SECURITIES PURCHASE AGREEMENT
Exhibit 4.1
This Securities Purchase Agreement (this “Agreement”) is made and entered into as of April 4,
2006 (the “Execution Date”), by and among Zix Corporation, a Texas corporation (the “Company”), and
each of the purchasers listed on Schedule A attached hereto (collectively, the “Purchasers”
and individually, a “Purchaser”).
RECITALS
WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers desire to purchase
from the Company, up to an aggregate of 9,930,000 units (each a “Unit”), each Unit consisting of
one share of common stock, par value $.01 per share, of the Company (“Common Stock”) and a five
year warrant (a “Warrant”) to purchase 0.60 of one share of Common Stock, on the terms and
conditions set forth in this Agreement; and
WHEREAS, the Company and each Purchaser are executing and delivering this Agreement in
reliance upon an exemption from securities registration afforded by Regulation D (“Regulation D”)
as promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of
1933, as amended (the “Securities Act”).
NOW, THEREFORE, in consideration of the foregoing, the mutual promises hereinafter set forth,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
(a) Company Authorization. The Company’s Board of Directors has authorized the
issuance and sale, pursuant to the terms and conditions of this Agreement, of up to 9,930,000
shares of Common Stock (the “Purchased Shares”) and Warrants to purchase up to 5,958,000 shares of
Common Stock, substantially in the form attached hereto as Exhibit A. Each Warrant shall
be exercisable to purchase the number of shares of Common Stock set forth thereon at a price of
$1.54 per share of Common Stock (the “Purchased Warrants” and together with the Purchased Shares,
the “Purchased Securities”). Subject to their terms and conditions, the Purchased Warrants shall
be exercisable at any time and from time to time from and after the six-month anniversary of the
Closing Date through and including October 5, 2011.
(b) Agreement to Purchase and Sell Securities. Subject to the terms and conditions of
this Agreement, each Purchaser, severally and not jointly, agrees to purchase, and the Company
agrees to sell to each Purchaser, at the Closing (as defined below), that number of Units set forth
opposite such Purchaser’s name on Schedule A attached hereto. The purchase price of each
Unit shall be $1.19 (the “Per Unit Price”).
(c) Use of Proceeds. The Company intends to use the net proceeds from the sale of the
Purchased Securities for working capital and general corporate purposes as determined by the
Company from time to time.
(d) Obligations Several, Not Joint. The obligations of each Purchaser under this
Agreement are several and not joint with respect to the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the performance of the obligations of any
other Purchaser under this Agreement. The decision of each of the Purchasers to purchase the
Purchased Securities pursuant to this Agreement has been made by such Purchaser independently of
any other Purchaser. Nothing contained herein, and no action taken by any Purchaser pursuant
hereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated
by this Agreement. Each Purchaser shall be entitled to independently protect and enforce such
Purchaser’s rights, including, without limitation, the rights arising out of this Agreement, and it
shall not be necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
2. CLOSING. The purchase and sale of the Purchased Securities shall take place at the
offices of Xxxxx Xxxxx L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, at 2:00 p.m. Dallas, Texas
time, on April 5, 2006, or at such other time and place as the Company and Purchasers representing
a majority of the Purchased Securities to be purchased, mutually agree upon (which time and place
are referred to in this Agreement as the “Closing”). At the Closing, against delivery of full
payment for the Purchased Securities sold hereunder by wire transfer of immediately available funds
in accordance with the Company’s instructions; the Company shall issue and deliver to each
Purchaser (i) one or more stock certificates registered in the name of each Purchaser (or in such
nominee name(s) as designated by such Purchaser in the Stock Certificate and Warrant Questionnaire,
attached hereto as Appendix I (the “Stock Certificate Questionnaire”), representing the
number of Purchased Shares set forth opposite the appropriate Purchaser’s name on Schedule A
hereto, and bearing the legend set forth in Section 4(k)(i) herein and (ii) the number
of Purchased Warrants set forth opposite the appropriate Purchaser’s name on Schedule A
hereto, and bearing the legend set forth in Section 4(k)(ii) ; provided, however, that
copies of the stock certificate and warrant shall be delivered to such Purchaser no later than one
Business Day following the Closing Date and that the original warrant and original stock
certificate(s) shall be delivered to such Purchaser by overnight courier no later than the third
(3rd) Business Day following the Closing Date. Closing documents, other than the warrants
representing the Purchased Warrants and the stock certificates representing the Purchased Shares,
may be delivered by facsimile on the Closing Date, with original signature pages subsequently sent
by overnight courier.
For purposes of this Agreement, “Closing Date” means the date of the Closing, and “Business
Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a
day on which banking institutions in the State of New York are authorized or required by law or
other governmental action to close.
3. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE COMPANY. The Company
hereby represents and warrants to each Purchaser that, except as set forth in the SEC Documents (as
defined below):
(a) Organization Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
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Texas and has all
corporate power and authority required to (i) own, operate and occupy its properties and to carry
on its business as presently conducted and (ii) execute and deliver this
Agreement and the Purchased Warrants (the “Transaction Agreements”) and the other agreements,
instruments and documents contemplated hereby, and to consummate the transactions contemplated
hereby and thereby. The Company is qualified to do business and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material Adverse Effect. As used in
this Agreement, “Material Adverse Effect” means a material adverse effect on, or a material adverse
change in, the business, operations, financial condition, results of operations, assets or
liabilities of the Company and the Subsidiaries (as defined below), taken as a whole.
(b) Capitalization. The capitalization of the Company is as follows:
(i) The authorized capital stock of the Company consists of 175,000,000 shares of Common
Stock, $.01 par value per share, and 10,000,000 shares of preferred stock, par value $1.00 per
share (“Preferred Stock”).
(ii) As of March 31, 2006, the issued and outstanding capital stock of the Company consisted
of 49,700,100 shares of Common Stock and no shares of Preferred Stock. The shares of issued and
outstanding capital stock of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and have not been issued in violation of or are not otherwise subject to any
preemptive or other similar rights.
(iii) As of April 3, 2006, the Company had 10,725,741 shares of Common Stock reserved for
issuance upon exercise of options granted under the Company’s stock option plans.
(iv) As of April 3, 2006, the Company had outstanding options for 8,983,270 shares of Common
Stock.
(v) As of April 3, 2006, the Company had 7,640,282 issued and outstanding warrants for the
purchase of shares of Common Stock.
(vi) As of April 3, 2006, the Company had 954,198 shares of stock reserved for issuance upon
the conversion of the Company’s outstanding Convertible Notes due 2005-2008.
With the exception of the foregoing in this Section 3(b) and except as set forth in
Schedule 3(b) of the Disclosure Letter attached hereto as Exhibit B (the
“Disclosure Letter”), there are no outstanding subscriptions, options, warrants, convertible or
exchangeable securities or other rights to purchase shares of Common Stock or other securities of
the Company, or rights that would trigger any anti-dilution or similar adjustments to any
securities of the Company, granted to or by the Company, and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible into or exchangeable
for Common Stock.
(c) Subsidiaries. Except for the Company’s subsidiaries listed in the SEC documents
(the “Subsidiaries”), the Company does not own any capital stock of, assets comprising the business
of, obligations of, or any other interest (including any equity or
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partnership interest) in, any
person or entity. The Company owns, directly or indirectly, all of the issued and outstanding
shares of stock in each of the Subsidiaries. Each of the Subsidiaries is
duly organized and validly existing in good standing under the laws of its respective state of
incorporation. Each of the Subsidiaries has full power and authority to own, operate and occupy
its properties and to conduct its business as presently conducted and is registered or qualified to
do business and in good standing in each jurisdiction in which it owns or leases property or
transacts business and where the failure to be so qualified would have a Material Adverse Effect.
(d) Due Authorization. All corporate actions on the part of the Company necessary for
the authorization, execution, delivery and performance of all obligations of the Company under the
Transaction Agreements, including the authorization, issuance, reservation for issuance and
delivery of all the Purchased Securities being sold under this Agreement and the Common Stock
issuable upon exercise of the Purchased Warrants (the “Warrant Shares”), have been taken and no
further consent or authorization of the Company, the Company’s board of directors (the “Board of
Directors”) or the Company’s stockholders is required, and the Transaction Agreements constitute
the legal, valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except (i) as may be limited by (1) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (2) the effect of rules of law governing the availability of
equitable remedies and (ii) as rights to indemnity or contribution may be limited under federal or
state securities laws or by principles of public policy thereunder.
(e) Valid Issuance of the Purchased Securities.
(i) Purchased Shares. The Purchased Shares have been duly authorized and, when issued
and delivered to each Purchaser against payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and will be free and clear from
all liens, claims, charges, taxes and encumbrances with respect to the issuance of such Purchased
Shares and will not be subject to any pre-emptive rights or similar rights.
(ii) Purchased Warrants. The Purchased Warrants to be issued pursuant to this
Agreement have been duly authorized and, when issued and delivered to each Purchaser against
payment therefor in accordance with the terms of this Agreement, will be validly issued and will be
free and clear from all liens, claims, charges, taxes and encumbrances with respect to the issuance
of such Purchased Warrants and will not be subject to any pre-emptive rights or similar rights.
(iii) Warrant Shares. The issuance of the Warrant Shares issued or issuable from time
to time upon the exercise of the Purchased Warrants have been, and at all times prior to such
exercise, will be, duly authorized and duly reserved for issuance upon such exercise and payment of
the exercise price of the Purchased Warrants and, when issued and delivered to each Purchaser upon
exercise against payment therefor in accordance with the terms of the Warrant, will be validly
issued, fully paid and non-assessable and will be free and clear from all liens, claims, charges,
taxes and encumbrances with respect to the issuance of such Warrant Shares and will not be subject
to any pre-emptive rights or similar rights.
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(f) Compliance with Securities Laws. Subject to the accuracy of the representations
made by the Purchasers in Section 4 hereof, the Purchased Securities will be issued and
sold to the Purchasers in compliance with (i) the exemption in Rule 506 of Regulation D promulgated
under the Securities Act from the registration and prospectus delivery requirements of the
Securities Act and (ii) applicable exemptions from the registration and qualification requirements
of all applicable securities laws of the states of the United States.
(g) Consents. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, or notice to, any federal, state or local
governmental authority or self regulatory agency or any other Person (as defined below) on the part
of the Company is required in connection with the issuance and sale of the Purchased Securities to
the Purchasers by the Company or the consummation of the other transactions contemplated by the
Transaction Agreements, except (i) such filings as have been made prior to the date hereof and set
forth in Schedule 3(g) of the Disclosure Letter, (ii) the filings under applicable
securities laws required to comply with the Company’s registration obligations under Section
5(a) of this Agreement and (iii) such additional post-Closing filings as may be required to
comply with applicable state and federal securities laws, including, but not limited to, the filing
of a Form D relating to the sale of the Purchased Securities pursuant to Regulation D. The Company
and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company from
obtaining or effecting any of the registration, application or filings pursuant to the preceding
sentence.
(h) Non-Contravention. Assuming the accuracy of the representations and warranties
made by the Purchasers in Section 4 hereof, the execution, delivery and performance of the
Transaction Agreements by the Company and the consummation by the Company of the transactions
contemplated hereby (including the issuance of the Purchased Securities and the Warrant Shares), do
not and will not: (i) contravene or conflict with the articles of incorporation, as amended (the
“Articles of Incorporation”), or bylaws, as amended (the “Bylaws”), of the Company or of any
Subsidiary; (ii) constitute a violation of any provision of any federal, state, local or foreign
law, rule, regulation, order or decree applicable to the Company or any Subsidiary; or (iii)
constitute a default (with or without the passage of time or giving of notice or both) or require
any consent under, give rise to any right of termination, cancellation or acceleration of, or
result in the creation or imposition of any lien, claim or encumbrance on any asset of the Company
or the Subsidiaries under, any material contract to which the Company or the Subsidiaries is a
party or any permit, license or similar right relating to the Company or the Subsidiaries or by
which the Company or the Subsidiaries may be bound or affected, except in the case of clauses (ii)
and (iii), for such violations, breaches or defaults as would not be reasonably likely to have a
Material Adverse Effect.
(i) Litigation. Except as set forth in the SEC Documents or as set forth in
Schedule 3(i) of the Disclosure Letter, there is no action, suit, proceeding, claim,
arbitration or investigation (“Action”) pending or, to the Company’s knowledge, threatened: (i)
against the Company or any Subsidiary, their properties or assets, or any officer, director or
employee of the Company or any Subsidiary in connection with such officer’s, director’s or
employee’s relationship with, or actions taken on behalf of, the Company or any Subsidiary, that
would be reasonably likely to have a Material Adverse Effect, or (ii) that seeks to prevent,
enjoin, alter, challenge or delay the transactions contemplated by the Transaction Agreements. The
Company
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is not a party to, nor subject to the provisions of, any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality that would reasonably be expected to
prevent, enjoin, alter, challenge or delay the consummation of the transactions contemplated by the
Transaction Agreements or would be reasonably likely to have a Material Adverse Effect. The SEC
has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the Securities Act or the Securities Exchange Act of 1934, as
amended ( the “Exchange Act”).
(j) Compliance with Law and Charter Documents. The Company is not in violation or
default of any provisions of the Articles of Incorporation or the Bylaws. The Company is currently
in compliance with all applicable statutes, laws, rules, regulations and orders of the United
States of America and all states thereof, foreign countries and other governmental bodies and
agencies having jurisdiction over the Company’s business or properties, except for any instance of
non-compliance that has not had, and would not reasonably be expected to have, a Material Adverse
Effect. Neither the Company nor any Subsidiary is in default (and there exists no condition which,
with or without the passage of time or giving of notice or both, would constitute a default) in any
material respect in the performance of any bond, debenture, note or any other evidence of
indebtedness in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or by which the properties of the Company or any Subsidiary is bound, which
default would be reasonably likely to have a Material Adverse Effect or which would be reasonably
likely to have a Material Adverse Effect on the transactions contemplated by the Transaction
Agreements.
(k) Material Non-Public Information. The Company has not provided, and will not
provide, to the Purchasers any material non-public information other than information related to
the transactions contemplated by the Transaction Agreements, all of which information shall be
disclosed by the Company pursuant to Section 9(m) hereof.
(l) SEC Documents.
(1) Reports. The Company has filed in a timely manner all reports, schedules, forms,
statements and other documents required to be filed by it with the Securities and Exchange
Commission (the “SEC”) pursuant to the reporting requirements of the Exchange Act and the rules and
regulations promulgated thereunder. The Company has made available to the Purchasers prior to the
date hereof copies of its Annual Report on Form 10-K for the fiscal year ended December 31, 2005,
as amended (the “Form 10-K”), and any Current Report on Form 8-K for events occurring since
December 31, 2005 (“Form 8-Ks”) filed or furnished by the Company with the SEC (the Form 10-K and
the Form 8-Ks are collectively referred to herein as the “SEC Documents”). Each of the SEC
Documents, as of the respective dates thereof (or, if amended or superseded by a filing or
submission, as the case may be, prior to the Closing Date, then on the date of such filing or
submission, as the case may be), (1) did not contain any untrue statement of a material fact nor
omit to state a material fact necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading and (2) complied in all material
respects with the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the Company with respect to such SEC Document.
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(2) Xxxxxxxx-Xxxxx. The Chief Executive Officer and the Chief Financial Officer of
the Company have signed, and the Company has furnished to the SEC, all certifications required by
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002. Such certifications contain no
qualifications or exceptions to the matters certified therein (other than such qualifications or
exceptions that are permitted under the Exchange Act and the rules promulgated thereunder) and have
not been modified or withdrawn; and neither the Company nor any of its officers has received notice
from any governmental entity questioning or challenging the accuracy, completeness, form or manner
of filing or submission of such certifications. Without limiting the foregoing, the Company is in
compliance with any applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated thereunder, as amended, that are currently in effect.
(3) Financial Statements. The consolidated financial statements of the Company
included in the SEC Documents (1) comply as to form in all material respects with the rules and
regulations of the SEC with respect thereto as were in effect at the time of filing and (2) present
fairly, in all material respects, in accordance with United States generally accepted accounting
principles (“GAAP”), consistently applied, the consolidated financial position of the Company as of
the dates indicated therein, and the consolidated results of its operations and cash flows for the
periods therein specified, subject, in the case of unaudited consolidated financial statements for
interim periods, to normal, immaterial year-end audit adjustments.
(m) Absence of Certain Changes Since the Balance Sheet Date. Except as disclosed in
the SEC Documents, since the filing of the Company’s most recent Form 10-K with the SEC, the
business and operations of the Company and the Subsidiaries have been conducted in the ordinary
course consistent with past practice, and there has not been:
(i) any declaration, setting aside or payment of any dividend or other distribution of the
assets of the Company 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 the Company of any outstanding
shares of the Company’s capital stock;
(ii) any damage, destruction or loss to the Company’s or any Subsidiary’s business or assets,
whether or not covered by insurance, except for such occurrences, individually and collectively,
that have not had, and would not reasonably be expected to have, a Material Adverse Effect;
(iii) any waiver by the Company or any Subsidiary of a valuable right or of a material debt
owed to it, except for such waivers, individually and collectively, that have not had, and would
not reasonably be expected to have, a Material Adverse Effect;
(iv) any material change or amendment to, or any waiver of any material right under a material
contract or arrangement by which the Company, any Subsidiary or any of their assets or properties
is bound or subject;
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(v) any transaction between the Company or any Subsidiary, on the one hand, and any of its
officers or directors, on the other hand, that would be required to be disclosed pursuant to Item
404(a), (b) or (c) of Regulation S-K of the SEC;
(vi) any change by the Company in its accounting principles, methods or practices or in the
manner in which it keeps its accounting books and records, except any such change required by a
change in GAAP or by the SEC; or
(vii) any other event or condition, either individually or collectively, that has had, or
would be reasonably likely to have, a Material Adverse Effect.
(n) Intellectual Property. The Company and its Subsidiaries own, possess, license or
have other sufficient rights to use all patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names, licenses, copyrights and other information
(collectively, “Intellectual Property”) which are used to conduct their businesses as currently
conducted or as proposed in the SEC Documents to be conducted, except where the failure to own or
possess such sufficient rights would not reasonably be expected to result, either individually or
in the aggregate, in a Material Adverse Effect. Except as set forth in the SEC Documents and
except where such violations or infringements would not reasonably be expected to result in a
Material Adverse Effect, (a) to the Company’s knowledge, there is no infringement by third parties
of any such Intellectual Property owned by the Company; (b) there is no pending or, to the
Company’s knowledge, any threatened action, suit, proceeding or claim by any third party
challenging the Company’s and its Subsidiaries’ rights in or to any such Intellectual Property, and
the Company is unaware of any facts which would form a reasonable basis for any such claim, (c)
there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
any third party that the Company and its Subsidiaries are infringing or otherwise violating any
patent, trademark, copyright, trade secret or other proprietary rights of such third party, and the
Company is unaware of any other fact which would forma reasonable basis for any such claim; and
(d) to the Company’s knowledge, none of the patent rights owned or licensed by the Company or the
Subsidiaries are unenforceable or invalid.
(o) Registration Rights. Except as provided in Section 5 herein or as set
forth in Schedule 3(o) of the Disclosure Letter, effective upon the Closing, the Company is
not currently subject to any agreement providing any person or entity any rights (including
piggyback registration rights) to have any securities of the Company registered with the SEC or
registered or qualified with any other governmental authority that have not previously been
satisfied.
(p) Title to Property and Assets. Except as set forth in Schedule 3(p) of the
Disclosure Letter, the properties and assets of the Company and the Subsidiaries are owned by the
Company or the Subsidiaries free and clear of all mortgages, deeds of trust, liens, charges,
encumbrances and security interests, except for (i) statutory liens for the payment of current
taxes that are not yet delinquent and (ii) liens, encumbrances and security interests that arise in
the ordinary course of business and do not in any material respect affect the business of the
Company and the Subsidiaries as currently conducted. With respect to the property and assets it
leases, each of the Company and the Subsidiaries is in compliance with such leases in all material
respects.
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(q) Taxes. The Company and the Subsidiaries have filed or have valid extensions of
the time to file all necessary federal, state, and foreign income and franchise tax returns due
prior to the date hereof or have requested extensions thereof (except in any case in which the
failure to so file would not reasonably be expected to have a Material Adverse Effect) and has paid
or accrued all taxes due, and no tax deficiency has been determined adversely to the Company or any
of its Subsidiaries which has had, nor does the Company or any of its Subsidiaries have any
knowledge of any tax deficiency which, if determined adversely to the Company or any of its
Subsidiaries, would reasonably be expected to have, a Material Adverse Effect.
(r) Internal Accounting Controls. The Company and each of 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 GAAP 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.
(s) Market. The Company has not taken and will not take, directly or indirectly, any
action designed to, or that might reasonably be expected to cause or result in, stabilization or
manipulation of the price of the Common Stock of the Company to facilitate the sale or resale of
the Purchased Securities.
(t) Investment Company. The Company is not an “investment company” within the meaning
of such term under the Investment Company Act of 1940, as amended.
(u) Application of Anti-Takeover Provisions. There is no control share acquisition,
business combination, poison pill or other similar anti-takeover provision under the Company’s
Articles of Incorporation (or similar charter documents) that would become applicable to the
Purchasers as a result of the issuance of the Company Shares and Warrant Shares.
(v) General Solicitation. Neither the Company nor any other Person (as defined below)
authorized by the Company to act on its behalf has engaged in a general solicitation or general
advertising (within the meaning of Regulation D) of investors with respect to offers or sales of
the Purchased Securities. For purposes of this Agreement, “Person” means an individual or
corporation, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of
any kind.
(w) Registration Statement Matters. The Company currently meets the eligibility
requirements for use of a Form S-3 Registration Statement for the resale of the Registrable Shares
(as defined below) by the Purchasers. Assuming the completion and timely delivery of the
Registration Statement/Suitability Questionnaire, attached hereto as Appendix II (the
“Registration Statement Questionnaire”), by each Purchaser to the Company, the Company
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is not aware of any facts or circumstances that would prohibit or delay the preparation and
filing of a registration statement with respect to the Registrable Shares.
(x) No Integrated Offering. Neither the Company, nor any Affiliate (as hereafter
defined) of the Company, nor any person acting on its behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security, under circumstances
that would cause this offering of the Purchased Securities to be integrated with prior offerings by
the Company for purposes of the Securities Act, any applicable state securities laws or any
applicable stockholder approval provisions, nor will the Company take any action or steps that
would cause the offering of the Purchased Securities to be integrated with other offerings.
(y) Insurance. The Company maintains and will continue to maintain insurance of the
types and in the amounts that the Company reasonably believes is adequate for the conduct of its
and its Subsidiaries’ respective businesses, including insurance covering all real and personal
property leased by the Company, against theft, damage, destruction, acts of vandalism and all other
risks consistent with industry practice, all of which insurance is in full force and effect.
(z) Off-Balance Sheet Arrangements. There is no transaction, arrangement or other
relationship between the Company and an unconsolidated or other off-balance sheet entity that is
required to be disclosed by the Company in its SEC Documents and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse Effect.
(aa) ERISA Compliance. Each employee benefit plan, within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered or contributed to by the Company or any entity that is considered a “single employer”
with the Company in accordance with Section 414 of the Internal Revenue Code of 1986, as amended
(the “Code”), for employees or former employees of the Company has been maintained in material
compliance with its terms (except that in any case in which any plan is currently required to
comply with a provision of ERISA or of the Code, but is not yet required to be amended to reflect
such provision, it has been maintained, operated and administered in accordance with such
provision) and the material requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code; no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, has occurred which would result in a material
liability to the Company with respect to any such plan excluding transactions effected pursuant to
a statutory or administrative exemption; and for each such plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, no “accumulated funding deficiency” as
defined in Section 412 of the Code has been incurred, whether or not waived, and the fair market
value of the assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeds the present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.
(bb) Employee Relations. The Company is not a party to any collective bargaining
agreement or employs any member of a union. The Company has no knowledge that its relations with
its employees are other than satisfactory. No executive officer of the Company (as defined in Rule
501(f) of the Securities Act) has notified the Company that such officer
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intends to leave the Company or otherwise terminate such officer’s employment with the
Company.
(cc) Foreign Corrupt Practices. Neither the Company or any of its Subsidiaries, nor,
to the knowledge of the Company, any director, officer, agent, employee or other Person acting on
behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on
behalf of, the Company or any Subsidiary (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic government
official or employee.
(dd) Consultation with Auditors. The Company has consulted its independent auditors
concerning the accounting treatment of the transactions contemplated by the Transaction Documents,
and in connection therewith has furnished such auditors complete copies of the Transaction
Documents. The Company intends to account for the gross proceeds raised from the financing which is
the subject of this Agreement as equity in its financial statements, subject to authoritative
accounting guidance to the contrary.
(ee) Solvency. Based on the financial condition of the Company as of the Closing Date
(and assuming that the Closing shall have occurred), (i) the Company’s fair saleable value of its
assets exceeds the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as they mature; (ii)
the Company’s assets do not constitute unreasonably small capital to carry on its business for the
current fiscal year as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii) the current cash
flow of the Company, together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would be sufficient to
pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in respect of its debt).
(ff) Trading and Registration Matters. The Common Stock of the Company is eligible
for trading on The NASDAQ National Market under the ticker symbol “ZIXI”. The Company has taken no
action designed to terminate, or likely to have the effect of terminating, the listing of the
Common Stock on the NASDAQ National Market. The Company is not in violation of any listing
requirements of the NASDAQ National Market which are applicable to it and has not received any
written notice from the Nasdaq National Market, any stock exchange, market or trading facility on
which the Common Stock is or has been listed (or on which it has been quoted) to the effect that
the Company is not in compliance with the listing or maintenance requirements of such exchange,
market or trading facility. Assuming the accuracy of the Purchasers’ representations hereunder,
the issuance of the Purchased Securities at the Closing does not require shareholder approval,
including, without limitation, pursuant to Nasdaq
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Marketplace Rule 4530(i), or any other approval of Nasdaq or any other Person or regulatory
authority related thereto.
For purposes of this Agreement, an “Affiliate” of any specified Person means any other Person
directly or indirectly controlling, controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition, “control” means the power to direct the
management and policies of such person or firm, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE PURCHASERS. Each
Purchaser, severally and not jointly, hereby represents and warrants to the Company, and agrees
that:
(a) Organization. Such Purchaser has all corporate, limited liability company,
partnership, trust or individual, as the case may be, power and authority required to enter into
this Agreement and the other agreements, instruments and documents contemplated hereby, and to
consummate the transactions contemplated hereby and thereby.
(b) Due Authorization. All corporate, limited liability company, partnership, trust
or individual, as the case may be, action on the part of such Purchaser necessary for the
authorization, execution, delivery of and the performance of all obligations of such Purchaser
under this Agreement have been taken and no further consent or authorization of such Purchaser is
necessary, and this Agreement constitutes such Purchaser’s legal, valid and binding obligation,
enforceable in accordance with its terms, except (i) as may be limited by (1) applicable
bankruptcy, insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (2) the effect of rules of law
governing the availability of equitable remedies and (ii) as rights to indemnity or contribution
may be limited under federal or state securities laws or by principles of public policy thereunder.
(c) Non-Contravention. The execution, delivery and performance of this Agreement by
such Purchaser, and the consummation by such Purchaser of the transactions contemplated hereby, do
not: (i) contravene or conflict with the organizational documents of such Purchaser; or (ii)
constitute a violation of any provision of any federal, state, local or foreign law, rule,
regulation, order or decree applicable to such Purchaser, except in the case of clause (ii), for
such violations, breaches or defaults as would not be reasonably likely to have a material adverse
effect on such Purchaser.
(d) Litigation. There is no Action pending to which such Purchaser is a party that is
reasonably likely to prevent, enjoin, alter or delay the transactions contemplated by this
Agreement.
(e) Purchase for Own Account. The Purchased Securities are being acquired for
investment for such Purchaser’s own account, not as a nominee or agent, in the ordinary course of
business, and not with a view to the public resale or distribution thereof within the meaning of
the Securities Act. Such Purchaser also represents that it has not been formed for the specific
purpose of acquiring the Purchased Securities. Such Purchaser does not have any agreement or
understanding, direct or indirect, with any other Person to sell or otherwise
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distribute the Purchased Securities. Notwithstanding the foregoing, the parties hereto
acknowledge such Purchaser’s right at all times to sell or otherwise dispose of all or any part of
such securities in compliance with applicable federal and state securities laws and as otherwise
contemplated by this Agreement.
(f) Investment Experience. Such Purchaser understands that the purchase of the
Purchased Securities involves substantial risk. Such Purchaser has experience as an investor in
securities of companies and acknowledges that it can bear the economic risk of its investment in
the Purchased Securities and has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of this investment in the Purchased
Securities and protecting its own interests in connection with this investment.
(g) Accredited Purchaser Status. Such Purchaser is an “accredited investor” within
the meaning of Regulation D promulgated under the Securities Act.
(h) Reliance Upon Purchaser’s Representations. Such Purchaser understands that,
subject to Section 5 hereof, the Purchased Securities sold to it will not initially be registered
under the Securities Act on the ground that such issuance and sale will be exempt from registration
under the Securities Act, and that the Company’s reliance on such exemption is based on each
Purchaser’s representations set forth herein.
(i) Receipt of Information. Such Purchaser has (i) had access to the Company’s SEC
Documents and (ii) has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the sale of the Purchased Securities and the business,
properties, prospects and financial condition of the Company and to obtain any additional
information requested and has received and considered all information it deems relevant to make an
informed decision to purchase the Purchased Securities. Neither such access, inquiries nor any
other due diligence investigation conducted by such Purchaser shall modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties contained in this
Agreement.
(j) Restricted Securities and Restrictions on Transfer.
(i) Such Purchaser understands that the Purchased Securities and the Warrant Shares have not
been registered under the Securities Act and will not sell, offer to sell, assign, pledge,
hypothecate or otherwise transfer any of the Purchased Securities or the Warrant Shares (except as
permitted in this Section 4(j) or Section 4(k) below) unless (A) pursuant to an
effective registration statement under the Securities Act, (B) such Purchaser provides a reasonably
acceptable legal opinion to the Company, to the effect that a sale, assignment, pledge,
hypothecation or other transfer of the Purchased Securities or the Warrant Shares, as the case may
be, may be made without registration under the Securities Act and the transferee agrees to be bound
by the terms and conditions of this Agreement, (C) such Purchaser provides the Company a “no
action” letter from the SEC to the effect that the transfer of the Purchased Securities or the
Warrant Shares, as the case may be, without registration will not result in a recommendation by the
Staff of the SEC that enforcement action by taken with respect thereto, (D) such Purchaser provides
the Company with reasonable assurances (in the form of seller and broker representation letters)
that the Purchased Securities or the Warrant Shares, as the case
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may be, can be sold pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”),
(E) such Purchaser provides the Company with reasonable assurances (in the form of seller
representation letters) that the Purchased Securities or the Warrant Shares, as the case may be,
can be sold pursuant to Rule 144(k) promulgated under the Securities Act following the applicable
holding period or (F) pursuant to any other exception contained in the Securities Act provided that
the Purchaser provides a reasonably acceptable legal opinion to the Company. Notwithstanding
anything to the contrary contained in this Agreement, including but not limited to in Section
5(c)(i) below, such Purchaser may transfer the Purchased Securities or the Warrant Shares to
its Affiliates provided that (X) such Affiliate is an “accredited investor” within the meaning of
Regulation D and (Y) any such Affiliate agrees to be bound by the terms and conditions of this
Agreement, and in particular, confirms to the Company that all of the representations set forth in
Section 4 of this Agreement are true and correct as to such Affiliate as of the date of the
transfer to such Affiliate.
(ii) Prior to any proposed transfer pursuant to clause (B), (C), (D), (E) or (F) in
Section 4(j)(i) above, such Purchaser shall give written notice to the Company of such
Purchaser’s intention to effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be accompanied by the legal
opinion (if applicable), “no action” letter or seller and broker representation letters.
(iii) Notwithstanding the foregoing provisions of this Section 4(j), no registration
statement, legal opinion or “no action” letter shall be necessary for a transfer of the Purchased
Securities or the Warrant Shares (A) by a Purchaser that is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date of this Agreement,
(B) by a Purchaser that is a limited liability company to a member of such limited liability
company, (C) by a Purchaser that is a partnership or limited liability company to the estate of any
partner, retired partner, or member thereof or (D) by any partner or member of a Purchaser that is
a partnership or limited liability company by gift, will or intestate succession to such partner or
member’s spouse or to the siblings, lineal descendants, ancestors of such partner or member or his
or her spouse.
(k) Legends.
(i) Such Purchaser agrees that, to the extent necessary, the certificates for the Purchased
Shares and the Warrant Shares shall bear the following legend:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SECURITIES IS
EFFECTIVE UNDER THE SECURITIES ACT, (II) THE TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND, IF THE COMPANY REQUESTS, AN
OPINION SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN RENDERED BY
COUNSEL, (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
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144A UNDER THE SECURITIES ACT OR (IV) THE TRANSFER IS TO AN AFFILIATE OF THE
HOLDER AND SATISFIES THE REQUIREMENTS OF THE SECURITIES PURCHASE AGREEMENT
BETWEEN THE COMPANY AND THE PURCHASERS LISTED ON SCHEDULE A THERETO.”
Certificates evidencing the Purchased Shares and the Warrant Shares shall not contain any
legend, (i) while a registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii) following any sale of such
Purchased Shares or the Warrant Shares pursuant to Rule 144, (iii) if such Purchased Shares or the
Warrant Shares are eligible for sale under Rule 144(k) or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the SEC). The Company shall cause its counsel to issue a
legal opinion to the Company’s transfer agent promptly after the date on which the Registration
Statement is declared effective (the “Effective Date”) if such legal opinion is required by the
Company’s transfer agent to effect the removal of the legend hereunder. If all or any portion of a
Purchased Warrant is exercised at a time when there is an effective registration statement to cover
the resale of the Warrant Shares, such Warrant Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as such legend is no longer
required under this Section 4(k), it will, no later than three (3) Business Days following
the delivery by a Purchaser to the Company’s transfer agent at
the address indicated in Section
9(f) of a certificate representing Purchased Shares or the Warrant Shares or an affidavit or
other evidence reasonably satisfactory to the Company of the loss or destruction of such
certificate or warrant, as the case may be, issued with a restrictive legend, deliver or cause to
be delivered to such Purchaser a certificate representing such Purchased Shares or the Warrant
Shares, as the case may be, that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in Section 4(j) or this Section
4(k). At any time that a legend on the Purchased Shares or the Warrant Shares is not required
pursuant to this Agreement, if within three (3) Business Days after the receipt by the Company’s
transfer agent of a legended certificate representing the Purchased Shares or the Warrant Shares
(the “Delivery Date”), the Company shall fail to issue and deliver to such Purchaser a certificate
representing such Purchased Shares or Warrant Shares that is free from all restrictive and other
legends, and if on or after such Delivery Date the Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Purchaser of shares of Common Stock that the Purchaser anticipated receiving from the Company
without any restrictive legend (a “Buy-In”), then the Company shall, within three (3) Business Days
after the Purchaser’s request and in the Purchaser’s sole discretion, either (i) pay cash to the
Purchaser in an amount equal to the Purchaser’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which
point the Company’s obligation to deliver such certificate shall terminate and such shares shall be
cancelled, or (ii) promptly honor its obligation to deliver to the Purchaser a certificate or
certificates representing such number of shares of Common Stock that would have been issued if the
Company timely complied with its obligations hereunder and pay cash to the Purchaser in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of
Common Stock that the Company was required to deliver to the Purchaser on the
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Delivery Date, multiplied by (B) the closing bid price of the Common Stock on the Delivery
Date.
Each Purchaser, severally and not jointly with the other Purchasers, agrees that the removal
of the restrictive legend from certificates representing the Purchased Shares or the Warrant Shares
as set forth in this Section 4(k) is predicated upon such Purchaser’s covenant that such
Purchaser only will sell any Purchased Shares or Warrant Shares pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery requirements, or
an exemption therefrom.
In addition, such Purchaser agrees that the Company may place stop transfer orders with its
transfer agent with respect to such certificates in order to implement the restrictions on transfer
set forth in this Agreement. The appropriate portion of the legend and the stop transfer orders
will be removed promptly upon delivery to the Company of such satisfactory evidence as reasonably
may be required by the Company that such legend or stop transfer orders are not required to ensure
compliance with the Securities Act.
(ii) Such Purchaser agrees that the Purchased Warrants shall bear the following legend:
“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SECURITIES IS
EFFECTIVE UNDER THE SECURITIES ACT, (II) THE TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND, IF THE COMPANY REQUESTS, AN
OPINION SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN RENDERED BY
COUNSEL, (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER THE
SECURITIES ACT OR (IV) THE TRANSFER IS TO AN AFFILIATE OF THE HOLDER AND
SATISFIES THE REQUIREMENTS OF THE SECURITIES PURCHASE AGREEMENT BETWEEN THE
COMPANY AND THE PURCHASERS LISTED ON SCHEDULE A THERETO.”
(l) Questionnaires. Such Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Statement Questionnaire for use in preparation of
the Registration Statement (as defined in Section 5(a) below), and the answers to such
questionnaires are true and correct as of the date of this Agreement; provided, that such Purchaser
shall be entitled to update such information by providing written notice thereof to the Company
before the effective date of the Registration Statement.
(m) Restrictions on Short Sales. Neither such Purchaser nor any Affiliate of such
Purchaser which (i) had knowledge of the transactions
contemplated hereby, (ii) has or
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shares discretion relating to such Purchaser’s investments or trading or information
concerning such Purchaser’s investments, including in respect of the Purchased Securities, or (iii)
is subject to such Purchaser’s review or input concerning such Affiliate’s investments or trading,
has (A) a net short position with respect to the Company’s Common Stock or (B) will, directly or
indirectly, during the period beginning on the date on which X.X. Xxxxxxxxx, Towbin, financial
advisor to the Company, first contacted such Purchaser regarding the transactions contemplated by
this Agreement until the time of the filing of the Current Report of Form 8-K required by
Section 9(m), engage in (1) any “short sales” (as such term is defined in Rule 3b-3
promulgated under the Exchange Act) of the Common Stock, including, without limitation, the
maintaining of any short position with respect to, establishing or maintaining a “put equivalent
position” (within the meaning of Rule 16a-1(h) under the Exchange Act) with respect to, entering
into any swap, derivative transaction or other arrangement (whether any such transaction is to be
settled by delivery of Common Stock, other securities, cash or other consideration) that transfers
to another, in whole or in part, any economic consequences or ownership, or otherwise dispose of,
any of the Purchased Securities or the Warrant Shares by such Purchaser or (2) any hedging
transaction which establishes a net short position with respect to the Common Stock (clauses (1)
and (2) together, a “Short Sale”); except for (A) Short Sales by such Purchaser or Affiliate of
such Purchaser which was, prior to the date on which such Purchaser was first contacted by X.X.
Xxxxxxxxx, Towbin regarding the transactions contemplated by this Agreement, a market maker for the
Common Stock, provided that such Short Sales are in the ordinary course of business of such
Purchaser or Affiliate of such Purchaser and are in compliance with the Securities Act, the rules
and regulation of the Securities Act and such other securities laws as may be applicable, (B) Short
Sales by such Purchaser or an Affiliate of such Purchaser which by virtue of the procedures of such
purchaser are made without knowledge of the transactions contemplated by this Agreement or (C)
Short Sales by the Purchaser or an Affiliate of such Purchaser to the extent that such Purchaser or
Affiliate of such Purchaser is acting in the capacity of a broker dealer executing unsolicited
third party transactions.
(n) Independent Investment. Such Purchaser has not agreed to act with any other
Purchaser for the purpose of acquiring, holding or disposing of any of the Purchased Securities or
the Warrant Shares for purposes of Section 13(d) of the Exchange Act, and such Purchaser is acting
independently with respect to its investment in the Purchased Securities.
5. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT; NO NASDAQ
REQUIREMENTS.
For the avoidance of doubt, for purposes of this Section 5, the term “Purchaser” shall
be deemed to include any successor, assign or other transferee of a Purchaser who holds any
Purchased Securities pursuant to Section 9(a), other than any successor, assign or
transferee of a Purchaser that acquires the Purchased Securities in a public transaction pursuant
to an effective Registration Statement (as defined below) or Rule 144.
(a) Form D Filing; Registration of the Purchased Securities and Warrant Shares. The
Company hereby agrees that it shall:
(i) file in a timely manner a Form D relating to the sale of the Purchased Securities under
this Agreement, pursuant to Regulation D;
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(ii) prepare and file with the SEC as soon as practicable and in no event later than thirty
(30) days following the Closing Date the (“Required Filing Date”), one or more registration
statements on Form S-3 or such other appropriate form that is available to the Company under the
Securities Act and reasonably acceptable to the Purchasers (the “Registration Statement”) (provided
that in the case of a Registration Statement not on Form S-3, the Company shall undertake to
register the Registrable Shares (as defined below) on Form S-3 as soon as such form is available,
provided that the Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering all of the Registrable
Shares has been declared effective by the SEC), to enable the resale of all of the Purchased Shares
and the Warrant Shares (together with any shares of Common Stock issued as a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the Purchased Shares or the
Warrant Shares, as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitations on the exercise of the Warrants, the
“Registrable Shares”) by the Purchasers from time to time. The Company shall use its commercially
reasonable efforts to cause the Registration Statement (x) to be declared effective as promptly as
possible after filing, but in any event, no later than (1) the 60th day following the Closing Date,
if the Registration Statement is not reviewed by the SEC, or (2) the 120th day following the
Closing Date, if the Registration Statement is reviewed by the SEC (the “Required Effective Date”),
and (y) to remain continuously effective until the earlier of (1) the second anniversary of the
effective date of the Registration Statement, (2) the date on which all Registrable Shares
purchased by the Purchasers pursuant to this Agreement have been sold thereunder or (3) the date on
which the Registrable Shares become eligible for resale pursuant to Rule 144(k) promulgated under
the Securities Act (the “Registration Period”); provided, however, that if any Purchaser is an
“affiliate” of the Company (as defined in Rule 144(a)(1) of the Securities Act) on the second
anniversary of the effective date of the Registration Statement, the applicable time period for
purposes of clause (1) above shall be the third anniversary of the effective date of the
Registration Statement;
(iii) promptly prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the Prospectus (as defined below)
used in connection therewith as may be necessary to keep the Registration Statement current and
effective at all times until the end of the Registration Period;
(iv) furnish to the Purchasers, with respect to the Registrable Shares registered under the
Registration Statement, such reasonable number of copies of any prospectus in conformity with the
requirements of the Securities Act and such other documents as the Purchasers may reasonably
request in writing, in order to facilitate the public sale or other disposition of all or any of
the Registrable Shares by the Purchasers;
(v) use its commercially reasonable efforts to file documents required of the Company for
normal blue sky clearance in states specified in writing by the Purchasers; provided, however, that
the Company shall not be required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(vi) promptly notify the Purchasers in writing of the effectiveness of the Registration
Statement no later than 9:00 a.m. E.S.T. on the day following the date that the Company or its
legal counsel is informed that the Registration Statement has been declared
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effective; and advise the Purchasers promptly, but in any event within two business days by
e-mail, fax or other type of communication, and, if requested by such person, confirm such advice
in writing: (i) after it shall receive notice or obtain knowledge of the issuance of any stop order
by the SEC delaying or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose, or any other order issued by any state
securities commission or other regulatory authority suspending the qualification or exemption from
qualification of such Registrable Securities under state securities or “blue sky” laws; (ii) when
the Prospectus or any supplements to or amendments of the Prospectus have been filed, and, with
respect to the Registration Statement or any post-effective amendment thereto, when the same has
become effective; and (iii) when the SEC notifies the Company whether there will be a “review” of
such Registration Statement and whenever the SEC comments in writing on such Registration
Statement;
(vii) promptly notify the Purchasers in writing of the existence of any fact or the happening
of any event, during the Registration Period (but not as to the substance of any such fact or
event), 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, or that requires the making of any additions to or changes in the Registration Statement or
the Prospectus in order to make such statements not misleading; provided, however, that no notice
by the Company shall be required pursuant to this subsection (vii) in the event that the Company
either contemporaneously files a prospectus supplement to update the Prospectus or, if applicable,
a Current Report on Form 8-K or other appropriate Exchange Act report that is incorporated by
reference into the Registration Statement, which, in either case, contains the requisite
information with respect to such material event that results in such Registration Statement no
longer containing any such untrue or misleading statements;
(viii) furnish to each Purchaser upon written request, from the date of this Agreement until
the end of the Registration Period, one copy of its periodic reports filed with the SEC pursuant to
the Exchange Act and the rules and regulations promulgated thereunder; and
(ix) not less than five (5) Business Days prior to the filing of the Registration Statement or
any related Prospectus or any amendment or supplement thereto, furnish to the Purchasers copies of
the “Selling Stockholders” section of such document, the “Plan of Distribution,” any risk factor
contained in such document that addresses specifically this transaction or the Selling
Stockholders, as proposed to be filed, which documents will be subject to the review and comment of
the Purchasers and their counsel; provided that, the failure of any Purchaser or his, her or its
counsel to respond to such proposed documents within five (5) Business Days after receipt thereof
shall be deemed approval of same;
(x) except if otherwise required pursuant to written comments received from the SEC upon a
review of such Registration Statement, include in the Registration Statement the “Plan of
Distribution” section attached hereto as Exhibit D;
(xi) comply in all material respects with the provisions of the Securities Act, the Exchange
Act and all rules of the SEC promulgated thereunder with respect to the Registration Statements;
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(xii) in the event the number of shares available under a Registration Statement filed
pursuant to Section 5(a) is insufficient to cover all of the Registrable Shares required to be
covered by such Registration Statement or a Purchaser’s allocated portion of the Registrable
Shares, amend the applicable Registration Statement, or file a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover at least 100% of the number
of such Registrable Shares as of the trading day immediately preceding the date of the filing of
such amendment or new or additional Registration Statement, in each case, as soon as practicable,
but in any event not later than ten (10) days after the Company becomes aware of the necessity
therefor. The Company shall use its reasonable best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the filing thereof.
For purposes of the foregoing provision, the number of shares available under a Registration
Statement shall be deemed “insufficient to cover all of the Registrable Shares” if at any time the
number of shares of Common Stock available for resale under the Registration Statement is less than
the number of Registrable Shares. The calculation set forth in the foregoing sentence shall be
made without regard to any limitations on the exercise of the Warrants and such calculation shall
assume that the Warrants are then exercisable into shares of Common Stock;
(xiii) use its commercially reasonable efforts to cause all the Registrable Shares covered by
the Registration Statement to be listed on each securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the listing of such Registrable
Shares is then permitted under the rules of such exchange;
(xiv) respond as promptly as practicable, but in any event within ten (10) Business Days, to
any comments received from the SEC with respect to each Registration Statement or any amendment
thereto and, as promptly as practicable provide the Purchasers true and complete copies of all
correspondence from and to the SEC relating to such Registration Statement, provided, however, that
the contents of such copies of correspondence shall be redacted by the Company as to prevent the
disclosure to the Purchasers of material and non-public information concerning the Company;
(xv) submit to the SEC, within two (2) Business Days after the Company learns that no review
of a particular Registration Statement will be made by the staff of the SEC or that the staff of
the SEC has no further comments on a particular Registration Statement, as the case may be, a
request for acceleration of effectiveness of such Registration Statement to 5:00 p.m. E.S.T. on a
date not later than two (2) Business Days after the submission of such request;
(xvi) no later than 9:15 a.m. E.S.T. on the first trading day following the Effective Date,
file with the SEC in accordance with Rule 424 under the Securities Act the Prospectus;
(xvii) make available, while the Registration Statement is effective and available for resale,
its Chief Executive Officer and Chief Financial Officer for questions regarding information which
the Purchaser may reasonably request in order to fulfill any due diligence obligation on its part,
to the extent consistent with the Company’s obligations under the securities laws;
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(xviii) unless otherwise agreed to by holders of a majority of the Registrable Shares held by
the Purchasers, not include securities of the Company (other than the Registrable Shares and shares
(or shares issuable upon exercise of warrants) to be issued to X.X. Xxxxxxxxx, Towbin in connection
with the transactions contemplated hereby) in any Registration Statement filed pursuant to this
Agreement and the Company shall not after the date hereof enter into any agreement in contravention
of the foregoing; and
(xix) bear all expenses in connection with the procedures described in paragraphs (i) through
(xviii) of this Section 5(a) and the registration of the Registrable Shares pursuant to the
Registration Statement, other than fees and expenses, if any, of legal counsel or other advisers to
the Purchasers or underwriting discounts, brokerage fees and commissions incurred by the
Purchasers, if any.
The initial number of Registrable Shares included in any Registration Statement and each
increase in the number of Registrable Shares included therein shall be allocated pro rata among the
Purchasers based on the number of Registrable Shares held by each Purchaser at the time the
Registration Statement covering such initial number of Registrable Shares or increase thereof is
declared effective by the SEC. In the event that a Purchaser sells or otherwise transfers any of
such Purchaser’s Registrable Shares, each transferee that becomes an investor shall be allocated a
pro rata portion of the then remaining number of Registrable Shares included in the Registration
Statement for such transferor. Any shares of Common Stock included in the Registration Statement
and which remain allocated to any Person which ceases to hold any Registrable Shares covered by
such Registration Statement shall be allocated to the remaining Purchasers, pro rata based on the
number of Registrable Shares then held by such Purchasers which are covered by such Registration
Statement. In no event shall the Company include any securities other than Registrable Shares (and
shares (or shares issuable upon exercise of warrants) to be issued to X.X. Xxxxxxxxx, Towbin in
connection with the transactions contemplated hereby) on any Registration Statement without the
prior written consent of Purchasers holding at least a majority of the Registrable Shares.
The Company understands that each of the Purchasers disclaims being an underwriter, but a
Purchaser being deemed an underwriter shall not relieve the Company of any obligations it has
hereunder. It shall be a condition precedent to the obligations of the Company to take any action
pursuant to this Section 5(a) with respect to Registrable Shares held by a Purchaser that
such Purchaser shall timely furnish to the Company a completed Registration Statement Questionnaire
on or before the Closing Date and such other written information regarding such Purchaser, the
Registrable Shares to be sold by such Purchaser and the intended method of disposition of the
Registrable Shares as the Company may deem reasonably necessary to effect the registration of the
Registrable Shares. The Purchasers shall update such information as and when reasonably necessary
by written notice to the Company.
(b) Liquidated Damages.
(i) Delay in Filing or Effectiveness of Registration Statement. In the event that the
Registration Statement is not (A) filed by the Required Filing Date or (B) declared effective by
the Required Effective Date, the Company shall pay to each Purchaser (except for any Purchaser
whose failure to provide information as required hereunder causes a delay in filing
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or obtaining effectiveness) liquidated damages (in addition to the rights and remedies
available to each Purchaser under applicable law and this Agreement), at a rate equal to two
percent (2%) per month (pro rata on a 30-day basis) of the total purchase price of the Purchased
Securities purchased by such Purchaser pursuant to this Agreement for the period from and including
the first day following the Required Filing Date or Required Effective Date, as the case may be,
until, but excluding, the earlier of (x) the date the Registration Statement is filed, or the date
the SEC declares the Registration Statement effective, as applicable and (y) the date that is the
two-year anniversary of the Closing Date, as the case may be. Such liquidated damages shall be
payable in cash within ten (10) days of the end of each one (1) month anniversary of the Required
Filing Date or Required Effective Date, as the case may be; provided, however, that the Company
shall not be obligated to pay liquidated damages to each such Purchaser for more than twenty-three
(23) months and that the maximum amount of liquidated damages that the Company shall be obligated
to pay to each such Purchaser shall be equal to 46% of the total purchase price of the Purchased
Securities purchased by such Purchaser pursuant to this Agreement.
(ii) Lapse in Effectiveness and Suspension of Registration Statement. In the event
that the Registration Statement is filed and declared effective but, during the Registration
Period, (1) the Company receives a request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or the related prospectus
included in the Registration Statement (the “Prospectus”, as amended or supplemented by any
prospectus supplement and by all other amendments thereto and all material incorporated by
reference in such Prospectus); (2) the SEC or any other federal or state governmental authority
issues any stop order suspending the effectiveness of a Registration Statement or the initiates any
proceedings for that purpose; (3) the Company receives any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable Shares
for sale in any jurisdiction or the initiation of any proceeding for such purpose; or (4) any event
or circumstance which necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (each, a “Suspension”), then, except as permitted in the
case of a Transactional Suspension Event (as defined below), the Company shall pay to each
Purchaser liquidated damages (in addition to the rights and remedies available to each Purchaser
under applicable law and this Agreement), for the period from and including the first day of the
Suspension until, but excluding, the earlier of (1) the first date after such Suspension on which
the Purchasers either receive copies of a supplemental or amended Prospectus or are advised in
writing by the Company that the current Prospectus may be used and (2) the date that is the
two-year anniversary of the Closing Date, at a rate equal to two percent (2%) per month (pro rata
on a 30-day basis) of the total purchase price of the Purchased Securities purchased and still held
by such Purchaser pursuant to this Agreement; provided, however, that the foregoing payment shall
not apply to any Suspension due to an event or circumstance that necessitates the making of changes
in the Registration Statement or the Prospectus, or any document incorporated therein by reference
such that, in the
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case of the Registration Statement, it 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 not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading (a
“Transactional Suspension Event”); provided further, however, that such exception in the case of a
Transactional Suspension Event to the provision requiring the payment of liquidated damages in the
event of any Suspension shall be limited so as to negate the payment of liquidated damages that
otherwise would have been payable with respect to only (A) not more than two Suspensions in any
consecutive 12-month period and (B) of such one or two Suspensions in any consecutive 12-month
period permitted by clause (A), such Suspensions totaling no more than an aggregate of 45 days in
any consecutive 12-month period. For the avoidance of doubt, if the aggregate number of Suspension
days referenced in the preceding proviso exceeds such 45 day limit, the Company shall only be
required to pay liquidated damages relating to any Suspension days in excess of such 45 days. Such
liquidated damages shall be payable in cash within ten (10) days of the end of each one (1) month
anniversary of the expiration of the first day of the Suspension; provided, however, that the
Company shall not be obligated to pay liquidated damages to each such Purchaser for more than
twenty-four (24) months and that the maximum amount of liquidated damages that the Company shall be
obligated to pay to each such Purchaser shall be equal to 48% of the total purchase price of the
Purchased Securities purchased by such Purchaser pursuant to this Agreement.
(c) Transfer of Registrable Shares After Registration; Suspension.
(i) The Purchasers agree that they will not offer to sell or make any sale, assignment,
pledge, hypothecation or other transfer with respect to the Registrable Shares that would
constitute a sale within the meaning of the Securities Act except pursuant to either (1) the
Registration Statement in the manner described in the “Plan of Distribution” therein, (2) Rule 144
of the Securities Act or (3) any other exemption from registration under the Securities Act, and
that they will promptly notify the Company of any changes in the information set forth in the
Registration Statement after it is prepared regarding the Purchaser or its plan of distribution to
the extent required by applicable law.
(ii) Subject to paragraph (iii) below, in the event of any Suspension, the Company shall
deliver a certificate in writing to the Purchasers (the “Suspension Notice”) to the effect of the
foregoing (which notice will not disclose the content of any material non-public information and
will indicate the date of the beginning and end of the intended period of suspension, if known),
and, upon receipt of such Suspension Notice, the Purchasers will discontinue disposition of
Registrable Shares covered by to the Registration Statement or Prospectus until the Purchasers’
receipt of copies of a supplemented or amended Prospectus prepared and filed by the Company, or
until the Purchasers are advised in writing by the Company that the current Prospectus may be used
and have received copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such prospectus. In the event of any Suspension, the Company will
use its commercially reasonable efforts to cause the use of the Prospectus so suspended to be
resumed as soon as possible after delivery of a Suspension Notice to the Purchasers. The
Suspension and Suspension Notice
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described in this Section 5(c)(ii) shall be held in strictest confidence by each
Purchaser and shall not be disclosed by such Purchaser.
(iii) Provided that a Suspension is not then in effect, the Purchasers may sell Registrable
Shares under the Registration Statement, provided that the selling Purchaser arranges for delivery
of a current Prospectus to the transferee of such Registrable Shares to the extent such delivery is
required by applicable law.
(iv) In the event of a sale of Registrable Shares by a Purchaser, such Purchaser must also
deliver to the Company’s transfer agent, with a copy to the Company, a certificate of subsequent
sale reasonably satisfactory to the Company, so that ownership of the Registrable Shares may be
properly transferred. The Company will cooperate to facilitate the timely preparation and delivery
of certificates (unless otherwise required by applicable law) representing Registrable Shares sold.
(v) The Company shall use its commercially reasonable efforts to prevent the issuance of any
stop order or other suspension of effectiveness of the Registration Statement (other than as
permitted pursuant to a Transactional Suspension Event), or the suspension of the qualification of
any of the Registrable Shares for sale in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension as soon as reasonably practicable
consistent with the provisions of this Agreement.
(d) Indemnification. For the purpose of this Section 5(d), the term
“Registration Statement” shall include any preliminary or final Prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in Section
5(a), and the term “Purchaser/Affiliate” shall mean a Purchaser and any Affiliate of the
Purchaser, including a transferee who is an Affiliate of the Purchaser, and any person who controls
the Purchaser or any affiliate of the Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act.
(i) Indemnification by the Company. The Company agrees to indemnify and hold harmless
each of the Purchaser/Affiliates, their respective officers, directors, agents, representatives,
partners, members and employees, and each person, if any, who controls any Purchaser/Affiliates
within the meaning of the Securities Act, against any losses, claims, damages, judgments, fines,
penalties, charges, costs or other liabilities or expenses, joint or several, to which such
Purchaser/Affiliates, such officers, directors, agents, representatives, partners, members or
employees, or such controlling persons may become subject, under the Securities Act, the Exchange
Act or any other federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with the written consent
of the Company, which consent shall not be unreasonably withheld), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, the Prospectus, any statutory prospectus or issuer free writing
prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be stated therein or
necessary to make the statements in any of them, in light of the circumstances under which they
were made, not misleading, and will reimburse each
-24-
Purchaser/Affiliate, each of its respective directors, officers, agents, representatives,
partners, members and employees, and each such controlling person for any reasonable out-of-pocket
legal and other expenses incurred by such Purchaser/Affiliate, such directors, officers, agents,
representatives, partners, members or employees, or such controlling persons in connection with
investigating, defending or preparing to defend, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company will not be liable
for any such case to the extent that any such loss, claim, damage, liability, expense or action
arises out of or is based upon (1) an untrue statement or alleged untrue statement or omission or
alleged omission in the Registration Statement, the Prospectus any statutory prospectus or issuer
free writing prospectus or any amendment or supplement to any of the foregoing made in reliance
upon and in conformity with written information furnished to the Company by or on behalf of the
Purchaser/Affiliate demanding such indemnification expressly for use in the Registration Statement,
the Prospectus, any statutory prospectus or issuer free writing prospectus (2) the failure of such
Purchaser/Affiliate to comply with the covenants and agreements of such Purchaser contained in this
Agreement respecting resale of the Purchased Securities or the Warrant Shares or (3) any untrue
statement or omission of a material fact required to make such statement not misleading in any
Prospectus, any statutory prospectus or issuer free writing prospectus that is corrected in any
subsequent Prospectus, any statutory prospectus or issuer free writing prospectus that was
delivered to such Purchaser/Affiliate before the pertinent sale or sales by such
Purchaser/Affiliate.
(ii) Indemnification by each Purchaser. Each Purchaser agrees, severally and not
jointly, to indemnify and hold harmless the Company, each of the Company’s directors, officers,
agents, representatives and employees, and each person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages, judgments, fines, penalties,
charges, costs or other liabilities or expenses to which the Company, the Company’s directors,
officers, agents, representatives or employees, or any controlling persons may become subject,
under the Securities Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Purchaser, which consent shall not be
unreasonably withheld) insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof as contemplated below) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the Registration Statement, the Prospectus, any
statutory prospectus, or issuer free writing prospectus or any amendment or supplement thereto, or
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, the Prospectus, any statutory prospectus, or issuer free
writing prospectus or any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Purchaser expressly for use
therein, and such Purchaser will reimburse the Company, each of its directors, officers, agents,
representatives and employees, and any controlling persons for any legal and other expenses
incurred by the Company, its directors, officers, agents, representatives or employees, or any
controlling persons in connection with investigating, defending or preparing to defend, settling,
compromising or paying any such loss, claim, damage, liability, expense or action; provided,
however, that such Purchaser shall not be liable for any such untrue or alleged untrue statement or
omission or alleged omission with
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respect to which such Purchaser has delivered to the Company in writing a correction of such
untrue or alleged untrue statement or omission or alleged omission, before the occurrence of the
event from which such loss, claim, damage, liability or expense was incurred. Notwithstanding the
provisions of this Section 5(d), such Purchaser shall not be liable for any indemnification
obligation under this Agreement in excess of the aggregate amount of net proceeds received by such
Purchaser from the sale of the Registrable Shares pursuant to the Registration Statement.
(iii) Indemnification Procedure.
(1) Promptly after receipt by an indemnified party under this Section 5(d) of notice
of the threat or commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 5(d), promptly
notify the indemnifying party in writing of the claim and provide to the indemnifying party copies
of all written documents relating to such threatened or commenced action; but the omission so to
notify the indemnifying party will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise under the indemnity agreement contained in this
Section 5(d) or otherwise, to the extent it is not prejudiced as a result of such failure.
(2) In case any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and counsel to the indemnified
party shall have reasonably concluded that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this Section 5(d) for
any legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless:
a) the indemnified party shall have employed such counsel in connection with the assumption of
legal defenses in accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of more than one separate
counsel, reasonably approved by such indemnifying party, representing all of the indemnified
parties who are parties to such action); or
b) the indemnifying party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time after notice of
commencement of the action against the indemnified party,
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in each of which cases the reasonable out-of-pocket fees and expenses of counsel for the
indemnified party shall be at the expense of the indemnifying party.
(iv) Contribution. If the indemnification provided for in this Section 5(d)
is required by its terms but is for any reason held to be unavailable to, or is otherwise
insufficient to hold harmless, an indemnified party under this Section 5(d) with respect to
any losses, claims, damages, liabilities or expenses referred to in this Agreement, then each
indemnifying party shall contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to in this Agreement:
(1) in such proportion as is appropriate to reflect the relative faults of the Company and the
Purchasers in connection with the statements or omissions or inaccuracies in the representations
and warranties in this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations, or
(2) if the allocation provided by clause (1) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative faults referred to in clause (1)
above but also the relative benefits received by the Company and the Purchasers from the sale of
the Purchased Securities.
The respective relative benefits received by the Company on the one hand and each Purchaser on
the other shall be deemed to be in the same proportion as the amount to which the consideration
paid by such Purchaser to the Company pursuant to this Agreement for the Registrable Shares
purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the
difference (the “Difference”) between the amount such Purchaser paid for the Registrable Shares
that were sold pursuant to the Registration Statement and the amount received by such Purchaser
from such sale. The relative fault of the Company and each Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by the
Company or by such Purchaser and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in Section 5(d)(iii), any
reasonable legal or other fees or expenses incurred by such party in connection with investigating
or defending any such action or claim. The provisions set forth in Section 5(d)(iii) with
respect to the notice of the threat or commencement of any threat or action shall apply if a claim
for contribution is to be made under this Section 5(d)(iv); provided, however, that no
additional notice shall be required with respect to any threat or action for which notice has been
given under Section 5(d)(iii) for purposes of indemnification. The Company and each
Purchaser agree that it would not be just and equitable if contribution pursuant to this
Section 5(d)(iv) were determined solely by pro rata allocation (even if the Purchasers were
treated as one entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this paragraph. Notwithstanding the
provisions of this Section 5(d)(iv), no Purchaser shall be required to contribute any
amount in excess of the amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent misrepresentation
-27-
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who is not guilty of such fraudulent misrepresentation. The Purchasers’
obligations to contribute pursuant to this Section 5(d)(iv) are several and not joint.
(e) Rule 144 Information. For two years after the date of this Agreement, the Company
shall file in a timely manner all reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder and shall take such further
action to the extent required to enable the Purchasers to sell the Purchased Securities pursuant to
Rule 144 under the Securities Act (as such rule may be amended from time to time).
6. ADVISORY FEE. The Purchasers acknowledge that the Company intends to pay to X.X.
Xxxxxxxxx, Towbin, as financial advisor, a fee in respect of the sale of the Purchased Securities.
Each of the parties to this Agreement hereby represents that, on the basis of any actions and
agreements by it, there are no other brokers or finders entitled to compensation in connection with
the sale of the Purchased Securities to the Purchasers. The Company shall indemnify and hold
harmless the Purchasers from and against all fees, commission or other payments owing by the
Company to X.X. Xxxxxxxxx, Towbin or any other Person acting on behalf of the Company hereunder.
Each Purchaser shall, severally and not jointly, indemnify and hold harmless the Company from and
against all fees, commission or other payments owing by such Purchaser to any Person, other than
X.X. Xxxxxxxxx, Towbin, acting on behalf of such Purchaser hereunder.
7. CONDITIONS TO THE PURCHASERS’ OBLIGATIONS AT CLOSING. The obligations of the
Purchasers to consummate the transactions contemplated herein are subject to the fulfillment or
waiver, on or before the Closing, of each of the following conditions:
(a) Representations and Warranties True. Each of the representations and warranties
of the Company contained in Section 3 shall be true and correct in all material respects
(unless such representation or warranty is already qualified by materiality, in which case such
representation or warranty shall be true and correct in all respects) on and as of the date hereof
and on and as of the Closing Date with the same effect as though such representations and
warranties had been made as of the Closing Date (except for representations and warranties that
speak only as of a specific date).
(b) Performance. The Company shall have performed and complied in all material
respects with all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and shall have obtained
all approvals, consents and qualifications necessary to complete the purchase and sale described
herein; provided, however, as provided in Section 2 hereof, the Company shall deliver to
each Purchaser the original stock certificate(s) representing their respective Purchased Shares and
original warrant representing their respective Purchased Warrant to be delivered to such Purchaser
by overnight courier no later than the third (3rd) Business Day following the Closing Date.
(c) Company Compliance Certificate. The Company will have delivered to the Purchasers
a certificate signed on its behalf by its Chief Executive Officer or Chief Financial
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Officer, dated as of the Closing Date, certifying that the conditions specified in
Sections 7(a) and 7(b) hereof have been fulfilled.
(d) Agreements. The Company shall have executed and delivered to the Purchasers this
Agreement and copies of the warrants representing the Purchased Warrants.
(e) Securities Exemptions. The offer and sale of the Purchased Securities to the
Purchasers pursuant to this Agreement shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification requirements of all applicable state
securities laws.
(f) Good Standing Certificate. The Company shall have delivered to the Purchasers a
certificate of the Secretary of State of the State of Texas, dated as of a date within five days of
the Closing Date, with respect to the good standing of the Company.
(g) Secretary’s Certificate. The Company shall have delivered to the Purchasers a
certificate of the Company executed by the Company’s Secretary, dated as of the Closing Date,
attaching and certifying to the truth and correctness of (1) the Articles of Incorporation, (2) the
Bylaws and (3) the resolutions adopted by the Company’s Board of Directors approving this Agreement
and the transactions contemplated hereby, and that each of the items noted in this Section 7(f)(i)
remains unamended (other than as already amended at the time of delivery hereunder) and in full
force and effect, and attaching the certificate noted in Section 7(e)..
(h) Opinion of Company Counsel. The Purchasers will have received opinions, on behalf
of the Company, substantially in the forms attached hereto as Exhibit C and dated as of the
Closing Date, from (i) Xxxxx Xxxxx L.L.P., counsel to the Company, and (ii) Xxx Xxxxxxxx, the
Company’s General Counsel.
(i) No Statute or Rule Challenging Transaction. No statute, rule, regulation,
executive order, decree, ruling, injunction, action, proceeding or interpretation shall have been
enacted, entered, promulgated, endorsed or adopted by any court or governmental authority of
competent jurisdiction or any self-regulatory organization or the staff of any of the foregoing,
having authority over the matters contemplated hereby which questions the validity of, or
challenges or prohibits the consummation of, any of the transactions contemplated by this
Agreement.
(j) Nasdaq Approval. NASDAQ shall have completed its review of the transaction
contemplated hereby and any necessary approval of any regulatory body or other Person shall have
been obtained.
(k) Other Actions. The Company shall have executed such certificates, agreements,
instruments and other documents, and taken such other actions as shall be customary or reasonably
requested by the Purchasers in writing in connection with the transactions contemplated hereby.
8. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING. The obligations of the Company
to consummate the transactions contemplated herein to occur at or in
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connection with the Closing with respect to a Purchaser are subject to the fulfillment or
waiver, on or before the Closing Date, of each of the following conditions with respect to such
Purchaser:
(a) Representations and Warranties True. The representations and warranties of such
Purchaser contained in Section 4 shall be true and correct in all material respects (unless
such representation or warranty is already qualified by materiality, in which case such
representation or warranty shall be true and correct in all respects) on and as of the date hereof
and on and as of the Closing Date with the same effect as though such representations and
warranties had been made as of the Closing Date (except for representations and warranties that
speak only as of a specific date).
(b) Performance. Such Purchaser shall have performed and complied in all material
respects with all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by them on or before the Closing and shall have obtained
all approvals, consents and qualifications necessary to complete the purchase and sale described
herein.
(c) Agreements. Such Purchaser shall have executed and delivered to the Company this
Agreement and Appendix I and II hereto.
(d) Securities Exemptions. The offer and sale of the Purchased Securities to the
Purchasers pursuant to this Agreement shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification requirements of all applicable state
securities laws.
(e) Payment of Purchase Price. The Purchasers shall have delivered to the Company by
wire transfer of immediately available funds, full payment of the purchase price for the Purchased
Securities as specified in Section 1(b).
(f) No Statute or Rule Challenging Transaction. No statute, rule, regulation,
executive order, decree, ruling, injunction, action, proceeding or interpretation shall have been
enacted, entered, promulgated, endorsed or adopted by any court or governmental authority of
competent jurisdiction or any self-regulatory organization or the staff of any of the foregoing,
having authority over the matters contemplated hereby which prohibits the consummation of, any of
the transactions contemplated by this Agreement.
9. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of this Agreement will inure to
the benefit of and be binding upon the respective successors and permitted assigns of the parties.
The Company shall not assign this Agreement or any rights or obligations hereunder without the
prior written consent of each Purchaser holding Purchased Shares and Warrant Shares (excluding any
Purchased Shares or Warrant Shares sold to the public pursuant to Rule 144 or otherwise). With
respect to transfers that are not made pursuant to the Registration Statement or Rule 144 (but are
otherwise made in accordance with all applicable federal and state securities laws and the terms of
Section 4(j) of this Agreement), the rights and obligations of the Purchaser under this
Agreement shall be automatically assigned by the Purchaser to any
-30-
transferee of all or any portion (with such transferor retaining his, her or its rights and
obligations hereunder in the event that he, she or it retains any Purchased Securities) of the
Purchaser’s Purchased Securities. Upon any transfer permitted by this Section 9(a), the
Company shall be obligated to such transferee to perform all of its covenants under this Agreement
as if such transferee was a Purchaser as of the date hereof.
(b) Governing Law. This Agreement will be governed by and construed and enforced
under the internal laws of the State of New York, without reference to principles of conflict of
laws or choice of laws. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(c) Survival. The representations and warranties of the Company contained in
Section 3 of this Agreement and of the Purchasers contained in Section 4 of this
Agreement shall survive until the second (2nd) anniversary of the Closing Date. The covenants
contained in this Agreement shall survive the Closing Date in accordance with their terms.
(d) Counterparts. This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together will constitute one and the same
instrument.
(e) Headings. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement. All
references in this Agreement to sections, paragraphs, exhibits and schedules will, unless otherwise
provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by reference.
(f) Notices. Any notices and other communications required or permitted under this
Agreement shall be in writing and shall be delivered (i) personally by hand or by courier, (ii)
mailed by United States first-class mail, postage prepaid or (iii) sent by facsimile directed (A)
if to any Purchaser, at such Purchaser’s address or facsimile number set forth on Schedule
A to this Agreement, or at such address or facsimile number as such Purchaser may designate by
giving at least ten (10) days’ advance written notice to the Company or (b) if to the Company, to
its address or facsimile number set forth below, or at such other address or facsimile number as
the Company may designate by giving at least ten (10) days’ advance written notice to the
Purchasers. All such notices and other communications shall be deemed given upon (i) receipt or
refusal of receipt, if delivered personally, (ii) three days after being placed in the mail, if
mailed, or (iii) confirmation of facsimile transfer, if faxed.
If to the Company:
-31-
Attn: Xxxxxx X. Xxxxxxxx, General Counsel
Facsimile: 214.515.7385
Facsimile: 214.515.7385
with a copy to:
Xxxxx Xxxxx L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile: 214.661.4419
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile: 214.661.4419
If to the Company’s transfer agent:
Computershare Investor Services
0 X. Xx Xxxxx Xx.
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Phone: 000.000.0000, ext.4876
0 X. Xx Xxxxx Xx.
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Phone: 000.000.0000, ext.4876
(g) Amendments and Waivers. This Agreement may be amended and the observance of any
term of this Agreement may be waived only with the written consent of the Company and the
Purchasers holding at least a majority of the total aggregate number of the Purchased Shares and
Warrant Shares then outstanding (excluding any shares then already sold to the public pursuant to
Rule 144 or otherwise); provided, however, that if the amendment or waiver would materially change
or adversely affect the rights or obligations of any Purchaser under this Agreement, the written
consent of the Company and each Purchaser holding Purchased Shares and Warrant Shares (excluding
any Purchased Shares or Warrant Shares sold to the public pursuant to Rule 144 or otherwise) shall
be required to effect such amendment or waiver. Any amendment effected in accordance with this
Section 9(g) will be binding upon the Purchasers, the Company and their respective
successors and assigns.
(h) Severability. If any provision of this Agreement is held to be unenforceable
under applicable law, such provision will be excluded from this Agreement and the balance of the
Agreement will be interpreted as if such provision were so excluded and will be enforceable in
accordance with its terms.
(i) Entire Agreement. This Agreement, together with all exhibits and schedules
hereto, constitute the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersede any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect to the subject matter
hereof.
(j) Further Assurances. From and after the date of this Agreement, upon the request
of the Company or the Purchasers, the Company and the Purchasers will execute and deliver such
instruments, documents or other writings, and take such other actions, as may be
-32-
reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent
and purposes of this Agreement.
(k) Meaning of Include and Including. Whenever in this Agreement the word “include”
or “including” is used, it shall be deemed to mean “include, without limitation” or “including,
without limitation,” as the case may be, and the language following “include” or “including” shall
not be deemed to set forth an exhaustive list.
(l) Fees, Costs and Expenses. Except as otherwise provided for in this Agreement, all
fees, costs and expenses (including attorneys’ fees and expenses) incurred by any party hereto in
connection with the preparation, negotiation and execution of this Agreement and the exhibits and
schedules hereto and the consummation of the transactions contemplated hereby and thereby
(including the costs associated with any filings with, or compliance with any of the requirements
of any governmental authorities), shall be the sole and exclusive responsibility of such party;
provided, however, that, upon the Closing of this Agreement, the Company shall pay up to $30,000 of
attorneys’ fees and expenses incurred by H&Q Life Sciences Investors in connection with the
negotiation, preparation and execution of this Agreement.
(m) 8-K Filing and Publicity. As soon as practicable following the execution of this
Agreement, but in no event later than 8:30 a.m., eastern time, on the day following the Execution
Date, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the
transactions contemplated by this Agreement and attaching this Agreement and the press release
referred to below as exhibits to such filing (the “8-K Filing” including all attachments). Neither
the Company nor any Purchaser shall issue any press releases or any other public statements (other
than any filings required pursuant to applicable securities laws) with respect to the transactions
contemplated by this Agreement; provided, however, that the Company shall be entitled, without the
prior approval of any Purchaser, to issue any press release or make any other public disclosure
(including a press release (concerning the offering of the Purchased Securities) pursuant to Rule
135(c) under the Securities Act) with respect to such transactions (i) in substantial conformity
with the 8-K Filing and (ii) as is required by applicable laws and regulations; and, provided
further, that no such release may identify a Purchaser unless such Purchaser has consented thereto
in writing, or as required by law. The Company shall provide a copy of the press release for the
Purchasers’ review prior to issuing such press release.
(n) Waivers. No waiver by any party to this Agreement of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
(o) Stock Splits, Dividends and other Similar Events. The provisions of this
Agreement shall be appropriately adjusted to reflect any stock split, stock dividend,
reorganization or other similar event that may occur with respect to the Company after the date
hereof.
(p) Remedies. In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, each Purchaser and the Company will
-33-
be entitled to specific performance under this Agreement. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law would be adequate.
[Remainder of page intentionally left blank.]
-34-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| ZIX CORPORATION | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||||||
| Name: | Xxxxxxx X. Xxxxx | |||||||
| Title: | Chairman of the Board, | |||||||
| Chief Executive Officer and President | ||||||||
[PURCHASER SIGNATURE PAGES TO FOLLOW]
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| RAQ, LLC | ||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxxxx, M.D. | |||
| Name: Xxxxxxx X. Xxxxxxxxx, M.D. | ||||
| Title: Managing Member | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxx X’Xxxxxxxx | ||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxxx X’Xxxxxxxx | |||
| Name: Xxxxx X’Xxxxxxxx | ||||
| Title: N/A | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Diamond Opportunity Fund, LLC |
||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxxxxx Xxxxx | |||
| Name: Xxxxxxx Xxxxx | ||||
| Title: Managing Director | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Enable Growth Partners LP |
||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxx Xxxxxxx | |||
| Name: Xxxx Xxxxxxx | ||||
| Title: Principal | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Enable Opportunity Partners LP |
||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxx Xxxxxxx | |||
| Name: Xxxx Xxxxxxx | ||||
| Title: Principal | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxxx Diversified Strategy Master Fund LLC |
||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxx Xxxxxxx | |||
| Name: Xxxx Xxxxxxx | ||||
| Title: Principal | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| SRB Greenway Capital, L.P. |
||||
| “Purchaser” | ||||
| By: | SRB Management, L.P., General Partner | |||
| By: | BC Advisors, L.L.C., General Partner | |||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Xxxxxx X. Xxxxxx, Member | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| SRB Greenway Capital (QP), L.P. |
||||
| “Purchaser” | ||||
| By: | SRB Management, L.P., General Partner | |||
| By: | BC Advisors, L.L.C., General Partner | |||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Xxxxxx X. Xxxxxx, Member | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| SRB Greenway Offshore Operating Fund, L.P. |
||||
| “Purchaser” | ||||
| By: | SRB Management, L.P., General Partner | |||
| By: | BC Advisors, L.L.C., General Partner | |||
| By: | /s/ Xxxxx Xxxxxx | |||
| Xxxxx Xxxxxx, Member | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| H&Q LIFE SCIENCES INVESTORS | ||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxx | ||||
| Title: President | ||||
| Address: | 00 Xxxxx Xxxxx – Xxxxx 000 Xxxxxx, XX 00000 |
|||
| Telephone: | 000-000-0000 | |||
| Facsimile: | 000-000-0000 | |||
| DATE: | 4/4/06 | |||
| The name H&Q Life Sciences Investors is the designation of the Trustees for the time being under an Amended and Restated Declaration of Trust Dated February 20, 1992, as amended, and all persons dealing with H&Q Life Sciences Investors must look solely to the trust property for the Enforcement of any claim against H&Q Life Sciences Investors, as neither the Trustees, officers nor shareholders assume any personal liability for obligations entered into on behalf of H&Q Life Sciences Investors. | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Iroquois Master Fund Ltd. |
||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxxxx Xxxxxxxxx | |||
| Name: Xxxxxx Xxxxxxxxx | ||||
| Title: Authorized Signatory | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxx Xxx Corporation | ||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxx | ||||
| Title: Executive Vice President | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxxx X. Xxxxxxx |
||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxx | ||||
| Title: Executive Vice President | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxxxx X. Xxxxxx Revocable Trust |
||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxx | ||||
| Title: Executive Vice President | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxx X. Xxxxxxx | ||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxx | ||||
| Title: Executive Vice President | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxx Xxxxxxx as Custodian FBO Xxxxxxx X Xxxxxxxx XXX |
||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxx | ||||
| Title: Executive Vice President | ||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxx Xxxxxxx as Custodian FBO Xxxxxx X. Xxxxxxxxx XXX | ||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Executive Vice President | |||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxxxx X. Xxxxxxx | ||||
| “Purchaser” | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | N/A | |||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxx Xxxxxxx as Custodian FBO Xxxxxx X. Xxxxxxxxx XXX | ||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Executive Vice President | |||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxx Xxxxxxx as Custodian Xxxxx X. Xxxxxxx SPN/PRO | ||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Executive Vice President | |||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxxxx X. Xxxx | ||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Executive Vice President | |||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Xxxxx X. Xxxxxxx | ||||
| “Purchaser” | ||||
| By: Xxxxxxx Capital Management Inc., Attorney-In-Fact | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Executive Vice President | |||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| CASTLERIGG MASTER INVESTMENTS LTD. | ||||
| “Purchaser” | ||||
| By: XXXXXXX ASSET MANAGEMENT CORP. | ||||
| Signature: | /s/ Xxxxxxx X. Xxxxx | |||
| Name: | Xxxxxxx X. Xxxxx | |||
| Title: | Senior Managing Director | |||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| SF Capital Partners Ltd. | ||||||||
| “Purchaser” | ||||||||
| Signature: | /s/ Xxxxx X. Xxxxxxxx | |||||||
| Name: | Xxxxx X. Xxxxxxxx | |||||||
| Title: | Authorized Signatory | |||||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Valesco Healthcare Partners II LP | ||||||||
| “Purchaser” | ||||||||
| Signature: | /s/ I. Xxxxx Xxxxx | |||||||
| Name: | I. Xxxxx Xxxxx | |||||||
| Title: | Portfolio Manager of its General Partner | |||||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Valesco Healthcare Partners I LP | ||||||||
| “Purchaser” | ||||||||
| Signature: | /s/ I. Xxxxx Xxxxx | |||||||
| Name: | I. Xxxxx Xxxxx | |||||||
| Title: | Portfolio Manager of its General Partner | |||||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Valesco Healthcare Overseas Fund, Ltd. | ||||||||
| “Purchaser” | ||||||||
| Signature: | /s/ I. Xxxxx Xxxxx | |||||||
| Name: | I. Xxxxx Xxxxx | |||||||
| Title: | Investment Manager | |||||||
Signature Page to Securities Purchase Agreement
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 4, 2006
BY AND AMONG
ZIX CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Zix Corporation, the Securities Purchase
Agreement (the “Agreement”) to which this signature page is attached effective as of the date of
the Agreement, which Agreement and signature page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.
| Con Xxxx | ||||||||
| “Purchaser” | ||||||||
| Signature: | /s/ Con Xxxx | |||||||
| Name: | Con Xxxx | |||||||
| Title: | N/A | |||||||
Signature Page to Securities Purchase Agreement
SCHEDULE A
SCHEDULE OF PURCHASERS
| Name and Address | Total Number of Purchased Shares | Total Number of Purchased Warrants | Total Purchase Price | |||||||||
H&Q Life
Sciences Investors |
2,475,000 | 1,485,000 | $ | 2,945,250.00 | ||||||||
00 Xxxxx Xxxxx — Xxxxx 000 Xxxxxx, XX 00000 |
||||||||||||
SF Capital Partners Ltd. |
2,475,000 | 1,485,000 | $ | 2,945,250.00 | ||||||||
c/x Xxxxx Offshore Management, LLC 0000 Xxxxx Xxxx Xxxxx Xx. Xxxxxxx, XX 00000 |
||||||||||||
Iroquois Master Fund Ltd. |
1,650,000 | 990,000 | $ | 1,963,500.00 | ||||||||
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
||||||||||||
Castlerigg Master Investments Ltd. |
825,000 | 495,000 | $ | 981,750.00 | ||||||||
c/o Sandell Asset Management Corp. 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 |
||||||||||||
Enable Growth Partners LP |
602,250 | 361,350 | $ | 716,677.50 | ||||||||
Xxx Xxxxx Xxxxxxxx, Xxxxx 000 Xxx Xxxxxxxxx, XX 00000 |
||||||||||||
Enable Opportunity Partners LP |
99,000 | 59,400 | $ | 117,810.00 | ||||||||
Xxx Xxxxx Xxxxxxxx, Xxxxx 000 Xxx Xxxxxxxxx, XX 00000 |
||||||||||||
Xxxxxx Diversified Strategy Master Fund LLC |
123,750 | 74,250 | $ | 147,262.50 | ||||||||
Xxx Xxxxx Xxxxxxxx, Xxxxx 000 Xxx Xxxxxxxxx, XX 00000 |
||||||||||||
| Name and Address | Total Number of Purchased Shares | Total Number of Purchased Warrants | Total Purchase Price | |||||||||
SRB Greenway Capital, L.P. |
43,000 | 25,800 | $ | 51,170.00 | ||||||||
000 Xxxxxxx Xxxxx, Xxxxx 0000 Xxxxxx, Xxxxx 00000 Attn: Xxx Xxxxxxx |
||||||||||||
SRB Greenway Capital (QP), L.P. |
347,100 | 208,260 | $ | 413,049.00 | ||||||||
000 Xxxxxxx Xxxxx, Xxxxx 0000 Xxxxxx, Xxxxx 00000 Attn: Xxx Xxxxxxx |
||||||||||||
SRB Greenway Offshore Operating Fund, L.P. |
19,900 | 11,940 | $ | 23,681.00 | ||||||||
000 Xxxxxxx Xxxxx, Xxxxx 0000 Xxxxxx, Xxxxx 00000 Attn: Xxx Xxxxxxx |
||||||||||||
Valesco Healthcare Partners I LP |
52,500 | 31,500 | $ | 62,475.00 | ||||||||
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 Attn: I.Xxxxx Xxxxx |
||||||||||||
Valesco Healthcare Partners II LP |
129,500 | 77,700 | $ | 154,105.00 | ||||||||
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 Attn: I.Xxxxx Xxxxx |
||||||||||||
Valesco Healthcare Overseas Fund, Ltd. |
168,000 | 100,800 | $ | 199,920.00 | ||||||||
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 Attn: I.Xxxxx Xxxxx |
||||||||||||
RAQ, LLC |
175,000 | 105,000 | $ | 208,250.00 | ||||||||
x/x Xxxxxxxxx Xxxxxxxxxx Xxxxxxxxxxx, LLC 000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 Attn: General Counsel |
||||||||||||
Diamond Opportunity Fund, LLC |
100,000 | 60,000 | $ | 119,000 | ||||||||
000 Xxxxxx Xxxx., Xxxxx 000 Xxxxxxxxxx, XX 00000 |
||||||||||||
| Name and Address | Total Number of Purchased Shares | Total Number of Purchased Warrants | Total Purchase Price | |||||||||
Xxxxx X’Xxxxxxxx |
134,750 | 80,850 | $ | 160,352.50 | ||||||||
000 Xxxxxx Xxxxxxx Xxx, XX 00000 |
||||||||||||
Con Xxxx |
110,250 | 66,150 | $ | 131,197.50 | ||||||||
000 Xxxx 00xx, XX X Xxx Xxxx, XX 00000 |
||||||||||||
Xxxxx Xxx Corporation |
42,000 | 25,200 | $ | 49,980.00 | ||||||||
c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 |
||||||||||||
Xxxxxx X. Xxxxxxx |
42,000 | 25,200 | $ | 49,980.00 | ||||||||
c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 |
||||||||||||
Xxxxxxx X. Xxxxxx Revocable Trust |
29,400 | 17,640 | $ | 34,986.00 | ||||||||
c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxxxx |
||||||||||||
Xxxx X. Xxxxxxx |
25,000 | 15,000 | $ | 29,750.00 | ||||||||
c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 |
||||||||||||
Xxxxx Xxxxxxx as Custodian FBO Xxxxxxx X. |
42,000 | 25,200 | $ | 49,980.00 | ||||||||
Xxxxxxxx XXX c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxxxxxx |
||||||||||||
| Name and Address | Total Number of Purchased Shares | Total Number of Purchased Warrants | Total Purchase Price | |||||||||
Xxxxx Xxxxxxx as Custodian FBO Xxxxxx X. |
29,400 | 17,640 | $ | 34,986.00 | ||||||||
Xxxxxxxxx XXX c/x Xxxxxxx Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 Attn: Xxxxxx X. Xxxxxxxxx |
||||||||||||
Xxxxx Xxxxxxx as Custodian FBO Xxxxxx X. |
25,000 | 15,000 | $ | 29,750.00 | ||||||||
Xxxxxxxxx XXX c/x Xxxxxxx Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 Attn: Xxxxxx X. Xxxxxxxxx |
||||||||||||
Xxxxx Xxxxxxx as Custodian FBO Xxxxx X. |
29,400 | 17,640 | $ | 34,986.00 | ||||||||
Xxxxxxx SPN/PRO c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 Attn: Xxxxx X. Xxxxxxx |
||||||||||||
Xxxxxxx X. Xxxx |
29,400 | 17,640 | $ | 34,986.00 | ||||||||
c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 |
||||||||||||
Xxxxxxx X. Xxxxxxx |
64,400 | 38,640 | $ | 76,636.00 | ||||||||
0000 Xxxxxxxxx Xxxx Xxxxx, XX 00000 |
||||||||||||
Xxxxx X. Xxxxxxx |
42,000 | 25,200 | $ | 49,980.00 | ||||||||
c/o Perkins Capital Management, Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxxx, XX 00000 |
||||||||||||
APPENDIX I
STOCK CERTIFICATE AND WARRANT QUESTIONNAIRE
Pursuant to Section 4(l) of the Agreement, please provide us with the following
information:
1. The exact name that the Purchaser’s Purchased Shares and Purchased Warrant are to be
registered in (this is the name that will appear on your stock certificate(s)). A nominee name may
be used if appropriate:
2. The relationship between the Purchaser of the Purchased Shares and the Purchased Warrant
and the Registered Holder listed in response to Item 1 above:
3. The mailing address of the Registered Holder listed in response to Item 1 above:
4. The Social Security Number or Tax Identification Number of the Registered Holder listed in
response to Item 1 above:
APPENDIX II
REGISTRATION STATEMENT/SUITABILITY QUESTIONNAIRE
Pursuant to Section 4(l) of the Agreement, please provide the information below. All
capitalized terms not defined in this Appendix II shall have the meanings assigned to them in the
Agreement.
PART A
In connection with the preparation of the Registration Statement, please provide us with the
following information:
1. Pursuant to the “Selling Stockholder” section of the Registration Statement, please state
the Purchaser’s name exactly as it should appear in the Registration Statement:
2. Please provide the number of shares of Common Stock that the Purchaser will own immediately
after Closing, including those Shares purchased by the Purchaser pursuant to the Agreement and
those shares purchased by the Purchaser through other transactions:
3. Please explain the nature of the beneficial ownership of the shares of Common Stock owned
by the Purchaser organization, including any shares of Common Stock not held of record by the
Purchaser:
4. If the Purchaser is not a natural person, please identify each natural person who will
exercise sole or shared voting and/or dispositive power with respect to the shares of Common Stock
owned by the Purchaser immediately after the Closing. Please also specify in what capacity such
person(s) will exercise their voting and/or dispositive power with respect to such shares.
| Natural Person(s) | Relationship to Purchaser | |
5. Disclose the details of any rights to acquire shares of Common Stock that the Purchaser may
have:
6. Has the Purchaser had any material relationship within the past three years with the
Company or its affiliates?
Yes ¨ No ¨
If yes, please indicate the nature of any such relationships below:
7. Is the Purchaser a broker-dealer registered with the SEC?
Yes ¨ No ¨
8. Is the Purchaser affiliated with any registered broker-dealer?
Yes ¨ No ¨
If yes, please identify such broker-dealer and explain the relationship that such
registered broker-dealer has with the Purchaser (including details of any affiliation or
other relationship).
| Registered Broker-Dealer | Relationship to Purchaser | |
PART B
Pursuant to Section 4 of the Agreement, please provide us with the following information,
and we will use the Purchaser’s responses to qualify the Purchaser for purposes of federal and
state securities laws:
9. IDENTIFICATION
| Name: | ||||||
| Address of principal place of business: | ||||||
| State (or Country) of formation or incorporation: | ||||
| Contact Person: | ||||
| Telephone Number: | ||||
| Facsimile Number: | ||||
| Email Address: | ||||
| Type of Entity (corporation, partnership, trust, etc.): | ||||
| Social Security or Taxpayer or Employer Identification Number: | ||||
10. STATUS AS AN ACCREDITED INVESTOR
Please confirm that the Purchaser is an “accredited investor” as defined under the Securities Act
of 1933, as amended (the “Act”), by checking all applicable boxes to indicate the exemption
qualifying you as an accredited investor, as provided in Rule 501(a) under the Securities Act of
1933, as amended.
o a corporation, organization described in Section 501(c)(3) of the Internal Revenue
Code, a Massachusetts or similar business trust or a partnership, in each case, not formed for the
purpose of this investment, with total assets in excess of $5,000,000;
o a private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;
o a Small Business Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958;
o an investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act;
o a bank as defined in Section 3(a)(2) or a savings and loan association or other
institution defined in Section 3(a)(5)(A) of the Act acting in either an individual or fiduciary
capacity;
o an insurance company as defined in Section 2(13) of the Securities Act;
o an employee benefit plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974 whose investment decision is made by a fiduciary which is either a
bank, savings and loan association, insurance company, or registered investment advisor, or whose
total assets exceed $5,000,000, or, if a self-directed plan, a plan whose investment decisions are
made solely by persons who are accredited investors;
o a director, executive officer or general partner of the issuer of the securities being
offered or sold;
o a natural person whose individual net worth, or joint net worth with your spouse, at
the time of purchase exceeds $1,000,000;
o a natural person who had an individual income in excess of $200,000 in each of the two
most recent years or joint income with your spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the current year;
o a trust with total assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the securities offered, purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of the Securities Act;
o an entity in which all the equity owners are accredited investors; or
o other – Please describe:
11. RESIDENCE INFORMATION
Please indicate the jurisdiction in which the Purchaser resides, if the Purchaser is a natural
person, or in which the Purchaser is chartered and the jurisdiction in which it maintains its
principal offices:
12. INVESTMENT REPRESENTATION
Is the Purchaser purchasing the securities offered for its and for investment purposes only?
Yes ¨ No ¨
If no, please state for whom is the Purchaser investing and/or the reason for investing.
13. SIGNATURE
The above information is true and correct in all material respects and the undersigned
recognizes that the Company and its counsel are relying on the truth and accuracy of such
information in reliance on the exemption under the Securities Act. The undersigned agrees to
notify the Company promptly of any changes in the foregoing information which may occur
prior to the investment.
Executed at
|
, | on | , 2006. | |||||||
| Name of Entity: | ||||||||
| By: | ||||||||
| (Signature) | ||||||||
| (Name and title of signatory) | ||||||||
IF THE INVESTMENT WILL BE MADE BY MORE THAN ONE ENTITY, WHETHER OR
NOT AFFILIATED, PLEASE COMPLETE A COPY OF THIS QUESTIONNAIRE FOR
EACH ENTITY.
EXHIBIT A
FORM OF WARRANT
Filed as Exhibit 4.2 to Zix Corporation’s Current Report on Form 8-K dated April 5, 2006.
EXHIBIT B
DISCLOSURE LETTER
Introduction
Reference is made to that certain Securities Purchase Agreement, dated as of April 4, 2006
(the “Agreement”), by and among Zix Corporation, a Texas corporation (the “Company”) and each of
the purchasers listed on Schedule A attached thereto (collectively, the “Purchasers”).
Capitalized terms used herein and not otherwise defined herein shall have the meanings given to
such terms in the Agreement.
The schedules that constitute this Disclosure Letter are qualified in their entirety by
reference to the specific provisions of the Agreement. Inclusion of information herein shall not
constitute an admission or raise any inference that such information rises to a level of
materiality or is determinative of any standard of materiality.
Matters reflected in this Disclosure Letter are not necessarily limited to matters required by
the Agreement to be reflected in this Disclosure Letter. Such additional matters are set forth for
informational purposes only and do not necessarily include other matters of a similar nature.
Unless otherwise stated, all statements made herein are made as of the date of the execution of the
Agreement.
Matters disclosed in this Disclosure Schedule shall be deemed to be disclosed with respect to
all sections of the Agreement to which such disclosure is reasonably pertinent.
Headings have been inserted on the schedules set forth in this Disclosure Letter for
convenience of reference only and shall to no extent have the effect of amending or changing the
express description of the sections as set forth in the Agreement.
Schedule 3(b)
Capitalization
Capitalization
1. The Company owes $5.0 million principal amount to Amulet Limited (“Amulet”) pursuant to a
convertible promissory note, originally issued November 2, 2004. The convertible promissory note is
convertible into shares of Common Stock at a current conversion price of $5.24. The Company also
has issued common stock purchase warrants covering an aggregate of 1,961,887 shares, to Omicron
Master Trust (a former holder of a convertible note issued by the Company) (“Omicron”) and Amulet.
Because the number of shares potentially issuable in connection with the convertible notes and
related warrants issued to Amulet and Omicron could have exceeded 20% of the number of shares of
our common stock outstanding at the time the Company entered into the transaction, to comply with
the Marketplace Rules of The Nasdaq Stock Market, Inc. (“Nasdaq”), the Company placed a cap on the
number of shares that could be issued in respect of the convertible notes and warrants issued to
Amulet and Omicron equal to 19.9% of our then-outstanding shares (approximately 6.4 million
shares). This number is referred to as the “Share Cap.” Under the Nasdaq Marketplace Rules the
Company may not issue more than this number of shares in connection with any conversion, redemption
or interest payment on the convertible notes or in connection with the exercise of the warrants.
Although the Company has not yet issued the number of shares necessary to reach the Share Cap,
the number of shares of our common stock previously issued to Amulet and Omicron to effect note
redemptions plus the shares previously issued to pay accrued interest on the notes, when aggregated
with the number of shares of our common stock potentially issuable upon conversion of the remaining
principal amount of the notes or upon the exercise of warrants issued to Amulet and Omicron, now
exceed the Share Cap, resulting in a “share deficiency” under the relevant agreements with Amulet
and Omicron. As a result, pursuant to our agreements with Amulet and Omicron, the Company is
obligated to seek a vote of its shareholders prior to May 1, 2006 to approve the issuance of shares
in excess of the Share Cap and thus cure the share deficiency. One of the agenda items on the
agenda for the Company’s 2006 Annual Meeting of Shareholders, currently scheduled for April 27,
2006, is a proposal to remove the Share Cap and, thus, cure the share deficiency.
The share deficiency affects each of Amulet and Omicron differently. With respect to
Amulet, unless and until our shareholders vote to remove the Share Cap, no additional
shares of our common stock may be issued to pay accrued interest on or to fulfill conversions of
the convertible note held by Amulet or upon exercise of warrants issued to Amulet (which exercises
and conversions would currently require 1,526,718 shares). With respect to Omicron, 1,156,429
shares remain available to fulfill exercises of the warrants held by Omicron in comparison to an
aggregate of 1,389,367 shares that are required to fulfill warrant exercises, for a deficiency of
232,938 shares.
Regardless of whether the Company’s shareholders vote to remove the share cap and cure the
share deficiency, Amulet, the holder of the $5.0 million principal amount of the outstanding
convertible note, will have the right, upon notice to us, to require that the Company redeem in
cash the remaining outstanding $5.0 million principal amount of the convertible note and accrued
interest. Amulet has agreed to refrain from exercising its right of redemption until the earlier
of May 1, 2006, or the date of the Company’s 2006 Annual Meeting. The approximate amount required
to be paid to Amulet under the convertible note held by it is $5,338,143, consisting of $5.0
million principal amount owing, $250,000 premium, and accrued interest as of April 27, 2006 of
$88,143. Of this amount, approximately $5.0 million is held in a restricted, collateral account for
the benefit of Amulet and may not be used by us for any purpose other than to pay the amounts owing
to Amulet.
2. If Amulet exercises its right of cash redemption of the convertible promissory note held by
it, the Company will be obligated to issue additional warrants to purchase 70% of the number of the
Company common stock shares that were at the time of the redemption issuable upon conversion of the
convertible note. The exercise price of these warrants will be at the then-applicable conversion
price of the convertible note. As noted in item 3. below, the conversion price of the convertible
note will be adjusted downward as a result of the consummation of the transactions contemplated by
the Agreement. Because of the operation of the share cap described in item 1. above, these
warrants could not actually be exercised by Amulet unless and until the Company’s shareholders vote
to remove the Share Cap.
3. The consummation of the transaction contemplated by the Agreement will result in a weighted
average anti-dilution adjustment to (a) the conversion price of the convertible note held by Amulet
(and a corresponding increase in the number of shares issuable upon conversion of the note) and (b)
the exercise price and number of shares issuable under the warrants held by Omicron and Amulet. As
noted in item 1. above, the conversion of the note held by Amulet and the exercise of the warrants
held by Amulet and Omicron is limited by the Share Cap.
4. In connection with the Agreement, the Company will be obligated to issue to X.X. Xxxxxxxxx,
Towbin warrants representing 2% of the aggregate number of common shares issued to the Purchasers,
pursuant to that certain Engagement Letter, dated February 10, 2006, between the Company and X.X.
Xxxxxxxxx, Towbin.
Schedule 3(g)
Consents
Consents
1. Completion of review by the Nasdaq Stock Market, Inc. of the Notification Form: Listing of
Additional Shares regarding the securities to be issued under the Agreement, submitted by the
Company on or about March 6, 2006. The Company updated the Notification Form and provided certain
supporting documentation to Nasdaq on March 30, 2006. In a telephone call on March 31, 2006,
Nasdaq indicated that there were no issues regarding the Notification Form. The Company must also
file a Notification Form: Change in Number of Shares Outstanding no later than 10 days following
the Closing of the transaction.
Schedule 3(i)
Litigation
Litigation
1. Several putative class action lawsuits have been filed in the U.S. District Court for the
Northern District of Texas against the Company and certain of its current and former officers. The
suits allege that defendants made materially false and misleading statements and/or omissions in
violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The suits seek
unspecified damages on behalf of a purported class of purchasers of the Company’s common stock
during the period from October 30, 2003 to May 4, 2004. The allegedly false and misleading
statements and/or omissions appear to consist of statements made by the Company’s chairman and
chief executive officer and other officers during investor conference calls during the
aforementioned time period. These several class action lawsuits have been consolidated into one
case.
The Company has filed a motion to dismiss the consolidated class action lawsuits pursuant to
Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure and the Private Securities
Litigation Reform Act.
2. Three “shareholder derivative” lawsuits have been filed against the Company and certain
named individuals, as described below. The shareholder derivative lawsuits relate to the allegedly
materially false and misleading statements and/or omissions that are the subject of the purported
shareholder class action lawsuits. The derivative lawsuits name the Company as a nominal defendant
and as actual defendants the individuals named in the purported shareholder class action lawsuits
mentioned above, as well as certain current and former Company officers and directors. The suits
seek to require the Company to initiate legal action for unspecified damages against the individual
defendants named in the purported shareholder class action lawsuits. The suits also allege breaches
of fiduciary duty, abuse of control, insider selling, gross management, waste of corporate assets,
and misappropriation of information and seek contribution and indemnification against the
individual defendants. The plaintiffs in one of the shareholder derivative lawsuits have agreed
with the Company to “stay” the lawsuit. The plaintiffs in one of the derivative lawsuits have
agreed with the Company to stay the lawsuit until June 6, 2006. The Company and the individual
defendants have filed a motion to compel a stay of the third suit.
3. A former employee of the Company has asserted that the Company owes such employee
commission-related compensation in the aggregate amount of approximately $250,000. Arbitration
proceedings have commenced with respect to such claim.
Schedule 3(o)
Registration Rights Agreements
Registration Rights Agreements
1. Engagement Letter, dated February 10, 2006, between the Company and X.X. Xxxxxxxxx, Towbin,
relating to the registration of shares of Common Stock issuable upon exercise of warrants to be
issued in connection with Engagement Letter.
Schedule 3(p)
Title to Property and Assets
Title to Property and Assets
1. Liens covering the Company’s Accounts, Equipment and Fixtures and any proceeds relating to
the foregoing, pursuant to that certain Security Agreement, entered into as of January 30, 2004, by
and between the Company and Aventis Inc.
The obligations secured by the Security Agreement are a promissory note dated as of January
30, 2004 in the original principal amount of $3,000,000 payable to Aventis Inc. and a Master
Services Agreement dated as of January 30, 2004, pursuant to which Aventis Inc. paid $4,000,000 to
Company in respect of services to be rendered by Company to Aventis Inc.
2. Lien covering PocketScript, Inc. inventory, equipment, accounts, contract rights, chattel
paper, general intangibles, instruments, machinery and equipment, vehicles, insurance policies, and
proceeds pertaining to items supplied by T-Mobile USA, Inc., a supplier of some of the Blackberry
PDA’s used by PocketScript users.
3. Capital Lease Agreement between the Company and Dell Inc. with respect to certain equipment
leased by the Company for the use of its customers.
4. As noted in the last paragraph of item 1. of Schedule 3(b), Capitalization, the
$5.0 million principal amount convertible note held by Amulet Limited is secured by $5.0 million
principal amount held in a restricted, collateral account for the benefit of Amulet Limited.
EXHIBIT C
FORMS OF OPINIONS
Form of Opinion of Counsel to the Company:
1. The Company is a corporation validly existing and in good standing under the laws of the
State of Texas.
2. The Company has the corporate power required (i) to own, lease and operate its property and
assets and carry on its business as presently conducted as described in its Annual Report on Form
10-K for the year ended December 31, 2005 and (ii) to execute, deliver and perform its obligations
under each of the Transaction Documents, including, without limitation, the issuance of the
Purchased Shares, the Purchased Warrants and the Warrant Shares (upon exercise of the Purchased
Warrants and payment therefor), in accordance with the terms thereof.
3. The Purchased Shares have been duly authorized and will be validly issued, fully paid and
non-assessable when such shares have been duly delivered against payment therefor as contemplated
by the Purchase Agreement and, to our knowledge, are not subject to any pre-emptive rights or
similar rights, except for pre-emptive rights which on the Closing Date are being exercised or for
which the time period for exercise has expired.
4. The issuance of the Purchased Warrants has been duly authorized and, to our knowledge, is
not subject to any pre-emptive rights or similar rights, except for pre-emptive rights which on the
Closing Date are being exercised or for which the time period for exercise has expired, and the
Purchased Warrants will be validly issued when duly delivered against payment therefor as
contemplated by the Purchase Agreement.
5. The Warrant Shares have been duly authorized and reserved for issuance, and will be validly
issued, fully paid and non-assessable when such shares have been duly delivered upon exercise of
the Purchased Warrants against payment therefor in accordance with the terms of the Purchased
Warrants and, to our knowledge, are not subject to any pre-emptive rights or similar rights, except
for pre-emptive rights which on the Closing Date are being exercised or for which the time period
for exercise has expired.
6. The Company has taken all corporate action necessary to authorize its execution and
delivery of each of the Transaction Documents and its performance of each of its obligations
thereunder, including, without limitation, the issuance of the Purchased Shares, the Purchased
Warrants and the Warrant Shares (upon exercise of the Purchased
Warrants and payment therefor), and
no further consent or authorization of the Company, its Board of Directors or its stockholders is
required therefor. The Company has duly executed and delivered each of the Transaction Documents.
7. Each of the Transaction Documents constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with the terms of each such Transaction
Document.
8. The execution and delivery by the Company of each of the Transaction Documents and its
performance of its obligations thereunder, including, without limitation, the issuance of the
Purchased Shares, the Purchased Warrants and the Warrant Shares (upon exercise of the Purchased
Warrants and payment therefor), and the consummation of the transactions contemplated thereby, does
not and will not: (i) result in the violation of the Articles of Incorporation or By-laws of the
company, as amended or (ii) result in the violation of any Texas or federal statute, law, rule or
regulation applicable to the Company.
9. The execution and delivery by the Company of the Transaction Documents and the consummation
by the Company of the transactions contemplated thereby, does not require authorization, approval
or consent from or any filings with any governmental authority, regulatory agency, self-regulatory
organization or stock exchange under Texas or federal law, except for (i) authorizations,
approvals, consents or filings referenced or contemplated by the Transaction Documents, including,
but not limited to, those set forth in the Company’s representation in Section 3(g) of the Purchase
Agreement and a notification filing with Nasdaq and (ii) authorizations, approvals, consents or
filings as have been obtained or filed, as applicable, as of the date hereof.
10. The authorized capital of the stock of the Company consists of 175,000,000 shares of
Common Stock and 10,000,000 shares of Preferred Stock.
11. The Company is not an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.
12. Assuming (i) the accuracy of the representations and warranties of each of the Purchasers
in Section 4 of the Purchase Agreement (ii) the compliance by each Purchaser with its covenants set
forth therein and (iii) the accuracy of the representations set forth in the letter dated the date
hereof from X.X. Xxxxxxxxx Towbin to the Company, the issuance and sale of the Purchased Securities
under the circumstances contemplated by the Transaction Documents does not require registration
under the Securities Act of 1933, as amended.
Form of Opinion of the Company’s General Counsel:
1. The Company is qualified as a foreign corporation to do business and is in good standing in
each jurisdiction in which such qualification is necessary to conduct its business, except where
the failure to be so qualified and in good standing would not have a material adverse effect.
2. The execution and delivery of each of the Transaction Documents by the Company and its
performance of its obligations thereunder, including, without limitation, the issuance of the
Purchased Shares, the Purchased Warrants and the Warrant Shares (upon exercise of the Purchased
Warrants and payment therefor), and the consummation of the transactions contemplated thereby, do
not and will not (i) breach or result in a default (with or without the passage of time or giving
of notice or both) or require consent under, give rise to any right of termination, cancellation or
acceleration of, or to loss of any material benefit to which the Company is entitled under, or
result in the creation or imposition of any lien, claim or encumbrance upon any property or asset
of the Company under, any document filed by the Company as an exhibit to the SEC Documents or (ii)
result in the violation of any order, writ, injunction or decree applicable to the
Company and known to me.
3. To my knowledge, no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body or any governmental agency or self-regulatory organization is pending
or threatened against the Company or any its properties or assets except for such
actions, suits, proceedings, inquiries or investigations set forth in the Disclosure Schedule or
that if determined adversely to the Company would not have a material adverse effect on the
Company.
EXHIBIT D
PLAN OF DISTRIBUTION
We are registering the shares of common stock to permit the resale of the shares of common
stock by the selling stockholders. We will not receive any of the proceeds from the sale by the
selling stockholders of the shares of common stock. We will bear all fees and expenses incident to
our obligations to register the shares of common stock.
The selling stockholders and any of their pledgees, assignees, transferees, donees and
successors-in-interest may, from time to time, sell any or all of the shares of common stock owned
by them and offered hereby on any stock exchange, market or trading facility on which our common
stock is traded or in private transactions. These sales may be at fixed or negotiated prices.
Each selling stockholder will act independently in making decisions with respect to the timing,
manner and size of each sale of the shares of common stock covered in the registration statement of
which this prospectus forms a part. The selling stockholders may use any one or more of the
following methods when selling the shares of our common stock
– ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers, which may include long sales and short sales effected after the effective date of the
Registration Statement;
– block trades in which the broker-dealer will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal to facilitate the transaction;
– purchases by a broker-dealer as principal and resale by the broker-dealer for its account
pursuant to this Prospectus;
– “at the market” to or through market makers or into an existing market for the Shares;
– an exchange distribution in accordance with the rules of the applicable exchange;
– in other ways not involving market makers or established trading markets, including direct
sales to purchasers, sales effected through agents or other privately negotiated transactions;
– settlement of short sales;
– broker-dealers may agree with the Selling Stockholders to sell a specified number of Shares
at a stipulated price per share;
– through transactions in options, swaps or other derivative securities (whether
exchange-listed or otherwise);
– a combination of any the foregoing methods of sale; and
– any other method permitted by applicable law.
Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated.
The selling stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration of the Shares,
including certain fees and disbursements of counsel to the selling stockholders; provided, however,
that the selling stockholders will pay all underwriting discounts and selling commissions, if any.
We have agreed to indemnify the selling stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act. We will be indemnified by the selling
stockholders against civil liabilities, including liabilities under the Securities Act that may
arise from any written information furnished to us by the selling stockholders for use in this
prospectus.
The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may
apply to sales of our common stock and activities of the selling stockholders. The foregoing may
affect the marketability of the shares of common stock and the ability of any person or entity to
engage in market-making activities with respect to the shares of common stock.
There can be no assurance that the selling stockholders will sell any or all of the shares of
common stock registered pursuant to the registration statement, of which this prospectus forms a
part.
Once sold under the registration statement of which this prospectus forms a part, the shares
of common stock will be freely tradable in the hands of persons other than our affiliates.
