated
pursuant to this Section 9(l), the Company shall remain obligated to reimburse
any nonbreaching Buyer for the expenses described in Section 4(l) above.
m. PLACEMENT AGENT. The Company acknowledges that it has not
engaged a placement agent in connection with the sale of the Preferred Shares,
however the Company has engaged UBS Warburg LLC as financial advisor in
connection with the sale of the Preferred Shares. The Company shall be
responsible for the payment of any placement agent's fees, financial advisory
fees, or brokers' commissions (other than for Persons engaged by any Buyer or
its investment advisor) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without limitation,
attorney's fees and out-of-pocket expenses) arising in connection with any such
claim.
- 31 -
n. NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
o. REMEDIES. Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
the Certificate of Designations and all rights and remedies which such holders
have been granted at any time under any other agreement or contract and all of
the rights which such holders have under any law. Any person having any rights
under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
p. PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to any Buyer hereunder or pursuant to the Registration
Rights Agreement, the Certificate of Designations or the Buyers enforce or
exercise their rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, 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.
q. INDEPENDENT NATURE OF BUYERS' OBLIGATIONS AND RIGHTS. The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each Buyer confirms
that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitations, the rights arising out of this Agreement or out of any
other Transaction Documents, and it shall not be necessary for any other Buyer
to be joined as an additional party in any proceeding for such purpose.
[signature page follows]
- 32 -
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
MIDWAY GAMES INC. PORTSIDE GROWTH AND
OPPORTUNITY FUND
By: Ramius Capital Group, LLC
Its: Investment Adviser
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
Title: President and Chief Executive -------------------------------
Officer Name: Xxxxxx X. Xxxxxxx
Title:
SMITHFIELD FIDUCIARY LLC
By: /s/ Xxxx X. Chill
-------------------------------
Name: Xxxx X. Chill
Title: Authorized Signatory
LIGHTHOUSE LLC
By: /s/ Xxxx X. Chill
-------------------------------
Name: Xxxx X. Chill
Title: Authorized Signatory
- 33 -
EXECUTED COPY
SCHEDULE OF BUYERS
Number Maximum
of Number of
Initial Additional
Buyer Address Preferred Number of Preferred Buyer's Representatives' Address
Buyer Name and Facsimile Number Shares Warrants Shares and Facsimile Number
------------------- ----------------------------- --------- --------- ---------- --------------------------------
Portside Growth c/o Ramius Capital Group, 1750 570,500 625 Xxxxxxx Xxxx & Xxxxx LLP
and Opportunity L.L.C. 000 Xxxxx Xxxxxx
Fund 000 Xxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000
Xxx Xxxx, XX 00000 Attn: Xxxxxxx Xxxxx, Esq.
Attention: Xxxxxxx X. Xxxxxxx Telephone: (000) 000-0000
Xxxxxxx Xxxxx Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Residence: Cayman Islands
Smithfield c/o Highbridge Capital 1250 407,500 446 Xxxxxxx Xxxx & Xxxxx LLP
Fiduciary LLC Management, LLC 000 Xxxxx Xxxxxx
0 Xxxx 00xx Xxxxxx, 00xx Xxx Xxxx, XX 00000
Floor Attn: Xxxxxxx Xxxxx, Esq.
Xxx Xxxx, XX 00000 Telephone: (000) 000-0000
Attention: Xxx X. Xxxxxx Facsimile: (000) 000-0000
Xxxx X. Chill
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
Lighthouse LLC c/o Highbridge Capital 500 163,000 179 Xxxxxxx Xxxx & Xxxxx LLP
Management, LLC 000 Xxxxx Xxxxxx
0 Xxxx 00xx Xxxxxx, 00xx Xxx Xxxx, XX 00000
Floor Attn: Xxxxxxx Xxxxx, Esq.
Xxx Xxxx, XX 00000 Telephone: (000) 000-0000
Attention: Xxx X. Xxxxxx Facsimile: (000) 000-0000
Xxxx X. Chill
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
EXECUTED COPY
TABLE OF CONTENTS
Page
----
1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS...................2
2. BUYER'S REPRESENTATIONS AND WARRANTIES...............................4
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................6
4. COVENANTS...........................................................16
5. TRANSFER AGENT INSTRUCTIONS.........................................21
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL......................22
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE...................23
8. INDEMNIFICATION.....................................................28
9. MISCELLANEOUS.......................................................28
- i -
INDEX
Page
----
19.99% Rule......................................................................7
1933 Act.........................................................................1
1934 Act.........................................................................9
Additional Closing...............................................................2
Additional Closing Date..........................................................3
Additional Preferred Share Purchase Cancellation Date............................2
Additional Preferred Shares......................................................1
Additional Preferred Shares Exercise Notice......................................2
Affiliate.......................................................................20
Agreement........................................................................1
Anti-Dilution Waivers...........................................................23
Business Day.....................................................................3
Buyer............................................................................1
By-laws..........................................................................8
Capitalized Lease Obligations...................................................20
Certificate of Designations......................................................1
Certificate of Incorporation.....................................................8
Closing..........................................................................2
Closing Date.....................................................................3
Code............................................................................12
Common Stock.....................................................................1
Company..........................................................................1
Conditions to Cancellation of Right to Purchase Additional Preferred Shares......2
Contingent Obligation...........................................................20
Conversion Shares................................................................1
Environmental Laws..............................................................13
ERISA...........................................................................12
Hazardous Materials.............................................................13
Indebtedness....................................................................20
Indemnified Liabilities.........................................................28
Indemnitees.....................................................................28
Initial Closing..................................................................2
Initial Closing Date.............................................................3
Initial Preferred Shares.........................................................1
Irrevocable Transfer Agent Instructions.........................................21
Material Adverse Effect..........................................................6
Measuring Period.................................................................3
NASDAQ...........................................................................2
NYSE.............................................................................2
Permits.........................................................................14
Permitted Indebtedness..........................................................20
Permitted Indebtedness Cancellation Measuring Period............................21
- ii -
Plans...........................................................................12
Preferred Shares.................................................................1
Preferred Stock..................................................................1
Preferred Stock Certificates.....................................................3
Principal Market................................................................17
Purchase Money Indebtedness.....................................................21
Purchase Price...................................................................2
Registration Rights Agreement....................................................1
Regulation D.....................................................................1
Related Party...................................................................19
Reporting Period................................................................17
Resolutions.....................................................................24
Rule 144.........................................................................5
SEC..............................................................................1
SEC Documents....................................................................9
Securities.......................................................................4
Series B Certificate of Designations............................................23
Series B Warrants...............................................................22
Stockholder Approval............................................................18
Stockholder Meeting Deadline....................................................18
Subsidiaries.....................................................................6
Transaction Documents............................................................6
Warrant Shares...................................................................1
Warrants.........................................................................1
- iii -
LIST OF OMITTED SCHEDULES
Schedule 3(a) - Subsidiaries
Schedule 3(c) - Capitalization
Schedule 3(e) - Conflicts
Schedule 3(h) - Litigation
Schedule 3(l) - Integration
Schedule 3(m)(ii) - Employee Matters
Schedule 3(n) - Intellectual Property
Schedule 3(o) - Liens
Schedule 3(p)(ii) - Environmental
Schedule 3(w) - Transactions with Affiliates
Schedule 3(y) - Rights Agreement
Schedule 4(d) - Use of Proceeds
LIST OF OMITTED EXHIBITS
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Warrant
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Irrevocable Transfer Agent Instructions
Exhibit E - Form of Anti-Dilution Waiver
Exhibit F-1- Form of Company Counsel Opinion
Exhibit F-2- Form of Company General Counsel Opinion
Exhibit G- Form of Amendment to Rights Agreement
- iv -
