Exhibit 1.2
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FLEXIBLE UNDERWRITTEN EQUITY FACILITY (FUEL(TM)) AGREEMENT
BETWEEN
RAMIUS SECURITIES, LLC
AND
NEON COMMUNICATIONS, INC.
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EXECUTION COPY FUEL(TM) AGREEMENT
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
TABLE OF CONTENTS
I. DEFINITIONS..............................................................................................1
II. SALE OF COMMON STOCK.....................................................................................6
2.1 UNDERWRITING COMMITMENT................................................................6
2.2 LIMITATION ON UNDERWRITING AMOUNT......................................................7
2.3 MECHANICS OF NOTIFICATION..............................................................7
2.4 CLOSINGS AND SETTLEMENTS...............................................................7
2.5 TERMINATION, SUSPENSION AND MODIFICATION OF UNDERWRITING OBLIGATION....................8
2.6 WARRANT AGREEMENT......................................................................9
III. CONDITIONS PRECEDENT.....................................................................................9
3.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE UNDERWRITER TO SELL COMMON STOCK
PURSUANT TO A CAPITAL DEMAND NOTICE....................................................9
3.2 DUE DILIGENCE REVIEW..................................................................11
3.3 OCCURRENCE OF MATERIAL EVENT..........................................................12
IV. REPRESENTATIONS AND WARRANTIES OF UNDERWRITER...........................................................12
4.1 AUTHORIZATION; ENFORCEMENT............................................................12
4.2 NOT AN AFFILIATE......................................................................13
4.3 ORGANIZATION AND STANDING.............................................................13
4.4 ABSENCE OF CONFLICTS..................................................................13
4.5 BROKER-DEALER.........................................................................13
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................13
5.1 CORPORATE ORGANIZATION................................................................13
5.2 CAPITALIZATION AND INDEBTEDNESS.......................................................13
5.3 SUBSIDIARIES..........................................................................14
5.4 AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.........................14
5.5 NO CONFLICTS..........................................................................15
5.6 COMPLIANCE WITH APPLICABLE LAW; REGULATORY PERMITS....................................15
5.7 ABSENCE OF LITIGATION.................................................................16
5.8 SEC DOCUMENTS, FINANCIAL STATEMENTS...................................................16
5.9 NO UNDISCLOSED OR CONTINGENT LIABILITIES..............................................17
5.10 EMPLOYMENT MATTERS; ERISA MATTERS.....................................................17
5.11 ABSENCE OF CERTAIN CHANGES............................................................17
5.12 ENVIRONMENTAL MATTERS.................................................................18
5.13 MATERIAL CONTRACTS....................................................................18
5.14 PROPERTIES; ENCUMBRANCES..............................................................19
5.15 INSURANCE.............................................................................19
5.16 MATERIAL DISCLOSURE...................................................................19
5.17 INTELLECTUAL PROPERTY.................................................................20
5.18 BROKERS...............................................................................20
5.19 ACKNOWLEDGMENT REGARDING THE UNDERWRITER'S SALE OF THE COMMON STOCK...................21
5.20 CERTAIN TRANSACTIONS..................................................................21
5.21 FOREIGN CORRUPT PRACTICES.............................................................21
5.22 INVESTMENT COMPANY STATUS.............................................................21
VI. COVENANTS...............................................................................................21
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
6.1 RESERVATION OF COMMON STOCK...........................................................21
6.2 LISTING OF COMMON STOCK...............................................................21
6.3 EXCHANGE ACT REGISTRATION.............................................................22
6.4 LEGENDS...............................................................................22
6.5 CORPORATE EXISTENCE...................................................................22
6.6 SECURITIES LAWS.......................................................................22
6.7 SEC REGISTRATION......................................................................22
6.8 STATE REGISTRATION REQUIREMENTS.......................................................23
6.9 REGISTRATION PROCEDURE................................................................23
6.10 INFORMATION BY UNDERWRITER............................................................24
6.11 SIMILAR STANDBY EQUITY FACILITY AGREEMENTS............................................24
6.12 NO SHORT SELLING......................................................................24
VII. ASSIGNMENT, ENTIRE AGREEMENT, AMENDMENT, TERMINATION....................................................24
7.1 SUCCESSORS AND ASSIGNS................................................................24
7.2 ENTIRE AGREEMENT; AMENDMENT...........................................................24
7.3 PUBLICITY.............................................................................25
7.4 TERMINATION...........................................................................25
VIII. NOTICES, COSTS AND EXPENSES.............................................................................25
8.1 NOTICES...............................................................................25
8.2 COSTS AND EXPENSES....................................................................26
IX. INDEMNIFICATION AND CONTRIBUTION........................................................................27
9.1 INDEMNIFICATION.......................................................................27
9.2 CONTRIBUTION..........................................................................29
X. GOVERNING LAW; MISCELLANEOUS............................................................................29
10.1 GOVERNING LAW.........................................................................29
10.2 COUNTERPARTS..........................................................................29
10.3 HEADINGS..............................................................................30
10.4 SEVERABILITY..........................................................................30
10.5 SURVIVAL..............................................................................30
10.6 NO THIRD PARTY BENEFICIARIES..........................................................30
10.7 FURTHER ASSURANCES....................................................................30
10.8 CONSTRUCTION..........................................................................30
10.9 EQUITABLE RELIEF......................................................................30
10.10 CONSENT TO JURISDICTION...............................................................31
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
FLEXIBLE UNDERWRITTEN EQUITY FACILITY (FUEL(TM)) AGREEMENT
FLEXIBLE UNDERWRITTEN EQUITY FACILITY (FUEL(TM)) AGREEMENT dated as of
July 20, 2001 (the "Agreement"), between Ramius Securities, LLC, a limited
liability company organized and existing under the laws of the State of Delaware
(the "Underwriter"), and Neon Communications, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company may elect from time to time to issue and sell through the
Underwriter the number of shares of the Company's Common Stock, $.01 par value
per share (the "Common Stock") that would result in up to $7,552,9981 in
aggregate gross proceeds to the Company (the "Maximum Aggregate Amount");
provided that the aggregate number of shares of Common Stock sold pursuant to
this Agreement shall not exceed 1,875,000;
NOW, THEREFORE, the parties hereto agree as follows:
I. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" shall mean, with respect to a specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified Person.
"Agreement" shall have the meaning set forth in the introductory
paragraph hereof.
"Best Efforts Amount" shall have the meaning set forth in Section 2.1
of this Agreement.
"Block Trades" shall mean block trades greater than 10,000 shares.
"Blocking Event" shall mean an event described in Section 2.5(a) of
this Agreement.
"Business Intellectual Property" shall mean the Owned Intellectual
Property and the Licensed Intellectual Property.
"Capital Demand Amount" shall mean the amount requested in a Capital
Demand Notice; PROVIDED, HOWEVER, that the Capital Demand Amount shall be
subject to the limitation in Section 2.3(a).
"Capital Demand Notice" shall mean the written notice, in the form
attached hereto as Exhibit 2.3(a), delivered by a Designated Officer of the
Company to the Underwriter on any Trading Day during the Commitment Period
pursuant to Section 2.3(a).
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(1) An amount that does not exceed 10% of the market value of the Company's
Float calculated within 60 days prior to the date of this Agreement. The market
value is based on the last sale price of the Company's Common Stock of $10.15
on May 21, 2001.
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
"Capital Raising Period" shall mean the period commencing at the
opening of the first (1st) Trading Day following the expiration of the Due
Diligence Period and ending at the closing of the fifth (5th) Trading Day
thereafter.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
any and all equivalent ownership interests in a Person (other than a
corporation).
"Closing Date" shall mean, with respect to each sale of Common Stock
subject to the conditions contained herein, each Trading Day that the
Underwriter delivers an Underwriter Sales Notice to the Company and the date on
which the Underwriter or the Holder (as defined in the Warrant Agreement) as the
case may be, exercises its right to purchase all or any portion of the Company's
shares pursuant to the Warrant Agreement.
"Commission" shall have the meaning set forth in Section 2.4(d).
"Commitment Period" shall mean the period commencing on the date the
SEC declares the Registration Statement effective and expiring on the earliest
to occur of: (a) termination of this Agreement pursuant to Section 7.4; (b) the
date that the Underwriter has sold the Maximum Aggregate Amount pursuant to
Capital Demand Notices (without regard to the Warrant Agreement); (c) on the
second anniversary of the date the SEC declares the Registration Statement
effective; or (d) 30 months from the date of execution of this Agreement.
"Common Stock" shall mean the common stock of the Company, $.01 par
value per share.
"Company" shall have the meaning set forth in the introductory
paragraph hereof.
"Condition Precedent Date" shall have the meaning set forth in Section
3.1.
"Deemed Receipt" shall have the meaning set forth in Section 3.3(b).
"Designated Officer" shall mean the Chief Executive Officer, the
President, the General Counsel or the Chief Financial Officer of the Company or
such other person as designated by any of them in writing.
"DTC" shall mean The Depository Trust Company.
"Due Diligence Materials" shall have the meaning set forth in Section
3.2(a).
"Due Diligence Period" shall mean: (a) with respect to the first
Capital Demand Notice delivered by the Company hereunder, the period commencing
on the Trading Day that the Company delivers or makes available all of the Due
Diligence Materials and ending on the seventh (7th) Trading Day thereafter; or
(b) with respect to each subsequent Capital Demand Notice, the period commencing
on the Trading Day that the Company delivers or makes available the Due
Diligence Materials and ending on the second (2nd) Trading Day thereafter or, if
there have been more than forty-five (45) days since the end of the immediately
preceding Capital Raising Period, the fifth (5th) Trading Day after the
beginning of such Due Diligence Period.
"Due Diligence Request List" shall mean: (a) with respect to the
initial due diligence review conducted by the Underwriter, its advisors and
representatives, the form of initial due diligence request list (which may be
supplemented by the Underwriter or its counsel during the Due Diligence Period)
delivered to the Company by the Underwriter; or (b) with respect to subsequent
due diligence
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
reviews conducted by the Underwriter, its advisors and representatives, the form
of subsequent due diligence request lists (which may be supplemented by the
Underwriter or its counsel during the relevant Due Diligence Period) delivered
to the Company by the Underwriter pursuant to Section 3.2 hereof.
"DWAC" shall mean the Deposit and Withdrawal at Custodian system.
"EST" shall mean Eastern Standard Time.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Firm Commitment Amount" shall mean, during any Capital Raising Period,
the lesser of: (a) the sum of the Qualified Daily Trading Limit for each Trading
Day during such Capital Raising Period; PROVIDED, HOWEVER, that the Firm
Commitment Amount may be deemed to be zero, at the Underwriter's sole option, if
the VWAP shall be below the Minimum Offering Price for two consecutive Trading
Days during such Capital Raising Period; PROVIDED FURTHER, that the
Underwriter's obligation to sell shares of Common Stock pursuant to a Capital
Demand Notice shall be null and void if the Firm Commitment Amount is less than
$100,000; or (b) $1,000,000.
"Float" shall mean the number of outstanding shares of Common Stock of
the Company held by non-affiliates.
"Governmental Entity" shall mean any federal, state, local or foreign
legislative body, court, government, department or instrumentality, or
governmental, administrative or regulatory authority or agency.
"Intellectual Property" shall mean all foreign and domestic: (a)
trademarks, service marks, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names, trade names, and other indicia of origin, all applications and
registration for the foregoing, and all goodwill associated therewith and
symbolized thereby, including all extensions, modifications and renewals of same
(collectively, "Trademarks"); (b) inventions, discoveries and ideas, whether
patentable or not, and all patents, registrations, and applications therefor,
including divisions, continuations, continuations-in-part and renewal
applications, and including renewals, extensions and reissues (collectively,
"Patents"); (c) confidential and proprietary information, trade secrets and
know-how, including processes, schematics, formulae, drawings, prototypes,
models, designs and customer lists (collectively, "Trade Secrets"); (d)
published and unpublished works of authorship, whether copyrightable or not
(including without limitation databases and other compilations of information),
copyrights therein and thereto, and registrations and applications therefor, and
all renewals, extensions, restorations and reversions thereof (collectively,
"Copyrights"); and (e) all other intellectual property or proprietary rights and
claims or causes of action arising out of or related to any infringement,
misappropriation or other violation of any of the foregoing, including rights to
recover for past, present and future violations thereof (collectively, "Other
Proprietary Rights").
"Intellectual Property Contracts" shall mean all agreements concerning
the Business Intellectual Property, including without limitation agreements
granting the Company rights to use the Licensed Intellectual Property,
agreements granting rights to use Owned Intellectual Property, confidentiality
agreements, Trademark coexistence agreements, Trademark consent agreements and
nonassertion agreements.
"Knowledge" shall mean the actual knowledge without independent inquiry
of the executive officers of the Company or the Underwriter.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
"Licensed Intellectual Property" shall mean the Intellectual Property
rights that the Company is licensed or otherwise permitted by other Persons to
use.
"Material Adverse Effect" shall mean any effect on the business,
operations, properties or financial condition of the Company which is material
and adverse to the Company or to the Company and any other entities controlled
by the Company, taken as a whole, or any condition or situation which could
prohibit, impair or otherwise interfere with the ability of the Company to enter
into and perform its obligations under this Agreement, the Warrant Agreement, or
any other related agreements.
"Maximum Aggregate Amount" shall have the meaning set forth in the
introductory paragraph hereof.
"Minimum Offering Price" shall be set by the Company in its sole
discretion in each Capital Demand Notice and such Minimum Offering Price may be
different in each Capital Demand Notice; PROVIDED, HOWEVER, that the Minimum
Offering Price may not be less than the minimum bid price necessary for initial
listing on the Principal Market.
"Notice of Blocking Period" shall mean the notice delivered by the
Company to the Underwriter pursuant to Section 3.3, in the form attached hereto
as Exhibit 3.3.
"Owned Intellectual Property" shall mean Intellectual Property owned by
the Company.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or subdivision thereof.
"Plans" means every employee benefit plan (whether or not subject to
ERISA), including, but not limited to, each retirement, pension, savings, bonus,
stock purchase, profit sharing, stock option, deferred compensation, severance
or termination pay, insurance, death, medical, hospital, dental, vision care,
drug, sick leave, disability, salary continuation, vacation, incentive or other
compensation plan or arrangement or other employee benefit for the benefit of
employees or former employees (or dependents or beneficiaries thereof) of the
Company (or as to which the Company may otherwise have any liability (whether
actual or contingent), whether funded, insured or self-funded or whether written
or oral, maintained, contributed to or required to be contributed to by the
Company or any of member of its controlled group (determined in accordance with
Section 4001(a)(14) of ERISA).
"Principal Market" shall mean the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market,
whichever is at the time or becomes the principal trading exchange or market for
the Common Stock.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any Prospectus supplement, including
post-effective amendments, and all material incorporated by reference in such
Prospectus.
"Qualified Daily Trading Limit" shall mean the lesser of: (a) the
Capital Demand Amount divided by the number of trading days in the Capital
Raising Period; or (b) 10% of the dollar trading volume of Common Stock
(excluding Block Trades) traded on each Trading Day of any Capital Raising
Period that trade at or above the Minimum Offering Price, as reported by
Bloomberg Financial LP using the AQR function; PROVIDED, that the Qualified
Daily Trading Limit shall be zero for any Trading Day that the VWAP is below the
Minimum Offering Price.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing an appropriate registration
statement in compliance with the Securities Act and
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
applicable rules and regulations thereunder, and the declaration or ordering of
the effectiveness of such registration statement.
"Registrable Securities" shall mean any shares of Common Stock issued
or issuable pursuant to this Agreement (including all shares of Common Stock
issuable in connection with the exercise of the Warrant Agreement).
"Registration Statement" shall mean a registration statement of the
Company on SEC Form S-3 relating to Common Stock (including all shares of Common
Stock issuable in connection with the exercise of the Warrant Agreement), as
amended or supplemented from time to time, which includes a description of this
Agreement and discloses the identity of the Underwriter.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Filings" shall mean the Company's Form 10-K for the fiscal year
ended December 31, 2001, and its Forms 10-Q and Forms 8-K filed with the SEC
since the end of the Company's most recent fiscal year, and all other filings
made by the Company after the date hereof pursuant to the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Settlement" shall mean the delivery, on the Settlement Date, of the
shares of the Company's Common Stock into the Company's DTC account.
"Settlement Date" shall mean, with respect to each purchase and sale of
Common Stock, subject to the conditions contained herein, the Trading Day no
later than three days (or such lesser time period as is mandated under "regular
ways" settlement on the Principal Market) following each Closing Date.
"Subsidiaries" means, with respect to any Person, any corporation,
partnership, limited liability company, trust or unincorporated organization of
which securities or other ownership interests representing more than 50% or more
of the voting power thereof are, at the time as of which any determination is
being made, owned or controlled, directly or indirectly, by the parent of such
Person or one or more subsidiaries of the parent of such Person.
"Tax Return" shall mean any report, return, information statement or
other information required to be supplied to any federal, state, local or
foreign taxing authority, or any election permitted to be made, in connection
with Taxes.
"Taxes" shall mean all taxes, charges, fees, levies, duties or other
assessments, including without limitation all net income, gross income, gross
receipts, franchise, value added, sales, use, property, ad valorem, transfer,
withholding, profits, license, employee, payroll, social security, unemployment,
excise, estimated, severance and any other taxes, duties, withholdings, fees,
assessments or charges of any kind whatsoever, including any interest, penalties
or additional amounts attributable thereto, imposed by any federal, state, local
or foreign taxing authority.
"Trading Day" shall mean any day (from 9:30 a.m. to 4:00 p.m., EST)
during which the Principal Market shall be open for business and on which
trading of the Common Stock on the Principal Market shall not have been
suspended or limited; PROVIDED, HOWEVER, that scheduled partial trading days
(e.g., trading days other than those described above) shall be excluded and the
Capital Raising Period shall be extended for one additional day for every
partial day excluded.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
"Transfer Agent" shall mean Equiserve LLP, 000 Xxxxxx Xxxxxx, Xxxxxx,
XX 00000.
"Underwriter" shall mean Ramius Securities, LLC, a limited liability
company organized and existing under the laws of the State of Delaware.
"Underwriter's Clearing Broker" shall mean Bear Xxxxxxx Securities
Corp.
"Underwriter Sales Notice" shall mean the notice delivered by the
Underwriter to the Company and to the Transfer Agent pursuant to Section 2.3(b)
in the form attached hereto as Exhibit 2.3(b).
"Underwriting Price" shall mean 95% to 96% of the VWAP pursuant to the
matrix below, depending upon the Company's market capitalization as calculated
on the date of the Capital Demand Notice, during each Trading Day during the
Capital Raising Period; PROVIDED, that if the VWAP for any Trading Day during
the Capital Raising Period is at or below the Minimum Offering Price, the VWAP
for such day shall be deemed to be the Minimum Offering Price.
COMPANY'S MARKET CAPITALIZATION UNDERWRITING PRICE
Less than $250 million 95 %
$250 million to less than $400 million 95.5%
Above $400 million 96 %
"VWAP" shall mean the daily volume weighted average price per share on
any Trading Day of the Common Stock on the Principal Market (or any successor
thereto) as reported by Bloomberg Financial LP using the AQR function and
eliminating any Block Trades; PROVIDED, that if a Blocking Event occurs on a
Trading Day during a Capital Raising Period, then the VWAP for such Trading Day
shall be adjusted such that the volume weighted average price per share shall
only take into consideration trades that occurred between 9:30 a.m. and the time
of such Blocking Event.
"Warrant Agreement" shall mean the warrant agreement between the
Company and the Underwriter dated as of the date hereof.
"Warrant Agreement Exercise Price" shall mean $6.98,2 subject to
adjustment pursuant to the terms of the Warrant Agreement.
"Warrant Agreement Expiration Date" shall mean the earliest to occur of
(i) the fifth anniversary of the Warrant Agreement Issuance Date and (ii) the
exercise in full of the Warrant Agreement.
"Warrant Agreement Issuance Date" shall mean the date hereof.
II. SALE OF COMMON STOCK.
2.1 UNDERWRITING COMMITMENT. Subject to the terms and conditions set
forth herein, during the Commitment Period the Company may elect to deliver a
Capital Demand Notice. Upon the Company's delivery of such Capital Demand
Notice, the Underwriter agrees, during the Capital Raising Period corresponding
to such Capital Demand Notice, to sell, on behalf of the Company on a firm
commitment basis, an amount of shares of the Company's Common Stock whose
proceeds to the Company equal the Firm Commitment Amount and on a best efforts
basis, the number of shares of the
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(2) The Exercise Price shall equal 115% of the VWAP on the trading day
immediately preceding the closing date.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
Company's Common Stock whose proceeds to the Company are equal to the difference
between the Capital Demand Notice and the Firm Commitment Amount (the "Best
Efforts Amount"). The parties hereby acknowledge that in any particular Capital
Raising Period, the Underwriter may not be able to sell such number of shares
that comprise the Best Efforts Amount.
2.2 LIMITATION ON UNDERWRITING AMOUNT. If during any Capital Raising
Period the Company shall issue any shares of Common Stock (other than shares of
Common Stock issued under this Agreement, the exercise of stock options granted
pursuant to the Company's approved stock option plans, the exercise of warrants
outstanding as of the date hereof or the issuance of shares of Common Stock
pursuant to the Company's employee stock purchase plan), the Underwriter may in
its sole discretion elect to terminate its firm commitment to sell all or any
portion of the Firm Commitment Amount as well as any efforts to sell the Best
Efforts Amount and may cancel the then current Capital Raising Period entirely.
The Underwriter shall notify the Company of any such election by facsimile, at
any time during the Capital Raising Period through and including the last
Trading Day immediately preceding the Closing Date for such Capital Raising
Period.
2.3 MECHANICS OF NOTIFICATION.
(a) CAPITAL DEMAND NOTICE. On any Trading Day during the
Commitment Period, a Designated Officer may deliver a written notice, in the
form attached hereto as Exhibit 2.3(a), by facsimile, to the Underwriter (a
"Capital Demand Notice"). The Capital Demand Notice must specify both the
Capital Demand Amount and the Minimum Offering Price. A Capital Demand Notice
shall be irrevocable. The Company may issue as many Capital Demand Notices as it
may elect during the Commitment Period that shall not, in the aggregate, exceed
the Maximum Aggregate Amount, but may not deliver a new Capital Demand Notice
during an existing Capital Raising Period. The Capital Demand Amount may not be
less than $1,500,000 or more than $4,000,000.
(b) UNDERWRITER SALES NOTICE. Prior to 8:00 p.m. EST on the
Trading Day following each Trading Day during the Capital Raising Period when
the Underwriter has sold shares of Common Stock, the Underwriter shall deliver a
notice to the Company and to the Transfer Agent in the form of Exhibit 2.3(b)
attached hereto (an "Underwriter Sales Notice") setting forth the number of
shares of Common Stock that the Underwriter has sold and the Underwriting Price
on such Trading Day.
(d) DATE/METHOD OF DELIVERY OF NOTICES. Except as otherwise
provided herein, any notices delivered by the Company to the Underwriter or by
the Underwriter to the Company hereunder shall be in accordance with the terms
set forth in Section 8.1.
2.4 CLOSINGS AND SETTLEMENTS.
(a) BROKERAGE ACCOUNT. The Company must have a brokerage account
with the Underwriter prior to the date on which the Company delivers the first
Capital Demand Notice, into which account the proceeds of any sale of Common
Stock, net of any amounts payable under Section 2.4(d), shall be deposited. The
Company may request that money be wired to any account it specifies at any time;
PROVIDED, HOWEVER, that the Underwriter shall not be obligated to wire monies
more often than once per any 5 Trading Days.
(b) DELIVERIES. The Company shall credit the number of shares of
Common Stock set forth in the Underwriter Sales Notice by the Settlement Date to
the Underwriter's or its designee's account with the DTC through its DWAC system
or shall effect delivery by such other means as may be mutually agreed upon by
the parties. In addition, prior to each Closing Date, both the Company and the
Underwriter shall deliver all documents, instruments and writings required to be
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
delivered or reasonably requested by either of them pursuant to this Agreement
in order to implement and effect the transactions contemplated herein.
(c) COMPANY'S FAILURE TO DELIVER SHARES. If the Company shall fail
to deliver the shares of Common Stock to the Underwriter by the Settlement Date,
the Underwriter shall notify the Company advising the Company that such shares
have not been received. If, after such notice, the Company shall fail to issue
the shares of Common Stock by the fifth (5th) Trading Day after the Settlement
Date for such shares, the Company shall pay damages to the Underwriter equal to
any actual damages incurred by the Underwriter because of the Company's failure
to deliver such required shares, including damages resulting from the
Underwriter's need, as determined by the Underwriter in its sole discretion, to
"unwind" any and all sales of the Company's Common Stock made during the Capital
Raising Period, to reimburse any and all purchasers for their completed
purchases of the Company's Common Stock, to borrow securities to cover short
positions, and interest and other charges related to net capital compliance.
Moreover, if the shares have not been delivered by such date, the Underwriter
will not be obligated to pay the Company (unless the Company has already paid
the Underwriter's actual damages, if any, incurred during such Capital Raising
Period) for any shares sold by the Underwriter or that the Underwriter agreed to
sell or was obligated to sell during the Capital Raising Period nor will the
Underwriter be obligated to engage in any further efforts to sell the Company's
Common Stock during the remainder of the Capital Raising Period. In addition, if
the shares have not been delivered by the Company by the fifth Business Day
after the Settlement Date, at the Underwriter's sole option, it may terminate
this Agreement.
(d) UNDERWRITER'S COMMISSION. During the Capital Raising Period,
the Company will pay the Underwriter, at the end of each Trading Day, a
commission (the "Commission") equal to the difference, if any, between (i) the
daily gross proceeds from sales of shares on such Trading Day minus (ii) the
aggregate number of shares sold during such Trading Day multiplied by the
Underwriting Price. Such Commission will be deducted from the Company's account
at the end of each Trading Day during a Capital Raising Period. In the event
that the Commission on any Trading Day during a Capital Raising Period shall
equal a negative amount, such Commission shall not be paid by the Underwriter to
the Company at the end of such Trading Day, but rather shall be accumulated and
credited against the next Commission(s) payable by the Company to the
Underwriter. Immediately following the Capital Raising Period, the Underwriter
shall pay to the Company any accumulated amounts which have not been paid.
2.5 TERMINATION, SUSPENSION AND MODIFICATION OF UNDERWRITING
OBLIGATION.
(a) BLOCKING EVENTS. The Underwriter shall not be obligated to
sell any shares of Common Stock from the Company pursuant to any Capital Demand
Notice, nor shall a Capital Demand Notice be delivered at any time during the
Commitment Period, when there shall exist any one or more of the following:
(i) the withdrawal or suspension of the effectiveness of a
registration statement for the registration of not less than the number of
shares of Common Stock equal to, for any Capital Demand Notice, the Capital
Demand Amount divided by the Minimum Offering Price, plus the maximum number of
shares of Common Stock issuable pursuant to the Warrant Agreement, which
Registration Statement shall have been declared effective by the SEC;
(ii) the failure of the Common Stock issuable hereunder to be
validly listed on the Principal Market;
(iii) the Company's failure to satisfy any of the
requirements of Section 3.1 or 3.2 or an event described in the last sentence of
Section 3.2 of this Agreement;
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
(iv) any failure in the compliance by the Company with any of
the covenants provided in Article VI;
(v) any merger or consolidation of the Company with or into,
or a transfer of all or substantially all of the assets of the Company to,
another entity; or
(vi) receipt or Deemed Receipt (as provided in Section 3.3)
by the Underwriter of a Notice of Blocking Period (each of (i), (ii), (iii),
(iv), (v) or (vi) a "Blocking Event").
(b) NOTIFICATION. The Company shall be obligated to notify the
Underwriter in writing using the form attached hereto as Exhibit 3.3 immediately
upon the occurrence of a Blocking Event.
(c) REDUCTION OR ELIMINATION OF UNDERWRITER'S OBLIGATION TO SELL
DURING ANY CAPITAL RAISING PERIOD OR EXTENSION OF CAPITAL RAISING PERIOD.
(i) In the event that a Blocking Event occurs during a
Capital Raising Period, at the option of the Underwriter, (a) the Capital
Raising Period, and therefore the Underwriter's obligations, shall be extended
by the number of Trading Days that such Blocking Event exists or (b) unless such
Blocking Event is waived in writing by the Underwriter, the obligation of the
Underwriter to sell any shares of Common Stock during such Capital Raising
Period shall be canceled for such Capital Raising Period and the Underwriter
shall be entitled to rescind any sales made during such Capital Raising Period,
and the Company shall be liable for all actual damages incurred by the
Underwriter resulting from the occurrence of the Blocking Event.
(ii) If the Underwriter has sold shares of Common Stock
during the Capital Raising Period and the Settlement of such sales has not
occurred prior to the occurrence of a Blocking Event, the Company shall use its
reasonable best efforts to take all actions necessary to cure such Blocking
Event, if curable, within 24 hours; PROVIDED, HOWEVER, that the Company shall
not be required to disclose any material information relating to a proposed
transaction or event that constitutes a Blocking Event prior to such time as the
Company would generally, based on advice from its counsel, disclose such
transaction or event.
2.6 WARRANT AGREEMENT. The Company will execute a Warrant Agreement in
the form attached hereto on the Warrant Agreement Issuance Date.
III. CONDITIONS PRECEDENT.
3.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE UNDERWRITER TO SELL
COMMON STOCK PURSUANT TO A CAPITAL DEMAND NOTICE. The obligation of the
Underwriter to sell Common Stock, as the Company's Underwriter, pursuant to a
Capital Demand Notice is subject to the satisfaction, on the date of delivery of
a Capital Demand Notice, and on each applicable Closing Date (each a "Condition
Precedent Date") of each of the following conditions, which conditions cannot be
waived without the prior written consent of the Underwriter:
(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
shall be in effect and shall remain effective on each Condition Precedent Date
and (i) neither the Company nor the Underwriter shall have received notice that
the SEC has issued or intends to issue a stop order with respect to the
Registration Statement or that the SEC otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently,
or intends or has
9
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
threatened to do so, and (ii) no other suspension of the use of the Registration
Statement or related Prospectus shall exist.
(b) STATE/NASD FILINGS. The Company shall have filed with the
applicable state securities commission such blue sky filings as shall have been
reasonably requested by the underwriter and any required filings with the NASD
or Principal Market.
(c) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company, as set forth in this Agreement,
shall be true and correct in all material respects as of each Condition
Precedent Date as though made at each such time (except for representations and
warranties made as of a specific date).
(d) PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to each Condition Precedent Date.
(e) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or Governmental Entity of competent jurisdiction which
prohibits or materially adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced which may have
the effect of prohibiting or materially adversely affecting any of the
transactions contemplated by this Agreement.
(f) ADVERSE CHANGES. Except as disclosed pursuant to public
filings under the Exchange Act, since the date through which the most recent
quarterly report of the Company on Form 10-Q (or annual report on Form 10-K if
more recent) has been prepared and filed with the SEC, no event which had or is
reasonably expected to have a Material Adverse Effect shall have occurred.
(g) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The
trading of the Common Stock shall not have been suspended by the SEC, the
Principal Market or the National Association of Securities Dealers, Inc.
("NASD"), and the Common Stock to be issued hereunder (including the Common
Stock issuable upon exercise of the Warrant Agreement) shall have been approved
for listing or quotation and shall not have been delisted from the Principal
Market. The issuance of shares of Common Stock with respect to the applicable
Closing Date (including the Common Stock issuable upon exercise of the Warrant
Agreement, if any) shall not violate the shareholder approval requirements of
the Principal Market.
(h) LEGAL OPINIONS. The Company shall have caused to be delivered
to the Underwriter, on the Trading Day immediately prior to the first Trading
Day of each Capital Raising Period, legal opinions of the Company's one or more
outside counsel, containing the opinions substantially similar to those set
forth in Exhibit 3.1(h) hereto, which opinions must be reasonably satisfactory
to the Underwriter.
(i) ACCOUNTANT'S LETTER. On the Trading Day immediately prior to
the first Trading Day of the first Capital Raising Period and on the Trading Day
immediately prior to the first Trading Day of the first Capital Raising Period
following the filing of any SEC filing to be incorporated by reference into the
Registration Statement or any amendment thereto, the Company shall have
furnished to the Underwriter a comfort letter of its independent auditors in
customary form and reasonably satisfactory to the Underwriter and counsel to the
Underwriter, including a statement to the effect that they have performed the
procedures in accordance with the provisions of Statement on Auditing Standards
No. 71, as amended, as agreed to by the parties hereto, and reports thereon as
shall have been reasonably requested by the Underwriter with respect to certain
financial information contained in the
10
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
Registration Statement; and on the Trading Day immediately prior to the first
Trading Day of each other Capital Raising Period, a bring-down comfort letter of
its independent auditor in customary form and reasonably satisfactory to the
Underwriter and counsel to the Underwriter.
(j) OFFICER'S CERTIFICATE. The Company shall have delivered to the
Underwriter, on the Trading Day immediately prior to the first Trading Day of
each Capital Raising Period, a certificate in the form attached hereto as
Exhibit 3.1(j) executed by an executive officer of the Company and to the effect
that all conditions to such Closing shall have been satisfied as of the date of
each such certificate.
(k) DUE DILIGENCE. The Underwriter shall have been reasonably
satisfied with the Due Diligence Materials and its due diligence review
conducted pursuant to Section 3.2 and to the adequacy of the disclosure
contained in the Registration Statement.
(l) CLEARING BROKER INSTRUCTIONS. The Company shall have issued
instructions to the Underwriter's Clearing Broker (in the form attached hereto
as Exhibit 3.1(l)) to release the Commission at the Underwriter's request. The
Company shall also cooperate with the Underwriter to provide the Underwriter's
Clearing Broker with any additional documentation requested thereby in
connection with payment of Commissions to the Underwriter.
(m) TRANSFER AGENT INSTRUCTIONS. The Company shall have issued
instructions to its Transfer Agent (in the form attached hereto as Exhibit
3.1(m)) to issue certificates, or at the Underwriter's request, to
electronically issue such shares (e.g., through DWAC or DTC) (such electronic
issuance to be made only if such shares have been registered), registered in the
name of the Company or its nominee(s).
(n) BROKERAGE ACCOUNT. The Company must have a brokerage account
open with the Underwriter.
(o) NASD REVIEW. The NASD shall have issued an opinion of "no
objections" to the proposed underwriting terms and arrangements pursuant to its
rules prior to the first Capital Demand Notice, if the Registration Statement
and this Agreement are subject to filing with and review by the NASD.
(p) LIMITATION ON "AT THE MARKET" SALES. The dollar value of the
Common Stock subject to the Capital Demand Notice, when aggregated with the
dollar value of any relevant prior sales of Common Stock that are included on
the Registration Statement, shall not exceed the 10% limitation on "at the
market" sales in SEC Rule 415(a)(4)(ii), which shall be calculated on the
Company's Float as set forth in Section 5.2.
3.2 DUE DILIGENCE REVIEW.
(a) Upon delivery of a Capital Demand Notice, the Company shall
also deliver or make available, during normal business hours, for inspection and
review by the Underwriter, advisors to and representatives of the Underwriter
(who may or may not be affiliated with the Underwriter), all such information
reasonably requested in the applicable Due Diligence Request List (the "Due
Diligence Materials") (including, without limitation, responses to all questions
and other inquiries reasonably made or submitted therein), for the sole purpose
of enabling the Underwriter and such representatives, advisors and underwriters
and their respective accountants and attorneys to conduct initial and ongoing
due diligence with respect to the Company and the accuracy of the Registration
Statement.
11
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
(b) Prior to disclosure of material non-public information to the
Underwriter, advisors to or representatives of the Underwriter, the Company
shall identify such information as being material nonpublic information and
provide the Underwriter, such advisors and representatives with the opportunity
to accept or refuse to accept such nonpublic information for review. If the
Company discloses material nonpublic information to the Underwriter, advisors to
or representatives of the Underwriter prior to disclosure of such information in
a registration statement, prospectus or amendment thereto, such event shall
constitute a Blocking Event pursuant to Section 2.5(a).
3.3 OCCURRENCE OF MATERIAL EVENT.
(a) If the Company's management determines in its good faith
judgment (i) that it is required or advisable to do so or (ii) that any fact
exists or any event has occurred that makes any statement of a material fact
made in the Registration Statement, the prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue in any
material respect, or that requires the making of any additions to or changes in
the Registration Statement or the prospectus, in order to make the statements
therein not misleading in any material respect, the Company shall notify the
Underwriter using the form attached hereto as Exhibit 3.3 (a "Notice of Blocking
Period") that the Underwriter may not sell the Registrable Securities pursuant
to any Registration Statement or prospectus.
(b) If the Underwriter reasonably believes, after advice from its
attorneys and notice to and consultation with the Company and its attorneys,
that a fact exists or an event has occurred that makes any statement of a
material fact made in the Registration Statement, the prospectus, any amendment
or supplement thereto, or any document incorporated by reference therein untrue
in any material respect, or that requires the making of any additions to or
changes in the Registration Statement or the prospectus, in order to make the
statements therein not misleading in any material respect, then the Company
shall have been deemed to have delivered a Notice of Blocking Period to the
Underwriter ("Deemed Receipt").
(c) The Underwriter agrees that, upon receipt of a Notice of
Blocking Period from the Company of the existence of any fact of the kind
described in this Section 3.3, the Underwriter shall not dispose of, sell or
offer for sale the Registrable Securities pursuant to the Registration Statement
until such Underwriter receives (i) copies of the supplemented or amended
prospectus, unless counsel for the Company shall have determined that such
disclosure is not required due to subsequent events, (ii) notice in writing from
the Company that the use of the prospectus may be resumed and (iii) copies of
any additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company in connection with any such notice,
each Underwriter will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Underwriter's possession,
of the prospectus covering such Registrable Securities that was current
immediately prior to the time of receipt of such notice.
IV. REPRESENTATIONS AND WARRANTIES OF UNDERWRITER.
The Underwriter represents and warrants to the Company as follows:
4.1 AUTHORIZATION; ENFORCEMENT. The Underwriter has full power and
authority to execute and deliver this Agreement and the Warrant Agreement, and
to consummate the transactions contemplated hereby and therein in accordance
with the terms hereof and therein. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the Underwriter. No other proceedings on the part of
Underwriter are necessary to approve and authorize the execution and delivery of
this Agreement and the Warrant Agreement, and the consummation of the
transactions contemplated hereby in accordance with the terms hereof. This
Agreement has been validly executed and delivered by the Underwriter and is a
valid and
12
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
binding agreement of the Underwriter enforceable against it in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
similar laws relating to, or affecting generally the enforcement of, applicable
creditors' rights and remedies or by other equitable principles of general
application.
4.2 NOT AN AFFILIATE. The Underwriter is not an officer, director or
Affiliate of the Company.
4.3 ORGANIZATION AND STANDING. The Underwriter is a limited liability
company duly organized, validly existing, and in good standing under the laws of
Delaware, and has all requisite power and authority to carry on its business as
now being conducted, and is duly qualified to do business and in good standing
in each jurisdiction in which the nature of the business conducted by it makes
such qualifications necessary, except where the failure to be so qualified or in
good standing would not have a material adverse effect.
4.4 ABSENCE OF CONFLICTS. The execution and delivery of this Agreement
and any other document or instrument executed in connection herewith, and the
consummation of the transactions contemplated hereby and thereby, and compliance
with the requirements hereof and thereof, will not violate the provision of any
indenture, instrument or agreement to which the Underwriter is a party or is
subject, or by which the Underwriter or any of its assets is bound, or conflict
with or constitute a material default thereunder, or result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by the
Underwriter to any third party.
4.5 BROKER-DEALER. The Underwriter is a registered broker-dealer under
the Exchange Act and is a member in good standing of the NASD.
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as disclosed in the Schedules delivered by the Company to
the Underwriter on the date hereof, the Company represents and warrants to the
Underwriter as follows:
5.1 CORPORATE ORGANIZATION. The Company and each of its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power and authority to own or lease and operate its properties and to
carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the property owned, leased, or
operated by it 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, individually or in the
aggregate, a Material Adverse Effect.
5.2 CAPITALIZATION AND INDEBTEDNESS. As of the date hereof, the
authorized capital stock of the Company consists of 60,000,000 shares of Common
Stock, of which as of the date hereof, 21,335,061 shares are issued and
outstanding, and 2,000,000 shares of preferred stock (the "Preferred Stock") of
the Company, of which as of the date hereof, no shares are issued or
outstanding. All of the outstanding shares have been validly issued and are
fully paid and nonassessable. Further, the Company's Float as of the date hereof
consists of 7,441,378 shares of Common Stock. Except as set forth in Schedule
5.2, no shares of Common Stock or Preferred Stock are subject to preemptive
rights or any other similar rights or any liens suffered or permitted by the
Company. As of the date hereof, except as set forth in Schedule 5.2, (i) 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
13
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
Capital Stock of the Company or any of its Subsidiaries, other than rights
created pursuant to this Agreement or pursuant to the Company's stock option
plan and employee stock purchase plan, (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company or any of its Subsidiaries or
by which the Company or any of its Subsidiaries is or may become bound and (iii)
there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except as provided in this Agreement). There are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of any of the Common Stock pursuant to this
Agreement. The Company has furnished to the Underwriter true and correct copies
of the Company's articles of incorporation, as amended and as in effect on the
date hereof (the "Articles of Incorporation"), and the Company's bylaws, as in
effect on the date hereof (the "Bylaws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
5.3 SUBSIDIARIES.
(a) A complete list of the Subsidiaries is set forth in Schedule
5.3(a).
(b) No Subsidiary owns material assets or is subject to material
liabilities, other than those listed on Schedule 5.3(b). Each Subsidiary is,
directly or indirectly, wholly owned by the Company.
(c) (i) All of the outstanding stock or other equity or ownership
interests of each Subsidiary is owned free and clear of all material liens and
is validly issued and (ii) there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which any Subsidiary
is a party or otherwise obligating any Subsidiary to issue or sell, or entitling
any Person to acquire from any Subsidiary, and no Subsidiary is a party to any
agreement, arrangement or commitment obligating it to repurchase, redeem or
otherwise acquire, any shares of the Capital Stock or any securities convertible
into or exchangeable for the Capital Stock of any such Subsidiary.
5.4 AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement and the Warrant
Agreement and to issue, sell and perform its obligations with respect to the
Common Stock in accordance with the terms hereof (including the Common Stock
issuable upon exercise of the Warrant Agreement).
(b) The execution and delivery of this Agreement and the Warrant
Agreement by the Company and the consummation by it of the transactions
contemplated by such agreements, including, without limitation, the reservation
for issuance and the issuance of the Common Stock pursuant to the terms of this
Agreement (including the Common Stock issuable upon exercise of the Warrant
Agreement), 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 shareholders. To the Knowledge of the Company, no other
corporate proceedings on the part of the Company are necessary to approve and
authorize the execution and delivery of this Agreement and the Warrant Agreement
and the issuance of the Common Stock issuable upon each Closing and pursuant to
the Warrants, and the consummation of the transactions contemplated hereby in
accordance with the terms hereof.
(c) The Common Stock issuable in accordance with the terms of this
Agreement (including the Common Stock issuable upon exercise of the Warrant
Agreement), upon the issuance of such Common Stock and payment of the
Underwriting Price or Warrant Agreement Exercise Price therefor, as applicable,
in accordance with the terms hereof or thereof, will be duly and validly
14
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
issued, fully paid and nonassessable and will conform to the description thereof
contained in the Prospectus.
(d) This Agreement and the Warrant Agreement have been duly
executed and delivered by the Company and constitute 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.
5.5 NO CONFLICTS.
(a) The execution, delivery and performance of this Agreement and
the Warrant Agreement by the Company, and the consummation by the Company of the
transactions contemplated by such agreements will not (i) result in a violation
of the Articles of Incorporation or Bylaws of the Company or the organizational
charter and/or bylaws of any of its Subsidiaries, or (ii) violate or conflict
with, or result in a breach of any provision of, 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, or result in the creation of any lien on or against any of the
properties of the Company or any of its Subsidiaries, any note, bond, mortgage,
agreement, license indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any statute, law, rule,
regulation, writ, injunction, order, judgment or decree (including U.S. federal
and state securities laws and regulations and the rules and regulations of the
Principal Market on which the Common Stock is traded or listed) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except where such
violation, conflict, breach or other consequence would not have a Material
Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is in
violation of any term of or in default under its Articles of Incorporation, or
Bylaws or its organizational charter or bylaws, respectively.
(c) Except as specifically contemplated by this Agreement and as
required under the Securities Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental or regulatory or self-regulatory agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement in accordance with the terms hereof. 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.
(d) The Company is not in violation of the listing requirements of
the Principal Market and, to its Knowledge, is not aware of any facts that would
cause it to be delisted by the Principal Market.
5.6 COMPLIANCE WITH APPLICABLE LAW; REGULATORY PERMITS. The businesses
of the Company are not being conducted in violation of any law, ordinance, rule,
regulation, judgment, decree or order of any Governmental Entity, except for
violations which, individually or in the aggregate, would not have a Material
Adverse Effect. The Company and each of its Subsidiaries possesses all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to conduct its businesses as currently being conducted
(collectively, the "Company Permits"), except where failure to possess any of
such Company Permits would not have a Material Adverse Effect. There is no
action pending or, to the Knowledge of the Company, threatened regarding the
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
5.7 ABSENCE OF LITIGATION. Except as set forth in Schedule 5.7, there
are no actions, suits, proceedings, inquiries or investigations before or by any
Governmental Entity or arbitrator pending, or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries. There is
no judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its Subsidiaries that has
had, or would reasonably be expected in the future to have, a Material Adverse
Effect or which reasonably could be expected to materially adversely affect the
transactions contemplated by this Agreement.
5.8 SEC DOCUMENTS, FINANCIAL STATEMENTS.
(a) The Common Stock is registered pursuant to Section 12(g) of
the Exchange Act and 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 Exchange Act (all of the foregoing, and all
other documents and registration statements, whether heretofore or hereafter
filed by the Company with the SEC, and the Registration Statement, when declared
effective, 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"). The Common Stock is currently
listed or quoted on the Principal Market which is, as of the date hereof, the
Nasdaq National Market. The Company (i) has delivered or made available to the
Underwriter or its advisor or representative (including via the SEC's XXXXX
system) true and complete copies of the SEC Documents as have been filed as of
the date hereof and as the Underwriter or its advisor or representative has
requested from the Company and (ii) agrees to make available or, if requested,
deliver to the Underwriter or its advisor or representative true and complete
copies of any SEC Documents filed after the date hereof, upon request.
(b) As of their respective dates, the SEC Documents (except for
the Registration Statement and the Prospectus, which are discussed below)
complied as to form in all material respects with the requirements of the
Securities Act and the Exchange Act applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC (except for those
SEC Documents that were subsequently amended 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 light of the circumstances under which they were made, not
misleading.
(c) The Registration Statement and the Prospectus contained in the
Registration Statement, including any post-effective amendment and prospectus
supplement, in such form as it may be as of the date of delivery of such
Prospectus, amendment or prospectus supplement by the Underwriter in connection
with sales of Common Stock by the Underwriter, will comply, as to form, in all
material respects with the requirements of the Securities Act and the rules and
regulations of the SEC and other federal, state and local laws, rules and
regulations applicable to such Prospectus and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading; PROVIDED, that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information relating to the
Underwriter furnished to the Company in writing by or on behalf of the
Underwriter expressly for use therein.
(d) As of their respective dates, the financial statements of the
Company included (or incorporated by reference) 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 or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis 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
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
or may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company and its Subsidiaries as of 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). Since the date of the latest audited financial statements
included in the Prospectus there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations of
the Company and its Subsidiaries taken as a whole, and except as disclosed in or
contemplated by the Prospectus, there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock.
(e) During the three (3) years preceding the date hereof, the SEC
has not issued an order preventing or suspending the use of any prospectus
relating to the offering of any shares of Common Stock or instituted proceedings
for that purpose.
5.9 NO UNDISCLOSED OR CONTINGENT LIABILITIES. Neither the Company nor
any of its Subsidiaries has any claims, liabilities or obligations of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due
or to become due) that would be required to be reflected or reserved against on
a consolidated balance sheet of the Company and its consolidated Subsidiaries
under GAAP, except for claims, liabilities or obligations (i) disclosed in the
Company's most recent Form 10-K or any SEC Document filed subsequent to such
Form 10-K or (ii) incurred by the Company or any of its Subsidiaries since the
date of filing the most recent SEC Document, which are in the ordinary course of
business and which are consistent with past practice and that, individually or
in the aggregate, would not have a Material Adverse Effect.
5.10 EMPLOYMENT MATTERS; ERISA MATTERS. 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 have, individually or in the aggregate, a Material Adverse
Effect.
5.11 ABSENCE OF CERTAIN CHANGES.
(a) Except as set forth in Schedule 5.11, since March 31, 2001, or
the end of the most recent fiscal quarter before the delivery of each Capital
Demand Notice, as the case may be, the business of the Company and its
Subsidiaries has been conducted in the ordinary course consistent with past
practices and except in the ordinary course of business consistent with past
practice there has not been:
(i) any event, occurrence, development or state of
circumstances or facts which, individually or in the aggregate, has had or would
have a Material Adverse Effect;
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of Capital Stock of
the Company or any repurchase, redemption or other acquisition by the Company or
any Subsidiary of any outstanding shares of Capital Stock or other securities
of, or other ownership interests in, the Company or any Subsidiary;
(iii) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(iv) any incurrence, assumption or guarantee by the Company
or any Subsidiary of any indebtedness for borrowed money, other than (i) working
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
lines of credit or borrowings under existing lines of credit or floor plan
financing arrangements, (ii) any license fees and royalties and (iii) pursuant
to any lease;
(v) any creation or assumption by the Company or any
Subsidiary of any lien on any material asset other than in the ordinary course
of business consistent with past practice;
(vi) any making of any loan, advance or capital contributions
to or investment in any Person in excess of $500,000 other than loans, advances
or capital contributions to or investments in wholly owned Subsidiaries made in
the ordinary course of business consistent with past practice;
(vii) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of the Company or
any Subsidiary which, individually or in the aggregate, has had or would have a
Material Adverse Effect;
(viii) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in any such case, material to the Company and the Subsidiaries, taken as a
whole, other than transactions and commitments in the ordinary course of
business consistent with past practice and those contemplated by this Agreement;
or
(ix) any material change in any method of accounting or
accounting practice by the Company or any Subsidiary.
(b) None of the Company or its Subsidiaries have taken any steps,
and do not currently expect to take any steps, to seek protection pursuant to
any bankruptcy law nor does the Company or its Subsidiaries have any Knowledge
or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.
5.12 ENVIRONMENTAL MATTERS. The Company and each of its Subsidiaries
have obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws and are in compliance in all material respects with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment which are applicable to
its business. "Environmental Laws" shall mean all applicable laws relating to
the protection of the environment including, without limitation, all
requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating Releases of Hazardous Substances into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances. "Hazardous Substance" shall include any element, compound
or chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic or hazardous substance, hazardous waste, medical waste, special
waste or solid waste under Environmental Laws, including, but not limited to
petroleum, PCBs or asbestos containing materials. "Releases" shall mean any
escaping, leaking, spilling, leaking, pumping, emitting, emptying, discharging,
injecting, dumping or disposing of Hazardous Substances into the environment. To
the best of the Company's Knowledge, there are no past or present events,
conditions, circumstances, incidents, actions or omissions relating to or in any
way affecting the Company or its Subsidiaries that violate any Environmental
Law.
5.13 MATERIAL CONTRACTS.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
(a) Except as set forth in Schedule 5.13, other than as filed in
any SEC filings, neither the Company nor any Subsidiary is a party to or bound
by any agreement or arrangement material to the Company and its Subsidiaries
taken as a whole ("Material Contracts").
(b) Each Material Contract is in full force and effect and
constitutes a legal, valid and binding obligation of the Company or the
Subsidiary party thereto and, to the Knowledge of the Company, each other party
thereto, and is enforceable against the Company or its Subsidiaries and, to the
Knowledge of the Company, each other party thereto in accordance with its terms,
except to the extent that such enforceability is limited by (i) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity, and neither the Company nor any of its
Subsidiaries, nor, to the Knowledge of the Company, any other party thereto is
in conflict therewith or in violation or breach thereof or default thereunder,
except for such conflicts, violations, breaches and defaults which, individually
or in the aggregate, would not have a Material Adverse Effect.
5.14 PROPERTIES; ENCUMBRANCES. Except as disclosed in the SEC Filings,
each of the Company and its Subsidiaries has good and valid title to all
material properties and assets which it purports to own (personal, tangible and
intangible, including all forms of goodwill, rights, intellectual property and
intellectual property rights) (collectively, the "Company Assets"). Except as
disclosed in the SEC Filings, all Company Assets are free and clear of all
liens, mortgages, claims, interests, charges, security interests or other
encumbrances or adverse interests of any nature whatsoever and other title or
interest retention arrangements ("liens").
5.15 INSURANCE. All current primary, excess and umbrella policies of
insurance owned or held by or on behalf of or providing insurance coverage to
the Company or any of its Subsidiaries are in full force and effect. With
respect to all such insurance policies purchased by the Company or any of its
Subsidiaries, no premiums are in arrears and no notice of cancellation or
termination has been received with respect to any such policy, other than
notices of cancellation or termination routinely sent at the end of a policy
term. 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 is prudent and customarily maintained by corporations of similar size
and engaged in similar lines of businesses as the Company and its Subsidiaries
are engaged. 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,
individually or in the aggregate, a Material Adverse Effect.
5.16 MATERIAL DISCLOSURE. There is no fact, transaction or development
which the Company has not disclosed to the Underwriter in writing (including
pursuant to the SEC Documents filed prior to the date hereof) which would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. This Agreement (including any Exhibit or Schedule hereto) and
any written statements, documents or certificates furnished to the Underwriter
by the Company or its Subsidiaries prior to the date hereof in connection with
the transactions contemplated hereby, taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated herein or therein or necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. Except with respect to transactions contemplated by this Agreement,
no event or circumstance has occurred or information exists with respect to the
Company or any of its Subsidiaries or its or their business, properties,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company prior to
the date hereof (or any Closing Date), but which has not been so publicly
announced or disclosed (assuming for this purpose that the Company's reports
filed under the Exchange Act are being incorporated into an effective
registration statement filed by the Company under the Securities Act).
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
5.17 INTELLECTUAL PROPERTY.
(a) Schedule 5.17(a) sets forth a true and complete list and
summary description of all (i) Registered or material Owned Intellectual
Property (each identified as a Patent, Trademark, Trade Secret, Copyright or
Other Proprietary Right, as the case may be) and (ii) Intellectual Property
Contracts.
(b) Except as set forth in the SEC Filings:
(i) All Business Intellectual Property is valid, subsisting
and enforceable. The Company owns all Owned Intellectual Property exclusively.
(ii) No Owned Intellectual Property has been canceled or
adjudicated invalid (excepting any expirations in the ordinary course), or is
subject to any outstanding order, judgment or decree restricting its use or
adversely affecting or reflecting the Company's or the Subsidiaries' rights
thereto. No Licensed Intellectual Property has been canceled or adjudicated
invalid (excepting any expirations in the ordinary course), or is subject to any
outstanding order, judgment or decree restricting its use or adversely affecting
or reflecting the Company's or the Subsidiaries' rights thereto. The Owned
Intellectual Property has been used with all patent, trademark, copyright,
confidential, proprietary, and other Intellectual Property notices and legends
prescribed by law or otherwise permitted.
(iii) The Company owns or otherwise holds valid rights to use
all Intellectual Property currently used or contemplated to be used in the
Business of the Company or the Subsidiaries.
(iv) The Company and the Subsidiaries are in compliance with
all applicable rules and regulations of foreign and domestic agencies with
respect to Business Intellectual Property. All documentation necessary to
confirm and effect the Company's ownership of Owned Intellectual Property, if
acquired from other Persons, has been recorded in the United States Patent and
Trademark Office, the United States Copyright Office and all other appropriate
offices.
(v) The Company has taken all reasonable measures to protect
the secrecy, confidentiality and value of all Trade Secrets used in the Business
(collectively, "Business Trade Secrets"). To the Company's Knowledge, the
Business Trade Secrets have not been disclosed to any Persons other than Company
or Subsidiary employees and contractors who had a need to know and use such
Business Trade Secrets in the ordinary course of employment or contract
performance and who executed appropriate confidentiality agreements.
(vi) To the Company's Knowledge, no current or former Company
or Subsidiary employee or contractor is or was a party to any confidentiality
agreement and/or agreement not to compete that restricts or forbids, or
restricted or forbade at any time during such employee's employment or
contractor's engagement such employee's or contractor's performance of the
Company's or the Subsidiaries' business, or any other activity that such
employee or contractor performed on behalf of the Company or Subsidiaries or in
connection with such employment or engagement by the Company or Subsidiaries.
5.18 BROKERS. Except as disclosed in Schedule 5.18, the Company has
taken no action which would give rise to any claim by any Person for brokerage
commissions, finder's fees or similar payments by the Underwriter relating to
this Agreement for the transactions contemplated hereby.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
5.19 ACKNOWLEDGMENT REGARDING THE UNDERWRITER'S SALE OF THE COMMON
STOCK. The Company acknowledges and agrees that the Underwriter is acting solely
as the Company's Underwriter with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the Underwriter is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by the Underwriter or any of its respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Underwriter's sale of the Common
Stock hereunder. The Company further represents to the Underwriter that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation by the Company and its representatives.
5.20 CERTAIN TRANSACTIONS. Except as disclosed in the SEC Filings and
except as may be disclosed in Schedule 5.20 and except for arm's length
transactions pursuant to which the Company makes payments in the ordinary course
of business upon terms no less favorable than the Company could obtain from
third parties, none of the officers, directors or employees of the Company is
presently a party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the Knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer, director or any such employee has a substantial interest or is an
officer, director, trustee or partner.
5.21 FOREIGN CORRUPT PRACTICES. 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 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.
5.22 INVESTMENT COMPANY STATUS. The Company is not, and upon
consummation of the sale of the Common Stock 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.
VI. COVENANTS.
6.1 RESERVATION OF COMMON STOCK. The Company shall reserve, prior to
the commencement of any Capital Raising Period, such number of shares of Common
Stock, free of preemptive rights (except as may be described on Schedule 5.2),
equal to (i) the quotient of the Capital Demand Amount divided by the Minimum
Offering Price plus (ii) the maximum number of shares issuable upon full
exercise of the Warrant Agreement. The number of shares so reserved from time to
time, as theretofore increased or reduced as hereinafter provided, may be
reduced by the number of shares actually delivered hereunder and the number of
shares so reserved shall be increased to reflect (a) potential increases in the
Common Stock which the Company may be obligated to issue by reason of
adjustments to the Warrant Agreement and (b) stock splits and stock dividends
and distributions.
6.2 LISTING OF COMMON STOCK. During the term of this Agreement, the
Company hereby agrees to use its best efforts to maintain the listing of the
Common Stock, including the shares to be issued hereunder and under the Warrant
Agreement, on a Principal Market and, as soon as reasonably practicable, to list
any additional shares of Common Stock issuable under this Agreement and the
Warrant
21
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
Agreement. The Company further agrees to use its best efforts to comply in all
material respects with the Company's reporting, filing and other obligations
under the by-laws or rules of the NASD and the Principal Market. The Company
further agrees that, if the Company applies to have the Common Stock traded on
any other Principal Market, it will include in such application the Common Stock
issuable under this Agreement and under the Warrant Agreement, and will take
such other action as is necessary or desirable to cause the Common Stock issued
or issuable hereunder and under the Warrant Agreement to be listed on such other
Principal Market as promptly as possible.
6.3 EXCHANGE ACT REGISTRATION. During the term of this Agreement, the
Company will cause its Common Stock to continue to be registered under Section
12(g) of the Exchange Act, will comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act.
6.4 LEGENDS. The certificates evidencing the Common Stock to be issued
on each Closing Date and upon exercise of the Warrant Agreement shall be free of
legends or stop transfer or other restrictions.
6.5 CORPORATE EXISTENCE. During the term of this Agreement, the Company
will take all reasonable steps necessary to preserve and continue the corporate
existence of the Company; provided, however, that nothing herein shall be
construed to limit the ability of the Company to partake in any merger, asset
sale or acquisition transaction involving the Company, subject to the Company
complying with the terms of this Agreement.
6.6 SECURITIES LAWS. The Company has complied and will continue to
comply with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the shares of Common Stock hereunder at the time
of each Capital Demand Notice. The SEC has not issued any order preventing or
suspending the effectiveness of the Registration Statement. At the time the
Registration Statement was filed with the SEC, the Company was eligible to
register securities, including a primary offering of, and the resale of, the
Common Stock purchased pursuant to this Agreement on a Registration Statement on
Form S-3 under the Securities Act. The Company has not distributed and, prior to
the completion of the sale of the shares of Common Stock by the Underwriter,
will not distribute any offering material in connection with the offer and sale
of the Common Stock purchased pursuant to this Agreement other than the
Registration Statement, the Prospectus or other materials, if any, permitted by
the Securities Act.
6.7 SEC REGISTRATION. The Company shall use its best efforts to effect
and maintain the registration of the Registrable Securities with the SEC on Form
S-3, including, without limitation, the filing of any pre-effective and
post-effective amendments to the Registration Statement and the filing of any
report required by the Exchange Act that relates to the transactions
contemplated by this Agreement, and will not take any action that would suspend
or terminate its ability to register or maintain registration on Form S-3 until
the termination of this Agreement, except to the extent a Blocking Event occurs
pursuant to Section 3.3. If a Blocking Event occurs pursuant to Section 3.3, the
Company shall use its reasonable best efforts to remove such Blocking Event as
soon as possible, including the filing with the SEC of a Prospectus supplement
or post-effective amendment to the Registration Statement or related Prospectus,
as applicable; PROVIDED, HOWEVER, that the Company shall not be required to
disclose any material information relating to a proposed transaction or event
that constitutes a Blocking Event prior to such time as the Company would
generally, based on advice of counsel, disclose such transaction or event.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
6.8 STATE REGISTRATION REQUIREMENTS. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable United States state
securities and takeover laws ("Blue Sky laws") or other state laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as would permit or facilitate the sale or distribution of all the
Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Underwriter for purposes of maximizing the
proceeds realizable by the Underwriter from such sale or distribution; PROVIDED,
HOWEVER, that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 6.8, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction. The Company shall cooperate with the Underwriter and take all such
other reasonable actions in connection therewith in order to expedite or
facilitate the disposition of the Registrable Securities.
6.9 REGISTRATION PROCEDURE. At its expense, the Company will use its
reasonable best efforts to:
(a) Permit the Underwriter and Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP (or such other counsel as thereafter designated as Underwriter's
counsel by the Underwriter), to review and comment upon any registration
statement registering shares of Common Stock pursuant to this Agreement and all
amendments and supplements thereto, any prospectus supplement or post-effective
amendment to the Registration Statement that relates to the transactions
contemplated by this Agreement and any report to be filed pursuant to the
Exchange Act that relates to the transactions contemplated by this Agreement at
least five (5) days prior to their filing with the SEC, and not file any
document in a form to which the Underwriter or its counsel reasonably objects
and the Company will also advise the Underwriter promptly of the filing of any
such amendment or supplement and of the institution by the SEC of any stop order
proceedings in respect of a Registration Statement and will use its reasonable
best efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued. The Company shall not file any
prospectus, amendment, supplement, or Exchange Act filing that relates to the
transactions contemplated by this Agreement without the prior approval of the
Underwriter and its counsel, which approval shall not be unreasonably withheld;
(b) Provide a CUSIP number, a transfer agent and registrar for all
such Registrable Securities;
(c) If reasonably requested by the Underwriter, incorporate as
soon as practicable in a prospectus amendment, supplement or post-effective
amendment or Exchange Act filing such information as the Underwriter requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being issued, the Underwriting Price being paid
therefor and any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering; make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and in connection therewith supplement or make
amendments to any Registration Statement if reasonably requested by the
Underwriter;
(d) Furnish such number of Prospectuses and amendments and
supplements thereto, and other documents incident thereto, as soon as available
and in such quantities as the Underwriter from time to time may reasonably
request;
(e) Notify the Underwriter and its counsel (as designated in
writing by the Underwriter) promptly, and confirm such notice (a "Notice") in
writing (i) when a Prospectus or any
23
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, and (ii) of any request by the SEC for amendments or
supplements to the Registration Statement or related Prospectus or for
additional information; and
(f) If, at any time when a prospectus relating to the Common Stock
offered pursuant to the terms of this Agreement is required to be delivered
under the Securities Act in connection with sales by the Underwriter, any event
occurs as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Securities Act, promptly notify the
Underwriter of such event and promptly prepare and file with the SEC, at its own
expense, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither the
Underwriter's consent to, nor the Underwriters' delivery of, any such amendment
or supplement shall constitute a waiver of any of the conditions set forth in
Section 3.
6.10 INFORMATION BY UNDERWRITER. The Underwriter shall promptly furnish
to the Company such information regarding the Underwriter and the distribution
proposed by such Underwriter as the Company may reasonably request in writing
and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in Sections 6.7, 6.8, and 6.9. All
information provided to the Company by the Underwriter shall be accurate and
complete in all material respects and the Underwriter shall promptly notify the
Company if any such information becomes incorrect or incomplete.
6.11 SIMILAR STANDBY EQUITY FACILITY AGREEMENTS. The Company shall
refrain from entering into any other similar standby equity facility agreements,
arrangements or understandings granting to the Company the right to issue shares
of its securities to one or more underwriters through a series of transactions
similar to the transactions contemplated by this agreement or similar types of
agreements.
6.12 NO SHORT SELLING. During the term of this Agreement, the
Underwriter and its Affiliates shall not engage in any short selling activities
with respect to the Company's Common Stock.
VII. ASSIGNMENT, ENTIRE AGREEMENT, AMENDMENT, TERMINATION.
7.1 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any rights of
the Underwriter or the Company hereunder may be assigned by either party to any
other Person. Notwithstanding the foregoing, the Underwriter's rights and
obligations under this Agreement may be assigned at any time, in whole, with the
prior written consent of the Company (which consent shall not be unreasonably
withheld) to any Affiliate of the Underwriter (a "Permitted Transferee"). The
rights and obligations of the Underwriter under this Agreement shall inure to
the benefit of, and be enforceable by and against, any such Permitted
Transferee.
7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof,
and supercedes all other prior oral or written agreements between the parties,
their Affiliates, or persons acting on their behalf. No party shall be liable or
bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth in this Agreement or therein. Except
as expressly provided in this Agreement, neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
7.3 PUBLICITY. Except as may be required by law or applicable
regulation, each of the Company and the Underwriter shall consult with the other
before issuing any press release or otherwise making any public statements with
respect to this Agreement and, except as required by law, applicable regulation
or the listing requirements of the Principal Market, shall not issue any such
press release or make any such public statement without the prior written
consent of the other party (which consent shall not be unreasonably withheld)
PROVIDED, HOWEVER, neither party may make any disclosure pursuant to the listing
requirements of the Principal Market without prior consultation with the other
party about its contents.
7.4 TERMINATION.
(a) The Underwriter may (in its sole and absolute discretion)
terminate this Agreement and its firm commitment to sell all or any portion of
the Firm Commitment Amount as well as any efforts to sell the Best Efforts
Amount, as a result of (i) a breach by the Company of any representation,
warranty, covenant or other obligation in connection with this Agreement, (ii)
failure by the Company to comply with the requirements of Section 6, (iii) the
Company, at any date after the date hereof, effecting any merger or
consolidation of the Company with or into, or transferring all or substantially
all of the assets of the Company to, another entity, or (iv) the Underwriter
reasonably determining, at any time that the adoption of, or change in, or any
change in the interpretation or application of, any law, regulation, rule,
guideline or treaty (including, but not limited to, laws, regulations, rules or
guidelines with respect to changes of capital adequacy) makes it illegal or
materially impracticable for the Underwriter to fulfill its commitment pursuant
to this Agreement, but in the case of (i) or (iv) above, the Underwriter may
terminate this Agreement only after a 30-day period beginning when the
Underwriter gives the Company notice of its intentions to terminate this
Agreement (but the Underwriter's right to terminate its obligation to purchase
any shares of Common Stock pursuant to a Capital Notice shall not be subject to
any delay or contingency) in which, in the case of (i), the Company has not
cured such breach as provided above, or, in the case of (iv), the parties
negotiate in good faith a reasonable alternative manner not illegal or
impracticable for the Underwriter to fulfill its commitment pursuant to this
Agreement. If the Underwriter elects to terminate this Agreement pursuant to
clause (ii) above, it must first give the Company notice of such election and
then may terminate this Agreement only after a 10-day period in which the
Company has not cured its failure to comply with such covenants.
(b) The Underwriter may also, in its sole and absolute discretion,
terminate this Agreement if the Company shall fail to maintain the listing of
the Common Stock on a Principal Market, or if trading of the Common Stock on a
Principal Market shall have been suspended for a period of ten (10) consecutive
Trading Days.
(c) The Company may, in its sole discretion, terminate this
Agreement and any remaining Firm Commitment Amount at any time.
(d) Such termination pursuant to this Section 7.4 shall not affect
the survival of this Agreement pursuant to Section 10.5.
(e) This Agreement will terminate on such date that the
Underwriter has sold the Maximum Aggregate Amount.
VIII. NOTICES, COSTS AND EXPENSES.
8.1 NOTICES. All notices, demands, requests, consents, approvals or
other communications required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall be (i)
personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, (iv)
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
transmitted by hand delivery or (v) transmitted by facsimile, addressed as set
forth below, or to such other address as such party shall have specified most
recently by written notice:
If to the Company, to:
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
Neon Communications, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
With a copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxx Xxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
If to the Underwriter, to
Xxxxxxx X. Xxxxxxx
Vice President
Ramius Securities, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxxx X. Xxxxxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Any notice (including, without limitation, a Capital Demand
Notice, but excluding any Underwriter Sales Notice, which Underwriter Sales
Notice shall be deemed to be delivered on the Trading Day it is delivered, if
delivered via facsimile prior to 8:00 p.m. EST) sent by one party to another
with confirmation of acceptance or otherwise received in writing via courier,
hand delivery or first-class mail (return receipt requested) by the Company, or,
if received on any day which is not a Trading Day or after 12:00 noon EST on a
Trading Day, shall be deemed to be delivered on the immediately succeeding
Trading Day. Notice shall be deemed given on the date of service or transmission
if personally served or transmitted by facsimile during normal business hours of
the recipient; provided, that such transmission by facsimile shall have been
confirmed received. Notice otherwise sent as provided herein shall be deemed
given on the third (3rd) business day following the date mailed or on the second
business day following the date of deposit for delivery of such notice with a
reputable air courier service.
8.2 COSTS AND EXPENSES. Upon the first Capital Demand Notice in any
quarter, the Company shall advance all estimated reasonable out-of-pocket costs
and expenses relating to due diligence, up to
26
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
$8,000. Any amount remaining after the actual costs and expenses for due
diligence have been paid for the quarter will be reimbursed to the Company.
Notwithstanding anything contained in this Section 8.2 to the contrary, the
Company shall not be responsible for any costs and expenses pursuant to this
Section 8.2 in any calendar quarter in which there were no Capital Demand
Notices delivered. The Company agrees to pay the Underwriter the amounts due
under this Section 8.2 (including expenses for due diligence) that have not yet
been paid within thirty (30) days following the Underwriter's request therefor.
In the event payment is not received within such thirty (30) day period,
Underwriter shall have the right to deduct any such amounts owed by the Company
to the Underwriter from any amounts owed by the Underwriter to the Company
pursuant hereto. The Underwriter acknowledges that the Company has advanced the
Underwriter $50,000 for out-of-pocket expenses and that any fees not incurred
will be returned to the Company within 60 days following the date of this
Agreement.
IX. INDEMNIFICATION AND CONTRIBUTION.
9.1 INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Underwriter, the directors,
officers, partners, employees and agents of the Underwriter and each Person, if
any, who controls any Underwriter within the meaning of the Securities Act or
the Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims"), incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC or NASD, whether pending or threatened, whether or not such
Indemnified Person is or may be a party thereto ("Indemnified Damages"), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other Blue Sky laws of any jurisdiction in
which Registrable Securities are offered, or the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which the statements
therein were made, not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement, or (iv) any breach of any representation, warranty,
covenant or agreement contained in this Agreement or any document delivered in
connection with this Agreement (the matters in the foregoing clauses (i) through
(iv) being, collectively, "Violations"). The Company shall reimburse the
Underwriters and each such controlling person, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 9.1(a): (i) shall not apply
to a Claim arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
any Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company; (ii) with respect
to any preliminary prospectus, shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the
27
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
Registrable Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or supplemented, if such prospectus was timely made available by
the Company, and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a Violation and
such Indemnified Person, notwithstanding such advice, used it; and (iii) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Underwriter.
(b) In connection with any Registration Statement or any amendment
or supplement thereto in which the Underwriter is participating, the Underwriter
agrees to indemnify, hold harmless and defend, to the same extent and in the
same manner as is set forth in Section 9.1(a), the Company, each of its
directors, each of its officers who signs the Registration Statement, each
Person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Party"), against any Claim or
Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter expressly for use in connection with any Registration Statement
covering Registrable Securities and, subject to Section 9.1(c), such Underwriter
will reimburse such Indemnified Parties promptly as such expenses are incurred
and are due and payable for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 9.1(b) and the
agreement with respect to contribution contained in Section 9.2 shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Underwriter, which consent shall not
be unreasonably withheld; provided, further, however, that the Underwriter shall
be liable under this Section 9.1(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the Commission to such Underwriter as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Underwriter.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 9.1(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 9.1 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 9.1,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right (at its expense) to participate
in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that
such indemnifying party shall diligently pursue such defense and that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, as the case may be, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The
28
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
indemnifying party shall pay reasonable fees for only one separate legal counsel
for all Indemnified Persons or Indemnified Parties (as applicable). The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 9.1, except to the extent that the indemnifying party
is prejudiced in its ability to defend such action.
(d) The indemnification required by this Section 9.1 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
(e) The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
9.2 CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 9.1 to the fullest extent permitted by law; provided,
however, that: (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 9.1; (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (iii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
X. GOVERNING LAW; MISCELLANEOUS.
10.1 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York without regard to the
principles of conflict of laws.
10.2 COUNTERPARTS. This Agreement may be executed in any number of
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. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
10.3 HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
10.4 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; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
10.5 SURVIVAL. The representations, warranties and agreements of the
parties hereto shall survive each Closing hereunder and the termination of this
Agreement or the Commitment Period for one year following the termination of
this Agreement or the Commitment period. The indemnity and contribution
agreements contained in Sections 9.1 and 9.2 hereof shall survive and remain
operative and in full force and effect regardless of (i) any termination of this
Agreement or of the Commitment Period, (ii) any investigation made by or on
behalf of any indemnified party or by or on behalf of the Company and (iii) the
consummation of the sale or successive resales of the Common Stock. Further,
termination of this Agreement or the Commitment Period shall not affect the
survival of (i) obligations relating to costs and expenses pursuant to Section
8.2, (ii) all obligations pursuant to Article II, to the extent such termination
shall occur at any time from the beginning of a Capital Raising Period to the
last Settlement Date of such Capital Raising Period, except in the case of any
termination pursuant to Section 2.2, (iii) the provisions of Articles VII and X,
or (iv) any other provisions of this Agreement that may be reasonably construed
to survive the termination of this Agreement or the Commitment Period.
10.6 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person, except as provided in Article IX.
10.7 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.
10.8 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. Unless the
context of this Agreement otherwise clearly requires, references to the plural
include the singular, the singular the plural and the part the whole and "or"
has the inclusive meaning represented by the phrase "and/or". Unless the context
requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (iv) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.
10.9 EQUITABLE RELIEF. The Company recognizes that in the event that it
fails to perform, observe, or discharge any or all of its obligations under this
Agreement, any remedy at law may prove to be inadequate relief to the
Underwriter. The Company therefore agrees that the Underwriter shall be entitled
to seek temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
10.10 CONSENT TO JURISDICTION. The parties hereto expressly submit
themselves to the exclusive jurisdiction of the state and federal courts of New
York, New York in any action or proceeding relating to this Agreement or any of
the other documents contemplated hereby or any of the transactions contemplated
hereby or thereby. Each party hereby irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of venue of any such action, suit or proceeding brought in such a court and any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. The parties hereto hereby irrevocably waive
any and all right to a trial by jury with respect to any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. The parties hereto irrevocably and unconditionally consent to the
service of process of any of the aforementioned courts in any such action, suit
or proceeding by the mailing of copies thereof by registered or certified mail,
return receipt requested, postage prepaid, at their respective addresses set
forth or provided for herein, such service to become effective ten (10) days
after such mailing. Nothing herein shall affect the right of any party to serve
process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against the other parties in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
RAMIUS SECURITIES, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
-------------------------------
Title: Vice President
------------------------------
NEON COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
-------------------------------
Title: V.P. Finance CFO
------------------------------
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FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
INDEX OF DEFINED TERMS
Affiliate.........................................................................................................1
Agreement.........................................................................................................1
Articles of Incorporation........................................................................................15
Best Efforts Amount...............................................................................................1
Block Trades......................................................................................................1
Blocking Event....................................................................................................9
Blue Sky laws....................................................................................................25
Business Intellectual Property....................................................................................1
Business Trade Secrets...........................................................................................22
Bylaws ........................................................................................................15
Capital Demand Amount.............................................................................................1
Capital Demand Notice.............................................................................................2
Capital Raising Period............................................................................................2
Capital Stock.....................................................................................................2
Claims ........................................................................................................29
Closing Date......................................................................................................2
Commission........................................................................................................8
Commitment Period.................................................................................................2
Common Stock......................................................................................................1
Company ..........................................................................................................1
Company Assets...................................................................................................20
Company Permits..................................................................................................17
Condition Precedent Date.........................................................................................10
Copyrights........................................................................................................3
Deemed Receipt...................................................................................................13
Designated Officer................................................................................................2
DTC .........................................................................................................2
Due Diligence Materials...........................................................................................2
Due Diligence Period..............................................................................................2
Due Diligence Request List........................................................................................3
DWAC .........................................................................................................3
Environmental Laws...............................................................................................20
EST .........................................................................................................3
Exchange Act......................................................................................................3
Firm Commitment Amount............................................................................................3
GAAP ........................................................................................................18
Governmental Entity...............................................................................................3
Hazardous Substance..............................................................................................20
Indemnified Damages..............................................................................................30
Indemnified Party................................................................................................30
Indemnified Person...............................................................................................29
Intellectual Property.............................................................................................3
Intellectual Property Contracts...................................................................................3
Knowledge.........................................................................................................4
Licensed Intellectual Property....................................................................................4
Liens ........................................................................................................20
Material Adverse Effect...........................................................................................4
Material Contracts...............................................................................................20
Maximum Aggregate Amount..........................................................................................1
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
Minimum Offering Price............................................................................................4
NASD ........................................................................................................11
Notice ........................................................................................................26
Notice of Blocking Period........................................................................................12
Other Proprietary Rights..........................................................................................3
Owned Intellectual Property.......................................................................................4
Patents .........................................................................................................3
Permitted Transferee.............................................................................................27
Person .........................................................................................................4
Plans .........................................................................................................4
Preferred Stock..................................................................................................14
Principal Market..................................................................................................4
Prospectus........................................................................................................4
Qualified Daily Trading Limit.....................................................................................4
registered........................................................................................................5
Registrable Securities............................................................................................5
Registration Statement............................................................................................5
Releases ........................................................................................................20
SEC .........................................................................................................5
SEC Documents....................................................................................................17
SEC Filings.......................................................................................................5
Securities Act....................................................................................................5
Settlement........................................................................................................5
Settlement Date...................................................................................................5
Subsidiaries......................................................................................................5
Tax Return........................................................................................................5
Taxes .........................................................................................................5
Trade Secrets.....................................................................................................3
Trademarks........................................................................................................3
Trading Day.......................................................................................................6
Transfer Agent....................................................................................................6
Underwriter.......................................................................................................1
Underwriter Sales Notice..........................................................................................7
Underwriter's Clearing Broker.....................................................................................6
Underwriting Price................................................................................................6
Violations.......................................................................................................30
VWAP .........................................................................................................6
Warrant Agreement.................................................................................................6
Warrant Agreement Exercise Price..................................................................................6
Warrant Agreement Expiration Date.................................................................................6
Warrant Agreement Issuance Date...................................................................................6
ii
FUEL(TM)PATENTS PENDING RAMIUS SECURITIES, LLC
