Exhibit 10.1 - Purchase Agreement, dated September 22, 2003
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 22nd
day of September, 2003 by and among Axeda Systems Inc., a Delaware corporation
(the "Company"), and the Investors set forth on the signature pages affixed
hereto (each an "Investor" and collectively the "Investors").
Recitals
A. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended; and
B. The Investors wish to purchase from the Company, and the
Company wishes to sell and issue to the Investors, upon the terms and conditions
stated in this Agreement, (i) an aggregate of 4,918,100 shares of the Company's
Common Stock, par value $0.001 per share (the "Common Stock"), and (ii) warrants
to purchase an aggregate of 2,459,050 shares of Common Stock in the form
attached hereto as Exhibit A (the "Warrants"); and
C. Contemporaneous with the sale of the Common Stock and
Warrants, the parties hereto will execute and deliver a Registration Rights
Agreement, in the form attached hereto as Exhibit B (the "Registration Rights
Agreement"), pursuant to which the Company will agree to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, and applicable state securities laws.
In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly Controls, is controlled by, or is under
common control with, such Person.
"Business Day" means a day, other than a Saturday or Sunday,
on which banks in New York City are open for the general transaction of
business.
"Common Stock" means the common stock, par value $0.001 per
share, of the Company, and any securities into which the Common Stock may be
reclassified.
"Company's Knowledge" means the actual knowledge of the
executive officers of the Company, after due inquiry.
"Confidential Information" means trade secrets, confidential
information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development
information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information).
"Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Intellectual Property" means all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).
"Material Adverse Effect" means a material adverse effect on
(i) the assets, liabilities, results of operations, financial condition,
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.
"Nasdaq" means The Nasdaq Stock Market, Inc., its successors
and assigns.
"Person" means an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically listed
herein.
"SEC Filings" has the meaning set forth in Section 4.6.
"Securities" means the Shares, the Warrants and the Warrant
Shares.
"Shares" means the shares of Common Stock being purchased by
the Investors hereunder.
"Subsidiary" has the meaning set forth in Section 4.1.
"Transaction Documents" means this Agreement, the Warrants and
the Registration Rights Agreement.
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"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
"1933 Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2. Purchase and Sale of the Shares and Warrants. Subject to the terms
and conditions of this Agreement, on the Closing Date, each of the Investors
shall severally, and not jointly, purchase, and the Company shall sell and issue
to the Investors, the Shares in the respective amounts set forth opposite the
Investors' names on the signature pages attached hereto at a purchase price of
$1.22 per share (the "Purchase Price"). The total purchase price payable by each
Investor for the Shares that each Investor is hereby agreeing to purchase is set
forth in such Investor's signature block on the signature pages hereto. The
aggregate purchase price payable by the Investors to the Company for all of the
Shares purchased at the Closing shall be Six Million Eighty-Two Dollars
($6,000,082). Also on the Closing Date, the Company shall issue the Warrants to
the Investors in the respective amounts set forth opposite the Investors' names
on the signature pages attached hereto.
3. Closing. Upon confirmation that the other conditions to closing
specified herein have been satisfied, the Company shall deliver to Xxxxxxxxxx
Xxxxxxx PC, in trust, a certificate or certificates, registered in such name or
names as the Investors may designate, representing the Shares and Warrants, with
instructions that such certificates are to be held for release to the Investors
only upon payment of the Purchase Price to the Company. Upon receipt by
Xxxxxxxxxx Xxxxxxx PC of the certificates, each Investor shall promptly cause a
wire transfer in same day funds to be sent to the account of the Company as
instructed in writing by the Company, in an amount representing such Investor's
pro rata portion of the Purchase Price as set forth on the signature pages to
this Agreement. On the date (the "Closing Date") the Company receives such
funds, the certificates evidencing the Shares and Warrants shall be released to
the Investors (the "Closing"). The purchase and sale of the Shares and Warrants
shall take place at the offices of Xxxxxxxxxx Xxxxxxx PC, 1330 Avenue of the
Americas, 21st Floor, New York, New York, or at such other location and on such
other date as the Company and the Investors shall mutually agree.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith (collectively, the "Disclosure Schedules"):
4.1 Organization, Good Standing and Qualification. Each of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted and to own its properties. Each of the Company and
its Subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing
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of property makes such qualification or leasing necessary unless the failure
to so qualify has not and would not reasonably be expected to have a Material
Adverse Effect. The Company's subsidiaries are reflected on Schedule 4.1 hereto
(the "Subsidiaries").
4.2 Authorization. The Company has full power and authority
and has taken all requisite action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization, execution and
delivery of the Transaction Documents, (ii) authorization of the performance of
all obligations of the Company hereunder or thereunder, and (iii) the
authorization, issuance (or reservation for issuance) and delivery of the
Securities. The Transaction Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors' rights generally.
4.3 Capitalization. The capitalization of the Company as of
June 30, 2003 is as set forth in the Form 10-Q for the period ended June 30,
2003 ("Q2 Form 10-Q"), increased as set forth in the next sentence. The Company
has not issued any capital stock since that date other than pursuant to (i)
employee benefit plans disclosed in the Company's Annual Report on Form 10-K for
the year ended December 31, 2002 (the "10-K"), or (ii) outstanding warrants,
options or other securities disclosed in the Q2 Form 10-Q. The outstanding
shares of capital stock of the Company have been duly and validly issued and are
fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and were not issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. Except as set
forth in or contemplated by the Q2 Form 10-Q or the 10-K, there are no
outstanding rights (including, without limitation, preemptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
unissued shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement
of any kind to which the Company is a party or of which the Company has
knowledge and relating to the issuance or sale of any capital stock of the
Company or any Subsidiary, any such convertible or exchangeable securities or
any such rights, warrants or options. No further approval or authorization of
any stockholder, the Board of Directors of the Company or others is required for
the issuance and sale of the Shares. The Company owns the entire equity interest
in each of its Subsidiaries, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, other than as described in
the Q2 Form 10-Q or as would reasonably be expected to have a Material Adverse
Effect. Except as described on Schedule 4.3 or as disclosed in SEC Filings made
prior to the date hereof, there are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any
character under which the Company or any of its Subsidiaries is or may be
obligated to issue any equity securities of any kind and except as contemplated
by this Agreement, neither the Company nor any of its Subsidiaries is currently
in negotiations for the issuance of any equity securities of any kind. Except as
described on Schedule 4.3 and except for the Registration Rights Agreement,
there are no voting agreements, buy-sell agreements, option or right of first
purchase agreements or other agreements of any kind among the Company and any of
the securityholders of the Company relating to the securities of the Company
held by them. Except as described on Schedule 4.3, or as disclosed in SEC
Filings made prior to the date hereof, the Company has not granted any Person
the right to require the Company to register any securities of the Company under
the 1933 Act, whether on a demand basis or in connection with the registration
of securities of the Company for its own account or for the account of any other
Person.
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Except as described on Schedule 4.3, the issuance and sale of
the Securities hereunder will not obligate the Company to issue shares of Common
Stock or other securities to any other Person (other than the Investors) and
will not result in the adjustment of the exercise, conversion, exchange or reset
price of any outstanding security.
Except as described on Schedule 4.3, or as disclosed in SEC
Filings made prior to the date hereof, the Company does not have outstanding
stockholder purchase rights or any similar arrangement in effect giving any
Person the right to purchase any equity interest in the Company upon the
occurrence of certain events.
4.4 Valid Issuance. The Shares have been duly and validly
authorized and, when issued and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws. The Warrants
have been duly and validly authorized. Upon the due exercise of the Warrants,
the Warrant Shares will be validly issued, fully paid and non-assessable free
and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in the Transaction Documents or imposed by applicable
securities laws. The Company has reserved a sufficient number of shares of
Common Stock for issuance upon the exercise of the Warrants, free and clear of
all encumbrances and restrictions, except for restrictions on transfer set forth
in the Transaction Documents or imposed by applicable securities laws.
4.5 Consents. The execution, delivery and performance by the
Company of the Transaction Documents and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than filings that have
been made pursuant to applicable state securities laws and post-sale filings
pursuant to applicable state and federal securities laws which the Company
undertakes to file within the applicable time periods. Assuming the truth and
accuracy of the Investors' representations and warranties in Article V hereof,
the transactions contemplated by the Transaction Documents, the Company has
taken all action necessary to exempt (i) the issuance and sale of the
Securities, (ii) the issuance of the Warrant Shares upon due exercise of the
Warrants, and (iii) the other transactions contemplated by the Transaction
Documents from the provisions of any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject or any provision of the
Company's Certificate of Incorporation, By-laws or any stockholder rights
agreement that is or could become applicable to the Investors as a result of the
transactions contemplated hereby, including without limitation, the issuance of
the Securities and the ownership, disposition or voting of the Securities by the
Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.
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4.6 Delivery of SEC Filings; Business. The Company has
provided the Investors with copies of the 10-K and all other reports filed by
the Company pursuant to the 1934 Act since the filing of the 10-K and prior to
the date hereof (collectively, the "SEC Filings"). The SEC Filings are the only
filings required of the Company pursuant to the 1934 Act for such period. The
Company and its Subsidiaries are not engaged in any material businesses except
those described in the SEC Filings and the SEC Filings contain a complete and
accurate description in all material respects of the business of the Company and
its Subsidiaries, taken as a whole.
4.7 Use of Proceeds. The proceeds of the sale of the Shares
and the Warrants hereunder shall be used by the Company for working capital and
general corporate purposes.
4.8 No Material Adverse Change. Since June 30, 2003,
except as identified and described in the SEC Filings or as described on
Schedule 4.8, there has not been:
(i) any change in the consolidated assets,
liabilities, financial condition or operating results of
the Company from that reflected in the financial statements included in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003,
except for changes in the ordinary course of business which have not and would
not reasonably be expected to have a Material Adverse Effect, individually or in
the aggregate;
(ii) any declaration or payment of any dividend, or
any authorization or payment of any distribution, on any of the capital stock of
the Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss,
whether or not covered by insurance to any assets or properties of the Company
or its Subsidiaries;
(iv) any waiver, not in the ordinary course of
business, by the Company or any Subsidiary of a material right or of a material
debt owed to it;
(v) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company or a Subsidiary,
except in the ordinary course of business and which is not material to the
assets, properties, financial condition, operating results or business of the
Company and its Subsidiaries taken as a whole (as such business is presently
conducted and as it is proposed to be conducted);
(vi) any change or amendment to the Company's
Certificate of Incorporation or by-laws, or material change to any material
contract or arrangement by which the Company or any Subsidiary is bound or to
which any of their respective assets or properties is subject;
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(vii) any material labor difficulties or labor union
organizing activities with respect to employees of the Company or any
Subsidiary;
(viii) any material transaction entered into by the
Company or a Subsidiary other than in the ordinary course of business;
(ix) the loss of the services of any key employee, or
material change in the composition or duties of the senior management of the
Company or any Subsidiary;
(x) the loss or threatened loss of any customer which
has had or would reasonably be expected to have a Material Adverse Effect; or
(xi) any other event or condition of any character
that has had or would reasonably be expected to have a Material Adverse Effect.
4.9 SEC Filings; S-3 Eligibility.
(a) At the time of filing thereof, the SEC Filings
complied as to form in all material respects with
the requirements of the 1934 Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each registration statement and any amendment
thereto filed by the Company since January 1, 2002
pursuant to the 1933 Act and the rules and regulations thereunder, as of the
date such statement or amendment became effective, complied as to form in all
material respects with the 1933 Act and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each prospectus
filed pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of
the closing of any sale of securities pursuant thereto did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(c) The Company is eligible to use Form S-3 to
register the Registrable Securities (as such term is defined in the
Registration Rights Agreement) for sale by the Investors as contemplated by the
Registration Rights Agreement.
4.10 No Conflict, Breach, Violation or Default. The execution,
delivery and performance of the Transaction Documents by the Company and the
issuance and sale of the Shares and Warrants and the issuance of the Warrant
Shares upon due exercise of the Warrants will not (i) conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under the Company's Certificate of Incorporation or the Company's
Bylaws, both as in effect on the date hereof (copies of which have been provided
to the Investors before the date hereof), or (ii) conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under (except for such breaches, violations or defaults that would not
have or be expected to have a Material Adverse Effect, individually or in the
aggregate,) (a) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company, any Subsidiary or any of their respective assets or properties, or (b)
any agreement or instrument to which the Company or any Subsidiary is a party or
by which the Company or a Subsidiary is bound or to which any of their
respective assets or properties is subject.
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4.11 Tax Matters. The Company and each Subsidiary has timely
prepared and filed all tax returns required to have been filed by the Company or
such Subsidiary with all appropriate governmental agencies and timely paid all
taxes shown thereon or otherwise owed by it. The charges, accruals and reserves
on the books of the Company in respect of taxes for all fiscal periods are
adequate in all material respects, and there are no material unpaid assessments
against the Company or any Subsidiary nor, to the Company's Knowledge, any basis
for the assessment of any additional taxes, penalties or interest for any fiscal
period or audits by any federal, state or local taxing authority except for any
assessments which have not and would not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate. All taxes and other
assessments and levies that the Company or any Subsidiary is required to
withhold or to collect for payment have been duly withheld and collected and
paid to the proper governmental entity or third party when due. There are no tax
liens or claims pending or, to the Company's Knowledge, threatened against the
Company or any Subsidiary or any of their respective assets or property. Except
as described on Schedule 4.11, there are no outstanding tax sharing agreements
or other such arrangements between the Company and any Subsidiary or other
corporation or entity.
4.12 Title to Properties. Except as disclosed in the SEC
Filings, the Company and each Subsidiary has good and marketable title to all
real properties and all other properties and assets owned by it, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
and each Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.13 Certificates, Authorities and Permits. The Company and
each Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, would reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
4.14 No Labor Disputes. No material labor dispute with
the employees of the Company or any Subsidiary exists or, to the Company's
Knowledge, is imminent.
4.15 Intellectual Property.
(a) No Intellectual Property of the Company or its
Subsidiaries which is necessary for the conduct of
Company's and each of its Subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted has been or is now involved
in any cancellation, dispute or litigation, and, to the Company's Knowledge, no
such action is threatened. No patent of the Company or its Subsidiaries has been
or is now involved in any interference, reissue, re-examination or opposition
proceeding.
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(b) All of the licenses and sublicenses and consent,
royalty or other agreements concerning
Intellectual Property which are necessary for the conduct of the Company's and
each of its Subsidiaries' respective businesses as currently conducted or as
currently proposed to be conducted to which the Company or any Subsidiary is a
party or by which any of their assets are bound (other than generally
commercially available, non-custom, off-the-shelf software application programs
having a retail acquisition price of less than $10,000 per license)
(collectively, "License Agreements") are valid and binding obligations of the
Company or its Subsidiaries that are parties thereto and, to the Company's
Knowledge, the other parties thereto, enforceable in accordance with their
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company or any of its Subsidiaries under any such License
Agreement.
(c) The Company and its Subsidiaries own or, to the
Company's Knowledge, have the valid right to use
all of the Intellectual Property that is necessary for the conduct of the
Company's and each of its Subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted and for the ownership,
maintenance and operation of the Company's and its Subsidiaries' properties and
assets, free and clear of all liens, encumbrances, adverse claims or obligations
to license all such owned Intellectual Property and Confidential Information,
other than licenses entered into in the ordinary course of the Company's and its
Subsidiaries' businesses. To the Company's Knowledge, the Company and its
Subsidiaries have a valid and enforceable right to use all third party
Intellectual Property and Confidential Information used or held for use in the
respective businesses of the Company and its Subsidiaries where the failure to
have such right has had or would reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
(d) To the Company's Knowledge, the conduct of the
Company's and its Subsidiaries' businesses as
currently conducted does not infringe or otherwise impair or conflict with
(collectively, "Infringe") any Intellectual Property rights of any third party
or any confidentiality obligation owed to a third party where such Infringement
has had or would reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate, and, to the Company's Knowledge, the
Intellectual Property and Confidential Information of the Company and its
Subsidiaries which are necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted are not being Infringed by any third party where such
Infringement, if continued, would reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate. There is no litigation or
order pending or outstanding or, to the Company's Knowledge, threatened or
imminent, that seeks to limit or challenge or that concerns the ownership, use,
validity or enforceability of any Intellectual Property or Confidential
Information of the Company and its Subsidiaries necessary for the conduct of the
Company's and each of its Subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted, and the Company's and its
Subsidiaries' use of such Intellectual Property or Confidential Information
owned by a third party, and, to the Company's Knowledge, there is no valid basis
for the same.
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(e) The consummation of the transactions contemplated
hereby will not result in the alteration, loss, impairment of or restriction
on the Company's or any of its Subsidiaries' ownership or right to use any of
the Intellectual Property or Confidential Information which is necessary for
the conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted.
(f) The Company and its Subsidiaries have taken
reasonable steps to protect the Company's and its
Subsidiaries' rights in their Intellectual Property and Confidential Information
where the failure to do so would have or would reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate. Each employee,
consultant and contractor who has had access to Confidential Information which
is necessary for the conduct of Company's and each of its Subsidiaries'
respective businesses as currently conducted or as currently proposed to be
conducted has executed an agreement to maintain the confidentiality of such
Confidential Information. Except under confidentiality obligations, there has
been no material disclosure of any of the Company's or its Subsidiaries'
Confidential Information to any third party, except for such disclosures as have
not had and would not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
4.16 Environmental Matters. Neither the Company nor any
Subsidiary is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "Environmental Laws"), except for such
violations as have not had and would not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate, owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim has had
or would reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate; and there is no pending or, to the Company's Knowledge,
threatened investigation that might lead to such a claim.
4.17 Litigation. Except as described in SEC Filings made prior
to the date hereof or on Schedule 4.17, there are no pending actions, suits or
proceedings against or affecting the Company, its Subsidiaries or any of its or
their properties; and to the Company's Knowledge, no such actions, suits or
proceedings are threatened or contemplated.
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4.18 Financial Statements. The financial statements included
in each SEC Filing present fairly, in all material respects, the consolidated
financial position of the Company as of the dates shown and its consolidated
results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis (except as may be
disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the 1934 Act). Except as
set forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof or as described on Schedule 4.18, neither the
Company nor any of its Subsidiaries has incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.
4.19 Insurance Coverage. The Company and each Subsidiary
maintains in full force and effect insurance coverage that is customary for
comparably situated companies for the business being conducted and properties
owned or leased by the Company and each Subsidiary, and the Company reasonably
believes such insurance coverage to be adequate against all liabilities, claims
and risks against which it is customary for comparably situated companies to
insure.
4.20 Compliance with Nasdaq Continued Listing Requirements.
The Company is in compliance with applicable Nasdaq continued listing
requirements. There are no proceedings pending or, to the Company's Knowledge,
threatened against the Company relating to the continued listing of the
Company's Common Stock on Nasdaq and the Company has not received any unremedied
notice of, nor to the Company's Knowledge is there any basis for, the delisting
of the Common Stock from Nasdaq.
4.21 Brokers and Finders. No Person will have, as a result of
the transactions contemplated by this Agreement, any valid right, interest or
claim against or upon the Company, any Subsidiary or an Investor for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company, other than as
described in Schedule 4.21.
4.22 No Directed Selling Efforts or General Solicitation.
Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the Securities.
4.23 No Integrated Offering. Neither the Company nor any of
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.
11
4.24 Private Placement. Assuming the truth and accuracy of the
Investors' representations and warranties contained in Article V hereof, the
offer and sale of the Securities to the Investors as contemplated hereby is
exempt from the registration requirements of the 1933 Act.
4.25 Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective current or
former stockholders, directors, officers, employees, agents or other Persons
acting on behalf of the Company or any Subsidiary, has on behalf of the Company
or any Subsidiary or in connection with their respective businesses: (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.
4.26 Transactions with Affiliates. Except as disclosed in SEC
Filings made on or prior to the date hereof or as disclosed on Schedule 4.26,
none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than as holders of stock
options and/or warrants, and for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
4.27 Internal Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
4.28 Disclosures. Neither the Company nor any Person acting on
its behalf has provided the Investors or their agents or counsel with any
information that constitutes or might constitute material, non-public
information. The written materials delivered to the Investors in connection with
the transactions contemplated by the Transaction Documents do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.
12
5. Representations and Warranties of the Investors. Each of the
Investors hereby severally, and not jointly, represents and warrants to the
Company that:
5.1 Organization and Existence. The Investor is a validly
existing corporation, limited partnership or limited liability company and has
all requisite corporate, partnership or limited liability company power and
authority to invest in the Securities pursuant to this Agreement.
5.2 Authorization. The Investor has full power and authority
and has taken all requisite action on the part of the Investor, its officers,
directors and partners or members necessary for (i) the authorization, execution
and delivery of the Transaction Documents to which such Investor is a party and
(ii) authorization of the performance of all obligations of the Investor
hereunder or thereunder. This Agreement constitutes, and the other Transaction
Documents to which such Investor is a party will, upon execution and delivery,
constitute the valid and legally binding obligation of the Investor, enforceable
against the Investor in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors'
rights generally.
5.3 Purchase Entirely for Own Account. The Securities to be
received by the Investor hereunder will be acquired for the Investor's own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the 1933 Act, and the Investor
has no present intention of selling, granting any participation in, or otherwise
distributing the same in violation of the 1933 Act. The Investor is not a
registered broker dealer or an entity engaged in the business of being a broker
dealer.
5.4 Investment Experience. The Investor acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment contemplated
hereby.
5.5 Disclosure of Information. The Investor has had an
opportunity to receive all additional information related to the Company
requested by it and to ask questions of and receive answers from the Company
regarding the Company, its business and the terms and conditions of the offering
of the Securities. The Investor acknowledges receipt of copies of the SEC
Filings. Neither such inquiries nor any other due diligence investigation
conducted by the Investor shall modify, amend or affect the Investor's right to
rely on the Company's representations and warranties contained in this
Agreement.
5.6 Restricted Securities. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
13
5.7 Legends. It is understood that, except as provided below,
certificates evidencing such Securities may bear the following or any similar
legend:
(a) "The securities represented hereby may not be
transferred unless (i) such securities have been
registered for sale pursuant to the Securities Act of 1933, as amended, (ii)
such securities may be sold pursuant to Rule 144(k), or (iii) the Company has
received an opinion of counsel satisfactory to it that such transfer may
lawfully be made without registration under the Securities Act of 1933 or
qualification under applicable state securities laws."
(b) If required by the authorities of any state in
connection with the issuance of sale of the
Securities, the legend required by such state authority.
Upon the earlier of (i) registration for resale pursuant to
the Registration Rights Agreement and receipt by the Company of the Investor's
written confirmation that such Securities will not be disposed of except in
compliance with the prospectus delivery requirements of the 1933 Act or (ii)
Rule 144(k) becoming available the Company shall, upon an Investor's written
request, promptly cause certificates evidencing the Securities to be replaced
with certificates which do not bear such restrictive legends, and Warrant Shares
subsequently issued upon due exercise of the Warrants shall not bear such
restrictive legends provided the provisions of either clause (i) or clause (ii)
above, as applicable, are satisfied with respect to such Warrant Shares. When
the Company is required to cause unlegended certificates to replace previously
issued legended certificates, if unlegended certificates are not delivered to an
Investor within three (3) Business Days of submission by that Investor of
legended certificate(s) to the Company's transfer agent together with a
representation letter in form reasonably satisfactory to the Company's transfer
agent, the Company shall be liable to the Investor for a penalty equal to 1% of
the aggregate purchase price of the Securities evidenced by such certificate(s)
for each thirty (30) day period (or portion thereof) beyond such three (3)
Business Day that the unlegended certificates have not been so delivered.
5.8 Accredited Investor. The Investor is an accredited
investor as defined in Rule 501(a) of Regulation D, as amended, under the 0000
Xxx.
5.9 No General Solicitation. The Investor did not
learn of the investment in the Securities as a result of any public advertising
or general solicitation.
5.10 Brokers and Finders. No Person will have, as a result of
the transactions contemplated by this Agreement, any valid right, interest or
claim against or upon the Company, any Subsidiary or an Investor for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Investors.
14
5.11 Previously-Acquired Shares of Common Stock. As of the
date hereof, the Investors do not beneficially own (within the meaning of Rule
13d-3 of the General Rules and Regulations under the 0000 Xxx) any shares of the
Common Stock of the Company, without giving effect to the transactions
contemplated hereby.
5.12 Representation of Counsel. The Investor has had the
opportunity to seek the advice of independent legal counsel with respect to the
negotiation, preparation and execution of the Transaction Documents; further,
the Investor understands and acknowledges that O'Melveny & Xxxxx LLP represents
the Company and does not represent the Investor in the transactions contemplated
by this Agreement and the other Transaction Documents.
6. Conditions to Closing.
6.1 Conditions to the Investors' Obligations. The obligation
of the Investors to purchase the Securities at the Closing is subject to the
fulfillment to the Investors' satisfaction, on or prior to the Closing Date, of
the following conditions, any of which may be waived by the Investors agreeing
hereunder to purchase a majority of the Shares and Warrants (the "Required
Investors"):
(a) The representations and warranties made by the
Company in Section 4 hereof qualified as to
materiality shall be true and correct at all times prior to and on the Closing
Date, except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall be
true and correct as of such earlier date, and, the representations and
warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date. The Company shall have performed in all material respects
all obligations and conditions herein required to be performed or observed by it
on or prior to the Closing Date.
(b) The Company shall have obtained in a timely
fashion any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities all of which shall be in full force and
effect.
(c) The Company shall have executed and delivered the
Registration Rights Agreement.
(d) The Company shall have received oral confirmation
from Nasdaq to the effect that (A) the issuance
and sale of the Securities as contemplated hereby will not require shareholder
approval pursuant to the requirements of Nasdaq Marketplace Rule 4350(i), and
(B) the Warrant Shares shall have been approved for inclusion in The Nasdaq
National Market System upon official notice of issuance.
15
(e) No judgment, writ, order, injunction, award or
decree of or by any court, or judge, justice or
magistrate, including any bankruptcy court or judge, or any order of or by any
governmental authority, shall have been issued, and no action or proceeding
shall have been instituted by any governmental authority, enjoining or
preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.
(f) The Company shall have delivered a Certificate,
executed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer, dated as of the Closing Date,
certifying to the fulfilment of the conditions specified in subsections (a),
(b), (d) and (e) of this Section 6.1.
(g) The Company shall have delivered a Certificate,
executed on behalf of the Company by its
Secretary, dated as of the Closing Date, certifying the resolutions adopted by
the Board of Directors of the Company approving the transactions contemplated by
this Agreement and the other Transaction Documents and the issuance of the
Securities, certifying the current versions of the Certificate of Incorporation
and Bylaws of the Company and certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on behalf of the
Company.
(h) The Investors shall have received an opinion from
O'Melveny & Xxxxx LLP, the Company's counsel, dated as of the Closing Date,
in substantially the form attached hereto as Exhibit C.
(i) No stop order or suspension of trading shall have
been imposed by Nasdaq, the SEC or any other governmental regulatory body with
respect to public trading in the Common Stock.
6.2 Conditions to Obligations of the Company. The Company's
obligation to sell and issue the Securities at the Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company:
(a) The representations and warranties made by the
Investors in Section 5 hereof, other than the
representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7,
5.8 and 5.9 (the "Investment Representations"), shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date. The Investment Representations shall be true and
correct in all respects when made, and shall be true and correct in all respects
on the Closing Date with the same force and effect as if they had been made on
and as of said date. The Investors shall have performed in all material respects
all obligations and conditions herein required to be performed or observed by
them on or prior to the Closing Date.
16
(b) The Investors shall have executed and delivered
the Registration Rights Agreement.
(c) The Investors shall have delivered the aggregate
purchase price to the Company.
6.3 Termination of Obligations to Effect Closing; Effects.
(a) The obligations of the Company, on the one hand,
and the Investors, on the other hand, to effect
the Closing shall terminate as follows:
(i) Upon the mutual written consent of the
Company and the Required Investors;
(ii) By the Company if any of the
conditions set forth in Section 6.2 shall have become incapable of
fulfillment, and shall not have been waived by the Company;
(iii) By the Required Investors if any
of the conditions set forth in Section 6.1 shall have become incapable of
fulfillment, and shall not have been waived by the Required Investors; or
(iv) By either the Company or the Required
Investors if the Closing has not occurred on or prior to October 31, 2003;
provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party's seeking to
terminate its obligation to effect the Closing.
(b) In the event of termination by the Company or the Required
Investors of their obligations to effect the Closing pursuant to this Section
6.3, written notice thereof shall forthwith be given to the other parties hereto
and the obligation of all parties to effect the Closing shall be terminated,
without further action by any party. Nothing in this Section 6.3 shall be deemed
to release any party from any liability for any breach by such party of the
terms and provisions of this Agreement or the other Transaction Documents or to
impair the right of any party to compel specific performance by any other party
of its obligations under this Agreement or the other Transaction Documents.
17
7. Covenants and Agreements of the Company.
7.1 Reservation of Common Stock. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of providing for the exercise of the
Warrants, such number of shares of Common Stock as shall from time to time equal
the number of shares sufficient to permit the exercise of the Warrants issued
pursuant to this Agreement in accordance with their respective terms.
7.2 Reports. The Company will furnish to such Investors and/or
their assignees such information relating to the Company and its Subsidiaries as
from time to time may reasonably be requested by such Investors and/or their
assignees; provided, however, that the Company shall not disclose material
nonpublic information to the Investors, or to advisors to or representatives of
the Investors, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides
the Investors, such advisors and representatives with the opportunity to accept
or refuse to accept such material nonpublic information for review and any
Investor wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect thereto.
7.3 No Conflicting Agreements. The Company will not take any
action, enter into any agreement or make any commitment that would conflict or
interfere in any material respect with the obligations to the Investors under
the Transaction Documents.
7.4 [intentionally omitted]
7.5 [intentionally omitted]
7.6 Listing of Underlying Shares and Related Matters. Promptly
following the date hereof, the Company shall take all necessary action to cause
the Shares and the Warrant Shares to be listed on the Nasdaq National Market
System no later than the Closing Date. Further, if the Company applies to have
its Common Stock or other securities traded on any other principal stock
exchange or market, it shall include in such application the Shares and the
Warrant Shares and will take such other action as is necessary to cause such
Common Stock to be so listed. The Company will use commercially reasonable
efforts to continue the listing and trading of its Common Stock on the Nasdaq
National Market System and, in accordance, therewith, will use commercially
reasonable efforts to comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of such market or
exchange, as applicable.
7.7 Termination of Covenants. The provisions of Sections 7.2
through 7.5 shall terminate and be of no further force and effect upon the
earlier of (i) the mutual consent of the Company and the Required Investors or
(ii) the date on which the Company's obligations under the Registration Rights
Agreement to register or maintain the effectiveness of any registration covering
the Registrable Securities (as such term is defined in the Registration Rights
Agreement) shall terminate.
18
8. Survival and Indemnification.
8.1 Survival. All representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements as of the date hereof and shall survive the
execution and delivery of this Agreement for a period of eighteen (18) months
from the date of this Agreement; provided, however, that the provisions
contained in Section 7 hereof shall survive in accordance therewith.
8.2 Indemnification. (a) The Company agrees to
indemnify and hold harmless, on an after-tax and after insurance recovery
basis, each Investor and its Affiliates and their respective directors,
officers, employees and agents (collectively, "Investor Indemnified
Persons") from and against any and all losses, claims, damages, liabilities and
expenses (including without limitation reasonable attorney fees and
disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement hereof) (collectively, "Losses") to which such
Investor Indemnified Persons may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents, and will reimburse any
Investor Indemnified Person for all such amounts as they are incurred by such
Investor Indemnified Person. The Company shall not be obligated to indemnify any
Investor Indemnified Person for any portion of a Loss resulting from a breach of
any representation or warranty made by the Company under the Transaction
Documents if either (i) the actual facts and circumstances which resulted in the
relevant Loss were expressly (and not by implication or inference) disclosed in
SEC Filings made prior to the date hereof or in the Schedules hereto or (ii) the
information and circumstances which resulted in the relevant Loss were actually
known (as opposed to implied or constructive knowledge) prior to the date hereof
by one or more of the general partners of the Investors.
(b) Each Investor severally agrees to indemnify and hold harmless, on
an after-tax and after insurance recovery basis, the Company and its Affiliates
and their respective directors, officers, employees and agents (collectively,
"Company Indemnified Persons") from and against any and all Losses to which such
Company Indemnified Persons may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of such Investor under the Transaction Documents, and will reimburse
any such Company Indemnified Person for all such amounts as they are incurred by
such Company Indemnified Person. No Investor shall be obligated to indemnify any
Company Indemnified Person for any portion of a Loss resulting from a breach of
any representation or warranty made by such Investor under the Transaction
Documents if either (i) the actual facts and circumstances which resulted in the
relevant Loss were expressly (and not by implication or inference) disclosed to
the Company in writing on or prior to the date hereof or (ii) the information
and circumstances which resulted in the relevant Loss were actually known (as
opposed to implied or constructive knowledge) prior to the date hereof by one or
more of the executive officers of the Company.
19
8.3 Conduct of Indemnification Proceedings.
Promptly after receipt by any Person (the "Indemnified
Person") of notice of any demand, claim or circumstances which would or might
give rise to a claim or the commencement of any action, proceeding or
investigation in respect of which indemnity may be sought pursuant to Section
8.2, such Indemnified Person shall promptly notify the indemnifying party in
writing and the indemnifying party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person,
and shall assume the payment of all fees and expenses; provided, however, that
the failure of any Indemnified Person so to notify the indemnifying party shall
not relieve the indemnifying party of its obligations hereunder except to the
extent that the indemnifying party is materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the indemnifying party and
the Indemnified Person shall have mutually agreed to the retention of such
counsel; or (ii) in the reasonable judgment of counsel to such Indemnified
Person representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, which consent shall not be unreasonably withheld, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the indemnifying party shall indemnify and hold harmless such Indemnified Person
from and against any loss or liability (to the extent stated above) by reason of
such settlement or judgment. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, the
indemnifying party shall not effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability arising out of such proceeding.
9. Miscellaneous.
9.1 Successors and Assigns. This Agreement may not be assigned
by a party hereto without the prior written consent of the Company or the
Required Investors, as applicable, provided, however, that an Investor may
assign its rights and delegate its duties hereunder in whole or in part to an
Affiliate or to a third party acquiring some or all of its Securities in a
private transaction without the prior written consent of the Company or the
other Investors, after notice duly given by such Investor to the Company and the
other Investors, provided, that no such assignment or obligation shall affect
the obligations of such Investor hereunder. The provisions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.2 Counterparts; Faxes. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
also be executed via facsimile, which shall be deemed an original.
20
9.3 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one day after delivery to
such carrier. All notices shall be addressed to the party to be notified at the
address as follows, or at such other address as such party may designate by ten
days' advance written notice to the other party:
If to the Company:
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Fax:: (000) 000-0000
With a copy to:
O'Melveny & Xxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Fax: (000) 000-0000
If to the Investors:
to the addresses set forth on the signature pages hereto.
9.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay the
reasonable fees and expenses of counsel to the Investors, not to exceed $20,000.
Such expenses shall be paid not later than the Closing. The Company shall
reimburse the Investors upon demand for all reasonable out-of-pocket expenses
incurred by the Investors, including without limitation reimbursement of
attorneys' fees and disbursements, in connection with any amendment,
modification or waiver of this Agreement or the other Transaction Documents. In
the event that legal proceedings are commenced by any party to this Agreement
against another party to this Agreement in connection with this Agreement or the
other Transaction Documents, the party or parties which do not prevail in such
proceedings shall severally, but not jointly, pay their pro rata share of the
reasonable attorneys' fees and other reasonable out-of-pocket costs and expenses
incurred by the prevailing party in such proceedings.
21
9.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Investors. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Securities purchased under this
Agreement at the time outstanding, each future holder of all such securities,
and the Company.
9.7 Publicity. No public release or announcement concerning
the transactions contemplated hereby shall be issued by the Company or the
Investors without the prior consent of the Company (in the case of a release or
announcement by the Investors) or Special Situations Fund III, L.P. ("SSF") (in
the case of a release or announcement by the Company) (which consents shall not
be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities
exchange or securities market, in which case the Company or the Investors, as
the case may be, shall allow SSF or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance.
9.8 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
9.9 Entire Agreement. This Agreement, including the Exhibits
and the Disclosure Schedules, and the other Transaction Documents constitute the
entire agreement among the parties hereof with respect to the subject matter
hereof and thereof and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter hereof
and thereof.
9.10 Further Assurances. The parties shall execute and deliver
all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.
22
9.11 Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York without regard to the choice of law principles thereof. Each
of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
[signature page follows]
23
IN WITNESS WHEREOF, the parties have executed this Agreement
or caused their duly authorized officers to execute this Agreement as of the
date first above written.
The Company: AXEDA SYSTEMS INC.
By:/s/Xxxxxx X. Xxxxxxx
--------------------
Name:Xxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
24
The Investors: SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By:/s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
Aggregate Purchase Price: $3,500,058
Number of Shares: 2,868,900
Number of Warrants: 1,434,450
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By:/s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
Aggregate Purchase Price: $409,066
Number of Shares: 335,300
Number of Warrants: 167,650
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
25
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
SPECIAL SITUATIONS TECHNOLOGY FUND II, L.P.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
Aggregate Purchase Price: $2,090,958
Number of Shares: 1,713,900
Number of Warrants: 856,950
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
26
