EXHIBIT 10.2
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is dated as of February 12,
2003 by and between Indus International, Inc., a Delaware corporation located at
0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "Company"), and each of
the various purchasers (each, a "Purchaser", and collectively, the "Purchasers")
identified on, and a party to, an executed copy of the Subscription Agreement to
which this Agreement is an Exhibit (the "Subscription Agreement").
SECTION 1
SALE OF COMMON STOCK AND CONVERTIBLE NOTES
Subject to the terms and conditions hereof, the Company has offered,
and will issue and sell (the "Offering") to the Purchasers, and the Purchasers
will, severally and not jointly, buy from the Company, upon acceptance by the
Company of the Subscription Agreements, (i) a total of up to 6,871,480 shares of
the common stock, $0.001 par value per share, of the Company (the "Common
Stock") for the purchase price of $1.50 per share, with each Purchaser,
severally and not jointly, purchasing the number of shares of Common Stock for
the aggregate cash purchase price indicated in the Subscription Agreement, and
(ii) a total of up to $20,000,000 in aggregate principal amount of the Company's
8% convertible notes due 2003 (the "Convertible Notes"), with each Purchaser,
severally and not jointly, purchasing the principal amount of Convertible Notes
indicated in the Subscription Agreement. The shares of Common Stock to be issued
and sold by the Company and purchased by the Purchasers pursuant to this
Agreement are herein referred to as the "Shares," and the Convertible Notes to
be issued and sold by the Company and purchased by the Purchasers pursuant to
this Agreement are herein referred to as the "Notes." Together, the Shares and
Notes to be purchased by the Purchasers pursuant to this Agreement are herein
referred to as the "Securities." This Agreement and each Purchaser's obligation
hereunder are not conditioned on the sale of any minimum number of Shares or any
minimum aggregate principal amount of Notes.
The Securities will be offered and sold without registration under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act and
Regulation D thereunder. The Company has prepared and delivered to each
Purchaser copies of a Confidential Private Placement Memorandum, dated as of the
date hereof, (as it may be amended or supplemented, and including the exhibits
and/or schedules thereto and the information incorporated therein by reference,
the "Offering Document").
The Company has entered into a Purchase Agreement, dated as of the date
hereof (the "Acquisition Agreement"), pursuant to which the Company has agreed
to acquire (the "Acquisition") all of the outstanding common stock of SCT
Utility Systems, Inc., a Delaware corporation ("SCT"), as well as certain assets
owned by affiliates of SCT and used in SCT's business. The Company will use the
proceeds from the sale of the Securities to fund the Acquisition and for related
fees and expenses. The Company has entered into an Escrow Agreement, dated as of
the date hereof (the "Escrow Agreement"), by and between the Company, and The
Bank of New York, as escrow agent (the "Escrow Agent"), pursuant to which the
Company will deposit, or direct the deposit, with the Escrow Agent the proceeds
from the sale of the Securities, which funds (the "Escrow Funds") will be held
by the Escrow Agent pending their application in accordance with the provisions
of the Escrow Agreement.
The Purchasers of Shares (and any subsequent permitted transferees)
will be entitled to the benefits of a Registration Rights Agreement, to be dated
as of the date hereof (as attached to the Subscription Agreement as Exhibit B,
the "Registration Rights Agreement for Shares"), by and among the Company and
the Purchasers. Pursuant to the Registration Rights Agreement for Shares, the
Company will file with the Securities and Exchange Commission (the "SEC" or the
"Commission") as soon as practicable after the Closing, and in no event later
than 30 days thereafter, a shelf registration statement on Form S-3 pursuant to
SEC Rule 415 (the "Registration Statement for Shares") under the Securities Act
relating to the resale of the Shares by the Purchasers. The Company shall use
its commercially reasonable efforts to cause such Registration Statement for
Shares to be declared effective promptly and to be maintained effective until
the earlier of (i) the date on which all of the Shares have been resold under
the Registration Statement for Shares, and (ii) the date on which all of the
Shares may be traded by the Purchasers without restriction (the "Effectiveness
Period for Shares"). Should the Registration Statement for Shares not be
declared effective or should its effectiveness lapse prior to the end of the
Effectiveness Period for Shares, then the Purchasers of Shares shall have demand
registration rights (if requested by Purchasers of Shares holding more than 30%
of the Shares not so resold) and unlimited "piggy-back" registration rights, in
each case as set forth in the Registration Rights Agreement for Shares.
The Purchasers of Notes (and any subsequent permitted transferees) will
be entitled to the benefits of a Registration Rights Agreement, to be dated as
of the date hereof (as attached to the Subscription Agreement as Exhibit C, the
"Registration Rights Agreement for Conversion Shares," and, together with the
Registration Rights Agreement for Shares, the "Registration Rights Agreements"),
by and among the Company and the Purchasers, for the purpose of registering the
shares (the "Conversion Shares") of Common Stock that the Purchasers of Notes
may receive upon the conversion of their Notes following the Company's receipt
of the requisite stockholder approval in accordance with the terms hereof and of
the Note. Pursuant to the Registration Rights Agreement for Conversion Shares,
the Company will file with the SEC as soon as practicable after the Closing, and
in no event later than 30 days thereafter, a shelf registration statement on
Form S-3 pursuant to SEC Rule 415 (the "Registration Statement for Conversion
Shares," and, together with the Registration Statement for Shares, the
"Registration Statements") under the Securities Act relating to the resale of
the Conversion Shares by the Purchasers. The Company shall use its commercially
reasonable efforts to cause such Registration Statement to be declared effective
promptly and to be maintained effective until the earlier of (i) the date on
which all of the Conversion Shares have been resold under the Registration
Statement for Conversion Shares, and (ii) the date on which all of the
Conversion Shares may be traded by the Purchasers without restriction (the
"Effectiveness Period for Conversion Shares"). Should the Registration Statement
for Conversion Shares not be declared effective or should its effectiveness
lapse prior to the end of the Effectiveness Period for Conversion Shares, then
the Purchasers of Notes shall have demand registration rights (if requested by
Purchasers of Notes holding more than 30% of the Conversion Shares not so
resold) and unlimited "piggy-back" registration rights, in each case as set
forth in the Registration Rights Agreement for Conversion Shares.
SECTION 2
FUNDING; ESCROW; CLOSING; DELIVERY
2.1. FUNDING AND ESCROW. The closing of the Purchasers' commitment,
and the Purchasers' delivery of funds (the "Funding"), to purchase the
Securities for which they have subscribed in the Subscription Agreement, shall
be held at the offices of Xxxxxx & Bird LLP, counsel to the Company, or at such
other place upon which the Company and the Purchasers shall agree. At Funding,
the Purchasers shall, severally and not jointly, pay the purchase price (as to
each Purchaser, the "Purchase Price") for their Securities by wire transfer to
an account designated by the Escrow Agent. The Escrow Agent will hold and
disburse the Escrow Funds pursuant to the terms of the Escrow Agreement. The
Funding shall occur simultaneously with or immediately after the execution and
delivery of this Agreement by the Purchasers and the Company, or on such later
date as the Company and the Purchasers may agree.
2.2. CLOSING AND DELIVERY. The issuance and delivery of the
Securities is conditioned upon, and shall occur simultaneously with, or
immediately after, the closing of the Acquisition (together, the "Closing"). In
the event that the Acquisition is not closed on or prior to March 14, 2003, the
"drop dead" date of the Acquisition under the Acquisition Agreement (the
"Expiration Date"), then the Closing of the sale of the Securities will not
occur, and the Escrow Agent shall disburse to each Purchaser, his or her
Purchase Price, together with his or her pro rata share of any interest earned
on the Escrow Funds while held by the Escrow Agent. At the Closing, or within a
reasonable period of time thereafter, the Company will deliver to each
Purchaser, as applicable (i) a certificate, registered in the name of such
Purchaser as shown in the appropriate Subscription Agreement, for the number of
Shares to be purchased by such Purchaser, and/or (ii) a Notes, registered in the
name of such Purchaser as shown in the appropriate Subscription Agreement, for
the aggregate principal amount of Notes to be purchased by such Purchaser.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to the Purchasers and
the Placement Agent as follows:
3.1. ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to carry
on it business as now conducted and to own, lease and operate its properties and
assets. The Company is duly qualified or licensed to transact business as a
foreign corporation in good standing in the states of the United States and
foreign jurisdictions where the character of its properties and assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the financial position, business or results of
operations of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect"). The term "Material Adverse Effect" does not include the impact
OF (i) changes in laws of general applicability or interpretations thereof by
courts or other Governmental Authorities (as defined below), or (ii) changes in
generally accepted accounting principals as in effect in the United States
("GAAP"). The Company has made available to each of the Purchasers true and
correct copies of the Company's Articles of Incorporation, as amended and/or
restated and as in effect on the date hereof (the "Articles of Incorporation"),
and the Company's Bylaws, as in effect on the date hereof (the "Bylaws"). The
Company owns 100% of all shares of capital stock and other equity interests in
each of its subsidiaries free and clear of all security interests, liens,
pledges or negative pledges, charges, encumbrances, mortgages, hypothecations,
adverse claims or equities (each, a "Lien").
3.2. CORPORATE POWER. The Company has the corporate power and
authority necessary to execute, deliver and perform this Agreement and to
execute, deliver and perform the Escrow Agreement and the agreements set forth
as Exhibits hereto (collectively with this Agreement, the "Agreements"), and at
Funding to sell, and at Closing to issue, the Securities as set forth in the
Agreements, and to carry out and perform its obligations under the Agreements.
3.3. SUBSIDIARIES. The Company has those subsidiaries or affiliated
companies shown on Schedule 3.3 hereto, and does not otherwise own or control,
directly or indirectly, any equity interest in any corporation, association or
business entity, other than as shown on Schedule 3.3 hereto. Each subsidiary of
the Company that is a corporation has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its properties
and to conduct its business and is duly registered, qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or the nature of its properties requires such
registration, qualification or authorization, except where such failure to so
qualify or register would not be reasonably likely to have a Material Adverse
Effect. All of the issued and outstanding capital stock of each subsidiary has
been duly authorized and validly issued, is fully paid and non-assessable, and
is owned by the Company free and clear of any Lien.
3.4. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock (the "Preferred Stock"). As of February 3,
2003, there were 35,237,403 shares of Common Stock issued and outstanding, and
no shares of Preferred Stock issued and outstanding. No other shares of capital
stock are issued and outstanding. As of February 3, 2003, there were options and
warrants outstanding issued by the Company to purchase an aggregate of 9,600,244
and 304,533 shares of Common Stock, respectively. All of the outstanding shares
of Common Stock and Preferred Stock are, and all of the Shares and Conversion
Shares, when issued, will be, duly authorized, validly issued, fully paid and
nonassessable, and all such shares were, and the Shares and any Conversion
Shares, will be, issued in material compliance with all applicable federal and
state securities laws, including available exemptions therefrom, and none of
such issuances were, and the issuance of the Shares and any Conversion Shares
will not be, made in violation of any pre-emptive or other rights. The Company
has reserved 14,585,631 shares of Common Stock for issuance pursuant to its
stock option and stock purchase plans and existing outstanding warrants and an
adequate number of shares of Common Stock for the conversion of the Notes.
Except as set forth above or on Schedule 3.4, there are no options, warrants or
other rights (including conversion, pre-emptive or other rights) or agreements
outstanding to purchase any of the Company's authorized and unissued capital
stock.
3.5. AUTHORIZATION; VALID ISSUANCE. (a) All corporate action on the
part of the Company, its officers, directors and stockholders, if any, necessary
for the authorization, execution, delivery and performance of the Agreements by
the Company, and for the authorization, the sale, issuance and delivery of the
Securities has been taken or will be taken prior to the Funding or the Closing,
as appropriate. The Agreements have been duly executed and delivered by the
Company, and represent legal, valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium or similar
laws affecting the enforcement of creditors' rights generally, and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought (the "Bankruptcy and Equity Exception")). The Board of Directors of
the Company (the "Board of Directors") has taken all action necessary to render
inapplicable, as it related to the Investor, the provisions of Section 203 of
the General Corporation Law of the State of Delaware.
(b) The Shares being purchased by the Purchasers hereunder will,
upon issuance pursuant to the terms hereof and upon payment therefor, be duly
authorized and validly issued, fully paid and non-assessable shares of Common
Stock, free of preemptive or similar rights. Upon their issuance in accordance
with the terms hereof and of the Notes, the Conversion Shares will be duly
authorized, validly issued, fully paid and non-assessable shares of Common
Stock, free of all preemptive or similar rights.
(c) Subject to the accuracy of the representations made by the
Purchasers in Section 5 hereof, the Securities and any Conversion Shares will be
issued to the Purchasers in compliance with applicable exemptions from (i) the
registration and prospectus delivery requirements of the Securities Act, and
(ii) the registration and qualification requirements of all applicable
securities laws of the states of the United States.
3.6. REPORTS AND FINANCIAL STATEMENTS. The Company has delivered,
as exhibits to the Offering Document, to the Purchasers prior to the execution
of this Agreement a copy of the Company's Annual Report on Form 10-K for the
year ended December 31, 2001, the Company's Quarterly Reports on Form 10-Q that
have been filed for all quarters ended since December 31, 2001, if any, the
definitive proxy statement for the Company's 2002 annual meeting of
stockholders, if filed with the Commission as of the date hereof, and will
deliver any Current Reports on Form 8-K filed since December 31, 2001 (as such
documents have since the time of their filing been amended or supplemented, and
together with all reports, documents and information filed on or after the date
first written above through the date of Closing with the SEC, including all
information incorporated therein by reference, collectively, the "SEC Reports").
The SEC Reports (a) complied and will comply as to form in all material respects
with the requirements of the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and (b) did not, at the time of their
filing, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.7. DISCLOSURES. The Offering Document, including all exhibits
thereto, as amended or supplemented, did not and will not, as of the date
thereof through the Closing, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The Company has provided to each prospective offeree of the Securities who has
requested further information concerning the Company and its subsidiaries such
information (to the extent that such information is available or can be acquired
and made available to prospective Purchasers without unreasonable effort or
expense and to the extent the provision thereof is not prohibited by applicable
law).
3.8. NO INTEGRATION. Neither the Company nor its affiliates (as
defined in Rule 501(b) under the Securities Act) ("Affiliates") has, directly or
through any authorized agent, during the six month period ending on the date of
this Agreement, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act) in a
manner that would cause the offer and sale of the Securities or Conversion
Shares, if any, to fail to be entitled to the exemption afforded by Rule 506 of
Regulation D, or under Section 4(2) of the Securities Act.
3.9. NO PUBLIC OFFERING. Neither the Company nor its Affiliates has
engaged, in connection with the offering of the Securities or Conversion Shares,
if any, (i) in any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the Securities Act, (ii) in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act, (iii) in any action which would violate applicable state securities, or
"blue sky," laws, or in any directed selling efforts within the meaning of SEC
Regulation S.
3.10. CONFORMITY OF DESCRIPTIONS. The Shares conform, and the
Conversion Shares, when issued, will conform in all material respects to the
descriptions of the Company's Common Stock contained in the Company's SEC
Reports and other filings with the SEC.
3.11. NO CONFLICTS. The execution, delivery and performance of the
Agreements, the issuance and delivery of the Securities, and the Conversion
Shares, when issued, by the Company and the consummation by the Company of the
transactions contemplated herein and in the other Agreements do not and will not
(i) conflict with or violate any provision of the Articles of Incorporation,
Bylaws or other organizational documents of the Company or any of its
subsidiaries, (ii) conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would become a default) under, or give to
other individual, partnership, joint stock company, corporation, trust,
unincorporated organization, government agency or political subdivision (each of
the foregoing, a "Person") any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture, patent, license or
instrument (whether evidencing a Company debt or otherwise) to which the Company
or any of its subsidiaries is a party or by which any property or asset of the
Company or any of its subsidiaries is bound or affected, except for such
defaults that would not, individually or in the aggregate, result in a Material
Adverse Effect, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or any of its subsidiaries is
subject (including federal and state securities laws and regulations and the
rules and regulations of the principal market, system or exchange on which the
Common Stock is traded, quoted or listed), or by which any material assets of
the Company or any of its subsidiaries is bound or affected.
3.12. CONSENTS AND APPROVALS. Except as set forth on Schedule 3.12,
no notice to, filing with, or consent of any federal, state, county, local,
foreign or other governmental, public or regulatory agencies, authorities
(including self-regulatory authorities), courts, instrumentalities, commissions,
boards or bodies having jurisdiction over the Company and its subsidiaries
("Governmental Authorities") or any third party is necessary for the
consummation by the Company or any of its subsidiaries of the transactions
contemplated by the Agreements, other than (i) the filing of the Registration
Statements with the Commission in accordance with the appropriate Registration
Rights Agreements, (ii) the application(s) or any letter(s) acceptable to Nasdaq
for the listing or quoting of the Shares and the Conversion Shares, if
applicable, on Nasdaq (and with any other national securities exchange or
automated quotation system or market on which the Common Stock is then traded,
listed or quoted), and the notice, if any, required by Nasdaq, (iii) any
filings, notices or registrations under applicable state securities laws, (iv)
the disclosure requirements of the Exchange Act, and the disclosure requirements
of Item 701 of SEC Regulation S-K, (v) filing a Form D and a Form 8-K in respect
of the sale and issuance of the Securities with the Commission (collectively,
the "Required Approvals"), and (vi) filing a Proxy Statement with the Commission
for the solicitation of the approval of, and obtaining the approval of, the
Company's stockholders to convert the Notes into Conversion Shares.
3.13. PROCEEDINGS. There is no action, suit, hearing, claim, notice
of violation, arbitration or other proceeding, hearing or investigation (each, a
"Proceeding") pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries or any of their respective
assets before or by any Governmental Authority or any arbitrator, which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Agreements, (ii) could reasonably be expected to, individually or in the
aggregate, have or result in a Material Adverse Effect, or (iii) if adversely
decided, could reasonably be expected to have a material adverse effect on, or
delay the issuance of, the Securities or the Conversion Shares, if any, or the
consummation of the transactions contemplated by the Agreement. The foregoing
includes, without limitation, any such action, suit, proceeding or investigation
that questions this Agreement or seeks to delay or prevent the consummation of
the transactions contemplated hereunder or the right of the Company to execute,
deliver and perform under same. The Company is not a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any
Governmental Authority that is reasonably likely to have a Material Adverse
Effect before or after consummation of the transactions contemplated by this
Agreement. No action, suit, proceeding, claim, investigation or inquiry by the
Company or any subsidiary is currently pending nor
does the Company intend to initiate any action, suit, proceeding, claim,
investigation or inquiry, in each case, that if resolved in a manner adverse to
the Company, is reasonably likely to have a Material Adverse Effect.
3.14. NO DEFAULT OR VIOLATION. Except for those that would not,
individually or in the aggregate, result in a Material Adverse Effect, none of
the Company or any of its subsidiaries is in (i) default under or in violation
of any indenture, loan or other credit agreement or any other agreement or
instrument to which any of them is a party or by which any of them or their
respective assets or properties is bound, or (ii) violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
arbitrator or Governmental Authority applicable to it. None of the Company or
any of its subsidiaries is in default under, or in violation of, its articles of
incorporation, bylaws or other organizational documents or in default under or
in violation of any of the listing or quotation requirements of Nasdaq (or of
any other national securities exchange or automated quotation system or market
on which the Common Stock is then traded, listed or quoted) as in effect on the
date hereof, and the Company is not aware of any facts which could reasonably
lead to de-listing or suspension of trading in the Common Stock by Nasdaq (or
any other national securities exchange or automated quotation system or market
on which the Common Stock is then traded, listed or quoted) in the foreseeable
future. The business of the Company and its subsidiaries is not being conducted
in violation of any law, statute, ordinance, rule or regulation of any
Governmental Authority, except where such violations have not resulted or are
not reasonably likely to result, individually or in the aggregate, in a Material
Adverse Effect. None of the Company or any of its subsidiaries is in breach of
any agreement where such breach, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect.
3.15. BROKER'S FEES. The Company has incurred no liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payments in connection with the Agreements or the transactions
contemplated therein, other than fees payable to X.X. Xxxxxxxxx, Towbin, as the
exclusive placement agent of the Company for the Offering (the "Placement
Agent"), and the Company shall indemnify and hold harmless the Purchasers from
and against any such claims.
3.16. LISTING COMPLIANCE. The only securities exchange or automated
quotation system or market on which the Common Stock is traded is Nasdaq, and
the Company has no other securities listed or traded on any other securities
exchange or automated quotation system or market. Except as set forth on
Schedule 3.16, the Company has not in the three (3) years preceding the date
hereof received notice (written or oral) from Nasdaq (or any other national
securities exchange or automated quotation system or market on which the Common
Stock is then traded, listed or quoted) to the effect that the Company is not in
compliance in all material respects with the listing or maintenance requirements
of any such market, exchange or trading facility. After giving effect to the
transactions contemplated by the Agreements, the Company is and will be in
compliance with all such maintenance requirements.
3.17. INTELLECTUAL PROPERTY RIGHTS. The Company and its subsidiaries
own or possess adequate rights or licenses to use material (A) patents (and any
renewals and extensions thereof), patent rights (and any applications therefor),
rights of priority and other rights in inventions; (B) trademarks, service
marks, trade names and trade dress, and all registrations and applications
therefor and all legal and common-law equivalents of any of the foregoing; (C)
copyrights and rights in mask works (and any applications or registrations for
the foregoing, and all renewals and extensions thereof), common-law copyrights
and rights of authorship including all rights to exploit any of the foregoing in
any media and by any manner and means now known or hereafter devised; (D)
industrial design rights, and all registrations and applications therefor; (E)
rights in data, collections of data and databases, and all legal or common-law
equivalents thereof; (F) rights in domain names and domain name reservations;
(G) rights in trade secrets, proprietary information and know-how (collectively
with all licenses and other agreements providing Company or its subsidiaries
with the right to use any item of the type referred to in clauses (A) through
(G) (collectively, "Intellectual Property Rights") which are necessary for use
in connection with their business as now conducted and as described in the SEC
Reports, except for those Intellectual Property Rights the absence of which
would not, individually or in the aggregate, result in a Material Adverse
Effect. None of the Company or any of its subsidiaries has knowledge that any of
them has infringed on any of the Intellectual Property Rights of any Person and,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, none of the Company or any of its subsidiaries
is infringing on any of the Intellectual Property Rights of any Person. Except
as disclosed in the Offering Document, there is no Proceeding that is pending,
or to the Company's knowledge, is threatened against, the Company regarding the
infringement of any of the Intellectual Property Rights. The Company is not, to
its knowledge, making unauthorized use of any confidential information or trade
secrets of any third party, and the Company has not received any notice of any
asserted infringement (nor is the Company aware of any reasonable basis for any
third party asserting an infringement) by the Company of, any rights of a third
party with respect to any Intellectual Property Rights that, individually or in
the aggregate, would have a Material Adverse Effect. The Company and its
subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.
3.18. REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as set
forth on Schedule 3.18, the Company has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
Governmental Authority which have not been satisfied. Except as set forth on
Schedule 3.18, no Person, including current or former stockholders of the
Company, underwriters, brokers or agents, has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Agreements or to require that the Company
include any such securities in the registration of Shares or Conversion Shares
as contemplated herein. With respect to the agreements evidencing the rights set
forth on Schedule 3.18 hereto, the Company has complied in all respects with the
provisions therein regarding any right of first refusal, preemptive right, right
of participation, or any similar right of a stockholder or any other third party
to participate in the transactions contemplated by the Agreements, including,
but not limited to, notice, consent and waiver requirements.
3.19. FORM S-3 ELIGIBILITY. The Company meets the requirements for
use of the SEC's registration statement on Form S-3 under the Securities Act
relating to the resale of the Shares and Conversion Shares by the Purchasers and
is eligible for filing and maintaining registration statements on Form S-3
relating to the resale of the Shares and Conversion Shares by the Purchasers.
3.20. ABSENCE OF CERTAIN CHANGES. Since the date of the financial
statements included in the Company's most recent Quarterly Report on Form 10-Q,
Annual Report on Form 10-K, or latest Current Report on Form 8-K, whichever is
more recent, last filed prior to the date of this Agreement, the Company and its
subsidiaries have conducted their business only in the ordinary course of such
business consistent with past practice and there has not been (i) any Material
Adverse Effect, (ii) any material commitment, contractual obligation, borrowing,
capital expenditure or transaction (each, a "Commitment") entered into by the
Company or any of its subsidiaries, other than (a) Commitments in the ordinary
course of business, (b) this Agreement, and (c) the Acquisition Agreement and
any other Commitments contemplated thereby, (iii) any action taken which, if
taken after the date hereof, would constitute a material breach of any provision
or covenant herein, or (iv) any material change in the Company's accounting
principles, practices or methods other than as required by concurrent changes in
GAAP.
3.21. BOOKS AND RECORDS. The minute books and other records of the
Company and its subsidiaries contain in all material respects accurate records
of all Company board, committee and stockholders' meetings and accurately
reflect in all material respects all other corporate action of the stockholders
and directors and any committees thereof of the Company and its subsidiaries and
all actions of the directors of the Company's subsidiaries, in each case since
January 1, 2001.
3.22. NO MANIPULATION OF STOCK. The Company has not taken, in
violation of applicable law, 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 to facilitate the transactions contemplated hereby or the sale or
resale of the shares of Common Stock.
3.23. COMPANY NOT AN "INVESTMENT COMPANY." The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for the Securities will not be, an "investment company"
or an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act.
3.24. LABOR RELATIONS. Neither the Company nor its subsidiaries is
party to any collective bargaining agreement covering any individual who
performs services as an employee primarily for the Company or any of its
subsidiaries (including such persons who are on an approved leave of absence,
vacation, short-term disability or otherwise treated as an active employee of
the Company or any of its subsidiaries, "Employees"), and there are no
controversies or unfair labor practice proceedings pending or, to the Company's
knowledge, threatened between the Company or any of its subsidiaries and any of
their current or former Employees or any labor or other collective bargaining
unit representing any current or former Employee of the Company or any of its
subsidiaries that would reasonably be expected to result in a labor strike,
dispute, slow-down or work stoppage or otherwise have a Material Adverse Effect.
To the Company's knowledge, no organizational effort is presently being made or,
to the Company's knowledge, threatened by or on behalf of any labor union.
3.25. EMPLOYEE BENEFITS.
(a) "Benefit Plans" shall mean (i) all "employee pension benefit
plans," as defined in section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), established, maintained, or contributed to by
the Company or its subsidiaries for the benefit of any employees or agents of
the Company or its subsidiaries; (ii) all "employee welfare benefit plans," as
defined in section 3(1) of ERISA, established, maintained, or contributed to by
the Company or its subsidiaries for the benefit of any employees or agents of
the Company or its subsidiaries; and (iii) to the knowledge of the Company, all
other material incentive, employment, supplemental retirement, severance,
deferred compensation and other employee benefit plans, programs, agreements and
arrangements established, maintained, or contributed to by the Company or its
subsidiaries for the benefit of any employees or agents of the Company or its
subsidiaries, without regard to the coverage of any such plan, program,
agreement or arrangement by ERISA or any provision of the Internal Revenue Code
of 1986, as amended (the "Code").
(b) Each of the Benefit Plans has been administered in accordance
with its terms and any federal, state or local statute, law, ordinance,
regulation, order, writ, injunction, directive, judgment or decree applicable to
the Company, its subsidiaries, or any of their respective properties, or assets,
as the case may be (including, where applicable, ERISA and the Code), except
where the failure to so administer such Benefit Plan would not have a Material
Adverse Effect.
(c) Each of the Benefit Plans intended to be "qualified" within
the meaning of section 401(a) of the Code has been determined by the United
States Internal Revenue Service to be so qualified, except where the failure to
so qualify such Benefit Plan would not have a Material Adverse Effect.
3.26. ENVIRONMENTAL MATTERS.
(a) The Company and its subsidiaries are in compliance with all
applicable Federal, state, and local laws and regulations relating to Releases
or threatened Releases of Hazardous Materials or otherwise relating to the
generation, treatment, storage, transport or handling of Hazardous Materials,
except where failure to be in compliance would not have a Material Adverse
Effect; and, to the Company's knowledge, there is no Environmental Claim pending
or threatened against the Company or its subsidiaries which would have a
Material Adverse Effect.
(b) For the purpose of this section (i), "Environmental Claim"
means any claim, action, demand, order, or written notice by or on behalf of,
any Governmental Entity or Person alleging potential liability arising out of,
based on or resulting from the violation of any Environmental Law or permit;
(ii) "Hazardous Materials" means all substances defined as hazardous substances
in the Comprehensive Environmental Response, Compensation and Liability Act; and
(iii) "Release" has the meaning set forth in the Comprehensive Environmental
Response, Compensation and Liability Act.
3.27. TAXES.
(a) Except as otherwise disclosed in Schedule 3.27 hereto, (i) the
Company has filed (or joined in the filing of) when due all Tax Returns required
by applicable law to be filed with respect to the Company and all Taxes shown to
be due on such Tax Returns have been paid; (ii) all such Tax Returns were true,
correct and complete in all material respects as of the time of such filing; or
(iii) any liability of the Company for Taxes not yet due and payable, or which
are being contested in good faith, in each case as of December 31, 2001, has
been accrued or reserved for on the financial statements of the Company in
accordance with GAAP, in each case except that any such failure to file or pay
Taxes would not result in a Material Adverse Effect.
(b) No current or former subsidiary of the Company has ever been a
member of any "affiliated group" (within the meaning of Section 1504(a) of the
Code) included in any consolidated federal income Tax Return filed with the
Internal Revenue Service other than an affiliated group of which the Company is
the common parent.
3.28. INSURANCE. All insurance policies carried by the Company or
any subsidiary or covering the Company's properties are in full force and
effect, and, to the Company's knowledge, no notice of cancellation has been
given with respect to any such policy, except where the lapse of such coverage
or cancellation of such policy would not reasonably be expected to have a
Material Adverse Effect. The insurance coverage provided by such policies is
provided by insurers that, to the knowledge of the Company, are solvent and is
in such amount and types of coverage which are adequate and customary for the
industries in which the Company operates.
3.29. ACCOUNTING CONTROLS. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurances 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 accordance with generally accepted
accounting principles and to maintain assets 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, except for any controls the absence of which would
not result in a Material Adverse Effect.
3.30. BYLAWS. The Company's Bylaws provide that all matters
submitted to a meeting of stockholders, including the vote relating to the
issuance of the Conversion Shares, shall require the affirmative vote of a
majority of the total number of votes cast, present in person or by proxy.
SECTION 4
COVENANTS OF THE COMPANY
The Company hereby covenants with the Purchasers and the Placement
Agent as follows:
4.1. OFFERING LIMITATIONS. None of the Company or any of its
Affiliates will solicit any offer to buy or offer to sell shares of Common Stock
or securities convertible into or exchangeable for Common Stock by means of any
form of general solicitation or general advertising (as such terms are used in
Regulation D under the Securities Act) in any manner involving a public offering
(within the meaning of Section 4(2) of the Securities Act) prior to the later of
the effective dates of the Registration Statements.
4.2. INTEGRATION. None of the Company or any of its Affiliates will
offer, sell or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) in a manner that would cause the
offer and sale of the Securities to fail to be entitled to the exemption from
registration afforded by Rule 506 of Regulation D and Section 4(2), of the
Securities Act.
4.3. DISCLOSURES. Subject to Section 8.14, as applicable, the
Company, promptly following the Closing will (i) issue a press release
announcing the sale of the Securities through the Placement Agent, (ii) file
such press release and other appropriate information with the SEC on a Form 8-K,
and (iii) include in the filing of its next Form 10-Q or Form 10-K, as
applicable, appropriate disclosures relating to the sale of the Securities,
including, without limitation, the disclosure required by Item 701 of Regulation
S-K. Within one business day following Closing, the Company shall also file with
the SEC on a Form 8-K, under Item 9 thereof, any and all material nonpublic
information (as such term is used under Regulation FD) regarding the Company,
the Offering and/or the Acquisition that was or has been provided by the
Company, or duly authorized agents or representatives acting on its behalf, to
Purchasers.
4.4. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Securities in the manner specified in the Offering Document under
the caption "Use of Proceeds."
4.5. COMPLIANCE. The Company has complied in all respects with the
provisions of those agreements which evidence the rights set forth on Schedule
3.18 regarding any right of first refusal, preemptive right, right of
participation, or any similar right of a stockholder or any other third party to
participate in the transactions contemplated by the Agreements, including, but
not limited to, any notice, consent and waiver requirements. The Company has
performed the timely notification of all affected Persons and has either (i)
solicited and obtained the appropriate consent and waiver from such Person, or
(ii) affirmatively received notice of participation in the transactions
contemplated by the Agreements from each of the affected Persons. For purposes
of the immediately preceding sentence only, the failure of any such affected
Person to exercise its rights or participate in the transactions contemplated by
the Agreements during any specified exercise or participation period shall be
deemed a waiver by the affected Person of such rights.
4.6. PROXY STATEMENT. The Company shall use its reasonable best
efforts to prepare and file with the SEC, as promptly as practicable after the
date hereof but in no event later than 30 days after the Closing, preliminary
proxy materials with respect to a meeting of the stockholders for the purpose of
approving the issuance of the Conversion Shares as contemplated by this
Agreement. Thereafter, the Company shall as promptly as possible file with the
SEC the definitive proxy statement and acting through its Board of Directors,
(i) call a special meeting of stockholders or the Company's Annual Meeting of
stockholders to be held at the earliest practicable date but in no event later
than 90 days after the Closing and (ii) include in the proxy statement the
recommendation of its Board of Directors that holders of the Common Stock
approve the issuance of the Conversion Shares as contemplated by this Agreement.
If the Company calls a special meeting of stockholders pursuant to this Section
4.6, neither prior to nor at such special meeting shall the Company put forth
any matter, other than approving the issuance of the Conversion Shares as
contemplated by this Agreement, to the holders of Common Stock for their
approval without the prior written consent of the Purchasers.
SECTION 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents, warrants
and covenants to the Company with respect to the purchase of Securities by such
Purchaser as follows:
5.1. EXPERIENCE. Such Purchaser has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company, and the Purchaser is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to
protect its own interests.
5.2. QUALIFIED INSTITUTIONAL BUYER; ACCREDITED INVESTOR. Such
Purchaser is a "qualified institutional buyer," as defined in Rule 144A of the
Securities Act, or an "accredited investor," as defined in SEC Regulation D
promulgated pursuant to the Securities Act (an "Accredited Investor").
5.3. RULE 144. Such Purchaser acknowledges that the Shares must be
held indefinitely unless subsequently registered for resale under the Securities
Act or unless an exemption from such registration is available, and that the
Notes must be held indefinitely unless and until converted into Conversion
Shares upon stockholder approval, and such Conversion Shares are subsequently
registered for resale under the Securities Act or unless an exemption from such
registration is available. Such Purchaser is aware of the provisions of the
SEC's Rule 144 promulgated under the Securities Act, which permit limited resale
of securities purchased in a private placement, subject to the satisfaction of
certain conditions, including, among other things, (i) the existence of a public
market for the securities, (ii) the availability of certain current public
information about the Company, (iii) the resale occurring not less than one year
after a party has purchased and fully paid for the security to be sold, (iv) the
sale being effected through a "broker's transaction" or in a transaction
directly with a "market maker," and (v) the number of securities being sold
during any three-month period not exceeding specified limitations.
5.4. CONFIDENTIAL ACCESS TO INFORMATION. Such Purchaser has had an
opportunity to discuss the Company's business, management and financial affairs
with its management. It has also had an opportunity to ask questions of officers
of the Company, which questions were answered to its satisfaction. Such
Purchaser understands that such discussions, as well as any written information
issued by the Company, were intended to describe certain aspects of the
Company's business and prospects. Pursuant to a confidentiality agreement, as
contemplated by the SEC's Regulation FD, such Purchaser acknowledges that it has
been provided access to material, non-public information and that the Purchaser
will keep all such information confidential except to the extent it becomes
public through no fault of the
Purchaser or to the extent compelled to produce such information as a result of
a court order or subpoena. Further, the Purchaser acknowledges and understands
that the fact that the Company is seeking to effect the private placement of the
Shares and Notes is itself material, non-public information, and disclosure of
such information or use of such information by the Purchasers or anyone
receiving such information from the Purchasers in connection with the purchase,
sale or trade of the Company's securities (other than use by the Purchasers in
acquiring the Shares and/or the Notes), or any hedging, derivative or similar
transactions or activities involving the Company's securities, is a violation of
securities laws. Neither such inquiries nor any other due diligence
investigation conducted by such Purchaser or any of its advisors or
representatives shall modify, amend or affect such Purchaser's right to rely on
the Company's representations, warranties and covenants contained herein or in
the other Agreements. The Purchaser understands that its investment in the
Shares and/or Notes involves a high degree of risk.
5.5 ORGANIZATION; AUTHORIZATION. The Purchaser is either (i) an
individual who hereby certifies that he or she is an Accredited Investor who
possesses the legal capacity, understanding and financial ability necessary and
appropriate to enter into, and bear the risks of, the transactions contemplated
hereby, or (ii) a corporation, a limited liability company or a partnership duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its organization. Such Purchaser, if a corporation, a limited liability
company or a partnership, has the requisite power and authority, to enter into
and to consummate the transactions contemplated by the Agreements and otherwise
to carry out its obligations under the Agreements. The purchase by such
Purchaser of the Shares and/or Notes hereunder has been duly authorized by all
necessary action on the part of such Purchaser. This Agreement, when executed
and delivered by such Purchaser, will constitute a valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
5.6. RESTRICTIVE LEGEND. Such Purchaser understands that the
certificates evidencing the Shares, Notes and Conversion Shares, will bear the
following legends when issued:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES, OR "BLUE
SKY," LAWS OF ANY STATE OR OTHER DOMESTIC OR FOREIGN JURISDICTION.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO DISTRIBUTION AND RESALE AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO A REGISTRATION STATEMENT IN EFFECT UNDER THE SECURITIES ACT
AND OTHER APPLICABLE LAWS OR A WRITTEN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED AND
THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE FOR SUCH
TRANSACTIONS UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS."
In addition, the Purchasers acknowledge that each certificate for
Shares, Notes and Conversion Shares shall bear any additional legend required by
any other applicable domestic or foreign securities or blue sky laws.
In the case of the Shares, the certificates representing such shares
shall also bear the following legend:
"THE HOLDER OF THESE SHARES, AND ANY PERMITTED TRANSFEREE THEREOF UNDER
THE SUBSCRIPTION AGREEMENT, BY AND BETWEEN SUCH HOLDER AND INDUS
INTERNATIONAL, INC. (THE "COMPANY")
PURSUANT TO WHICH THESE SHARES WERE ISSUED AND SOLD (THE "SUBSCRIPTION
AGREEMENT"), IS PROHIBITED FROM VOTING THESE SHARES TO APPROVE OR
DISAPPROVE THE CONVERSION OF THE NOTES (AS DEFINED IN THE SUBSCRIPTION
AGREEMENT) INTO CONVERSION SHARES (AS DEFINED IN THE SUBSCRIPTION
AGREEMENT), AND SHALL ABSTAIN FROM VOTING ON SUCH MATTER. A COPY OF THE
SUBSCRIPTION AGREEMENT MAY BE OBTAINED AT NO CHARGE UPON WRITTEN
REQUEST TO THE COMPANY."
The Company will direct its transfer agent and registrar to maintain
stop transfer instructions on record for the Shares, Notes and Conversion Shares
until it has been notified by the Company, upon the advice of counsel, that such
instructions may be waived consistent with the Securities Act and applicable
domestic and foreign securities laws. Such stop transfer instructions will limit
the method of sale of the Shares, Notes and Conversion Shares, consistent with
Rule 144 or other available exemptions from registration under the Securities
Act. Any transfers other than pursuant to a registration statement under the
Securities Act will require an opinion of counsel reasonably satisfactory to the
Company and its counsel prior to such transfers.
5.7. NO GOVERNMENTAL REVIEW. Each Purchaser understands that no
United States federal or state agency or any other government or governmental
agency or authority has passed upon or made any recommendation or endorsement of
the Shares, the Notes, the Conversion Shares or the contents of the Offering
Document.
5.8. RESIDENCY. Such Purchaser is a resident of the jurisdiction
set forth immediately below such Purchaser's name on the Subscription Agreement.
5.9. INVESTMENT INTENT. Such Purchaser is acquiring the Securities
for investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof. Such
Purchaser understands and agrees that the Securities have not been registered
under the Securities Act by reason of the exemption from the registration
provisions of the Securities Act contained in Rule 506 of Regulation D and
Section 4(2) of the Securities Act, the availability of which depends upon,
among other things, the bona fide nature of the investment intent and the
accuracy of such Purchaser's representations, warranties and covenants as
expressed herein, which are being relied upon by the Company and the Placement
Agent.
5.10. NO MANIPULATION. Neither such Purchaser nor, to the
Purchaser's knowledge, any of its directors, officers, managers, subsidiaries,
controlling persons or other affiliates has taken, or presently plans to take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted, under the Exchange
Act, the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
5.11 VOTING OF SHARES. Each of the Purchasers hereby understands
and agrees that such Purchaser, or its permitted transferee hereunder, as
appropriate, is strictly prohibited from voting any of the Shares to approve or
disapprove the conversion of the Notes into Conversion Shares, and each such
Purchaser or permitted transferee shall abstain from voting any Shares on such
matter.
SECTION 6
CONDITIONS TO PURCHASERS' OBLIGATIONS TO CLOSE
The obligation of each Purchaser to close the Offering is subject to
the fulfillment, as of the date of Closing, of the following conditions, any of
which may be waived by each such Purchaser:
6.1. REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties by the Company contained herein qualified as to materiality shall
be true and correct (in light of such qualification(s)) and those not so
qualified shall be true and correct in all material respects as of the date
hereof and at and as of the Closing as though such representations and
warranties were made at and as of such date unless limited by their terms to a
prior date.
6.2. COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing
shall have been performed or complied with in all material respects.
6.3. NO INJUNCTION. No statute, rule, regulation, order, decree,
ruling or injunction shall have been enacted, entered, promulgated, endorsed or
threatened or is pending by or before any Governmental Authority of competent
jurisdiction which in any material respect restricts, prohibits or threatens to
restrict or prohibit the consummation of any of the transactions contemplated by
the Agreements.
6.4. NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading in the
Common Stock shall not have been restricted or suspended by the Commission,
Nasdaq or any other market or exchange where such Common Stock is traded (except
for any suspension of trading of limited duration solely to permit dissemination
of material information regarding the Company).
6.5 ADVERSE CHANGES. Since the date of this Agreement, no event
which has had or could reasonably be expected to have a Material Adverse Change
shall have occurred. The term "Material Adverse Change" shall mean an event,
change or occurrence that individually, or together with any other event, change
or occurrence, has a material adverse impact on the Company or its subsidiaries'
financial position, business or results of operations, taken as a whole;
provided, however, that the term "Material Adverse Change" shall not include the
impact of (a) changes in laws of general applicability or interpretations
thereof by courts or other Governmental Authorities, or (b) changes in GAAP; (c)
actions or omissions required of the Company by the terms of the Acquisition
Agreement; (d) changes in conditions or events that are generally applicable to
the industry in which the Company operates or the economy in general in
jurisdictions in which Company operates; (e) seasonal fluctuations in the
Company's performance; or (f) the effects, including, without limitation,
effects on relations and business with customers, suppliers and employees, that
are a direct result of the transactions contemplated or permitted under the
Acquisition Agreement.
6.6. LITIGATION. No Proceeding shall have been instituted or
threatened against the Company that could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
6.7. COMPLIANCE CERTIFICATE. The Company shall have delivered to
the Purchasers a certificate of the Company executed by the President of the
Company, dated as of the Closing, certifying to the fulfillment of the
conditions specified in Section 6 of this Agreement.
6.8. SECRETARY'S CERTIFICATE. The Company shall have delivered to
the Purchasers a certificate of the Company executed by an officer of the
Company, dated as of the Closing, certifying (i) resolutions adopted by the
Board of Directors of the Company authorizing the execution of the Agreements,
the issuance of the Securities, the filing of the Registration Statements, and
the transactions contemplated hereby; (ii) the Articles of Incorporation and
Bylaws of the Company, each as amended, and copies of the third party consents,
approvals and filings required in connection with the consummation of the
transactions contemplated by the Agreements; and (iii) such other documents
relating to the transactions contemplated by the Agreements as the Purchasers
may reasonably request.
6.9. OPINION OF COUNSEL. At the Closing, the Purchasers and the
Placement Agent shall have received the opinion of Xxxxxx & Bird LLP, as counsel
to the Company, dated as of Closing, in the form set forth below to the effect
that:
(a) The Company is validly existing and in good standing
under the laws of the State of Delaware, with corporate power and
authority to carry on its business as now conducted and to own, lease
and operate its assets and properties and to enter into and perform its
obligations under this Agreement, the Subscription Agreement, the
Registration Rights Agreement, the Escrow Agreement and the other
documents and agreements to be executed by the Company in connection
with the Closing (collectively, the "Operative Documents");
(b) The execution, delivery and performance by the
Company of each of the Operative Documents to which the Company is a
party have been duly authorized by the Company;
(c) No consent or other action by, or filing or
registration with, any Governmental Authority is required for (i) the
execution and delivery by the Company of the Operative Documents, (ii)
the offer, sale, and issuance of the Securities in accordance with the
Operative Documents, (iii) the performance by the Company of its
obligations under the Operative Documents, except such as may be
required (a) in connection with the registration under the Securities
Act of the Securities pursuant to the appropriate Registration Rights
Agreements (including any filing with the National Association of
Securities Dealers, Inc.), (b) under the "blue sky" or securities laws
of any jurisdiction in connection with the purchase and sale or resale
of the Shares or Conversion Shares; (c) to provide notice and
application to list or quote the Shares and the Conversion Shares, if
applicable, on Nasdaq (and with any other national securities exchange
or automated quotation system or market on which the Common Stock is
then traded, listed or quoted), (d) to satisfy the disclosure
requirements of the Exchange Act, and the disclosure requirements of
Item 701 of SEC Regulation S-K, (v) to file a Form D and a Form 8-K in
respect of the sale and issuance of the Securities with the Commission
(collectively, the "Required Approvals"), and (vi) to file a Proxy
Statement with the Commission for the solicitation of the approval of,
and obtaining the approval of, the Company's stockholders for the
issuance of the Conversion Shares.
(d) Neither the execution and delivery of this Agreement
or the other Operative Documents, nor the consummation by the Company
of the transactions contemplated hereby or thereby (including the
issuance, sale and delivery of the Securities and any Conversion Shares
(other than with respect to the delivery in book-entry form of Shares
and any Conversion Shares)), nor compliance by the Company with any of
the provisions hereof or thereof, will (i) constitute or result in a
default under, or require any consent pursuant to any contract or
permit of the Company listed on Schedule A to the opinion, (ii)
conflict with or result in a breach of any provision of the Certificate
of Incorporation or Bylaws of the Company, or any federal or state law,
rule or regulation known to such counsel of any court or federal, state
or other regulatory
board or body or administrative agency having jurisdiction over the
Company or over its properties or business, or (iii) conflict with or
constitute a default under any judgment, writ, decree or order known to
such counsel to be applicable by its terms to the Company;
(e) This Agreement, the Escrow Agreement, the
Registration Rights Agreement for Shares, and, assuming the requisite
stockholder approval is received for conversion of the Notes into
Conversion Shares, the Registration Rights Agreement for Conversion
Shares, each have been duly authorized, executed and delivered by the
Company, and, assuming the due execution and delivery thereof by the
Purchasers where applicable, no other corporate action is necessary to
authorize such execution, delivery or performance, and constitute valid
and binding obligations of the Company, enforceable against the Company
in accordance with its terms, except as such enforcement may be subject
to the Bankruptcy and Equity Exception;
(f) When issued to a Purchaser against payment therefor
in accordance with the Agreement and other Operative Documents, each
Security and each Conversion Share will be duly and validly authorized
and issued, fully paid and nonassessable, and the Purchasers, as
holders thereof, will not be subject to personal liability by reason of
being such holders;
(g) To the knowledge of such counsel, there is no action,
suit, investigation or proceeding pending or threatened against the
Company or any of its properties or assets by or before any court,
arbitrator or Governmental Authority, department, commission, board,
bureau, agency or instrumentality, which questions the validity of the
Agreement, any Security or any of the Conversion Shares or any action
taken or to be taken pursuant hereto or thereto;
(h) The Company is not an "investment company" or a
company "controlled by" or required to register as an investment
company as such terms are defined in the 1940 Act or the PUHC Act, and
the SEC's rules and regulations thereunder; and
(i) Assuming the accuracy of the Purchasers'
representations and warranties in Section 5 of this Agreement, the
accuracy of the Company's representations and warranties in Sections
3.8 and 3.9 of this Agreement, and the Company's and the Purchasers'
satisfaction of their respective covenants hereunder, the offer, sale
and issuance of the Securities and the Conversion Shares, if any, as
contemplated by the Agreements is exempt from the registration
requirements under Section 5 of the Securities Act.
Such opinions may be subject to such assumptions, qualifications and
limitations as are customary. Without limiting the foregoing, such counsel (i)
need not express any opinion with regard to the application of laws of any
jurisdiction other than the Federal law of the United States and the relevant
corporate act of the State where the issuer is organized, (ii) may rely, as to
matters of fact, to the extent appropriate on representations or certificates of
responsible officers of the Company and certificates of public officials, (iii)
may express no opinion as to the effect of (a) bankruptcy, insolvency,
reorganization, arrangements, fraudulent transfer, moratorium or similar laws
relating to or affecting the rights of creditors and (b) general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, the exercise of judicial discretion, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law, (iv) may express no
opinion as to compliance with the anti-fraud or information delivery provisions
of applicable securities laws, (v) may express no opinion as to compliance with
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and (vi)
may express no opinion as to the enforceability of the indemnification
provisions of the Operative Documents to the extent the provisions thereof may
be subject to limitations of public policy and the effect of applicable statutes
and judicial decisions.
6.10 OTHER DOCUMENTS. The Company shall have delivered to each
Purchaser such other documents relating to the transactions contemplated by the
Agreements as the Purchasers or their counsel may reasonably request.
6.11. ACQUISITION. The Company shall have entered into the
Acquisition Agreement pursuant to which the Company will consummate the
Acquisition and all conditions to closing of the Acquisition shall have been
satisfied or waived by the Company.
6.12. LISTING APPROVALS. The Company shall have obtained any
necessary approvals for the listing of the Shares and Conversion Shares on
Nasdaq.
6.13. REGISTRATION RIGHTS AGREEMENT. The Company and the Purchasers
shall have executed, entered into and delivered the Registration Rights
Agreements, as applicable to each such Purchaser.
6.14. ESCROW AGREEMENT. The Company shall have entered into the
Escrow Agreement and deposited with the Escrow Agent, or arranged for the
deposit by the Purchasers with the Escrow Agent of, the proceeds from the sale
of the Securities.
SECTION 7
CONDITIONS TO THE COMPANY'S OBLIGATIONS TO CLOSE
The Company's obligation to close the Offering is subject to the
fulfillment as of the date of Closing, of the following conditions, any of which
may be waived by the Company:
7.1. REPRESENTATIONS. The representations and warranties made by
the Purchasers herein shall be true and correct in all material respects on the
dates made and on the date of Closing.
7.2. PERFORMANCE BY THE PURCHASERS. Each Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Agreements to be performed, satisfied
or complied with by such Purchaser at or before the Closing.
7.3. NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated,
endorsed or threatened or is pending by or before any Governmental Authority of
competent jurisdiction which prohibits or threatens to prohibit the consummation
of any of the transactions contemplated by the Agreements.
7.4. CLOSING OF THE ACQUISITION; RECEIPT OF ESCROW FUNDS. All
conditions to closing of the Acquisition shall have been satisfied or waived by
the Company, and the Company shall have received the Escrow Funds from the
Escrow Agent.
SECTION 8
MISCELLANEOUS
8.1. GOVERNING LAW.
(a) This Agreement shall be governed in all respects by the laws
of the State of Delaware, without giving effect to the conflict of law rules
thereof to the extent that the application of the law of another jurisdiction
would be required thereby.
(b) Each of the parties hereto acknowledges and agrees that
damages will not be an adequate remedy for any material breach or violation of
this Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to
seek, in any state or federal court in the State of Delaware, equitable relief
of a kind appropriate in light of the nature of the ongoing or threatened
Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the party bringing
such action is unsuccessful in obtaining the relief sought, the moving party
shall pay the non-moving party's reasonable costs, including attorney's fees,
incurred in connection with defending such action. Such remedies shall not be
the parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement, and this provision shall survive the termination of
this Agreement.
8.2. SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchasers
and the closing of the transactions contemplated hereby until the three year
anniversary date of the Closing.
8.3. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided that the rights of the Purchasers to purchase the Shares and/or Notes
shall not be assignable without the consent of the Company, not to be
unreasonably withheld, other than to Affiliates. Upon issuance of the Notes, the
rights, interests or obligations of (i) the Company thereunder may not be
assigned, by operation of law or otherwise, in whole or in part, by the Company
without the prior written consent of the holders of a majority in principal
amount of the Notes and (ii) each Holder thereunder may be assigned to any of
its Affiliates.
8.4. AMENDMENT AND WAIVER. This Agreement may not be amended or
waived except in writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between or among any
Persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
8.5. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
mail, postage prepaid, by reliable overnight delivery service such as UPS or
FedEx, or by facsimile transmission, or otherwise delivered by hand or by
messenger, addressed (a) if to any Purchaser, at the Purchaser's address set
forth on the Subscription Agreement, or at such other address as such Purchaser
shall have furnished to the Company in writing in the manner set forth herein,
with a copy to the Purchasers' Counsel listed below, (b) if to any other holder
of any shares, at such address as such holder shall have furnished the Company
in writing, or, until any such holder so furnishes an address to the Company,
then to and at the address of the last holder of such shares who has so
furnished an address to the Company, with a copy to the Purchasers' Counsel
listed below, or (c) if to the Company, one copy should be sent to the Company
at the address listed below, in each case with a copy to the Placement Agent at
the address also listed below. In the event that any notice or other
communication is sent by facsimile transmission to the Company, such
transmission shall be followed immediately by overnight delivery to the Company
of such notice or other communication.
Company: Placement Agent:
------- ---------------
Indus International, Inc.. X.X. Xxxxxxxxx, Towbin
0000 Xxxxx Xxxxx Xxxxxxx 000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
with a copy to:
--------------
with a copy to:
Placement Agent Counsel:
Company Counsel:
Mayer, Brown, Xxxx & Maw
Alston & Bird LLP 0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
0000 Xxxx Xxxxxxxxx Xxxxxx Attention: Xxxxxx X. Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000 Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered, or if by
facsimile transmission, as indicated by the facsimile imprint date.
8.6. DELAYS OR OMISSIONS; RIGHTS CUMULATIVE. Except as expressly
provided herein, no delay or omission to exercise any right, power or remedy
accruing to any Purchaser upon any breach or default of the Company under the
Agreements shall impair any such right, power or remedy of such Purchaser, nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Purchaser of any
breach or default under this Agreement, or any waiver on the part of any party
hereto of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement or by law or otherwise afforded to any
Purchaser, shall be cumulative and not alternative.
8.7. EXPENSES. The Company shall pay the reasonable and documented
fees and expenses incurred by Purchasers in connection with the transactions
contemplated hereby including, without limitation, legal expenses of Xxxxxxx
Xxxx & Xxxxxxxxx, as counsel to Warburg, Xxxxxx Investors, L.P., and accounting
fees, which transaction fees will be reasonably and customary for transactions
of this type ("Transaction Fees"). Payments due pursuant to this Section 8.7
will be made at the Closing, in the event the Closing occurs, or if the Closing
does not occur then upon termination of this Agreement, and in any event, any
remaining payments will be made not later than 30 days after a xxxx for such
fees and expenses has been sent by any Purchaser to the Company. The obligations
under this Section 8.7 will survive any termination of this Agreement.
8.8 SUBSCRIPTION AGREEMENT; COUNTERPARTS. Persons may become
parties to this Agreement by executing the Subscription Agreement, which may be
executed in two or more identical counterparts and by facsimile, each of which
shall be deemed an original and all of which shall constitute one and the same
agreement. Any signature that is delivered by facsimile transmission shall be
valid and binding, with the same force and effect as if an original, manually
signed counterpart.
8.9. SEVERABILITY. In the event that any provision of this
Agreement is unenforceable, the remaining provisions shall continue in full
force and effect.
8.10. SECTION HEADINGS, ETC. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement. As used herein, any gender shall include all other
genders, and the singular shall include the plural and vice versa. The terms
"include," "including" and similar terms shall mean include without limitation,
whether by enumeration or otherwise.
8.11. NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and no other person is intended to or shall have any rights hereunder
whether as a third party beneficiary or otherwise.
8.12. INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The obligations of each Purchaser are not conditioned upon
the action of any other Purchaser. Nothing contained herein or in any other
agreement or document delivered at the Closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of Person, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including, without limitation, the rights arising out of the Agreements,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
8.13. FURTHER ASSURANCES; COOPERATION. Each party shall do and
perform, and shall cooperate with and assist each other to do or perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other parties may reasonably request in order to carry out the
intent and accomplish the purposes of the Agreements and the consummation of the
transactions contemplated thereby in a timely manner, and further agrees not to
take any actions, or to permit, authorize or direct any of its affiliates to
take any actions, that would have the effect of delaying, threatening the
success of, or preventing in any way the transactions contemplated by each of
the Agreements.
8.14. PUBLIC STATEMENTS OR RELEASES. Neither the Company nor any
Purchaser shall make any public announcement with respect to the existence or
terms of this Agreement or the transactions provided for herein without the
prior approval of the other parties, which shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, nothing in this Section 8.14 shall
prevent any party from making any public announcement it considers necessary in
order to satisfy its obligations under the law or the rules of any national
securities exchange or Nasdaq; provided such party, to the extent practicable,
provides the other parties with an opportunity to review and comment on any
proposed public announcement before it is made.
8.15. CONFIDENTIALITY. All material, non-public information
disclosed by the Company to the Purchasers pursuant to this Agreement or
otherwise shall be held strictly confidential and used by the Purchasers solely
for evaluating purchases of Securities in this Offering, provided this
obligation shall not apply to any information that is generally available to the
public or becomes available to the public without any disclosure by the
Purchasers or their agents or due to negligence or misconduct of the Purchasers
or their agents or as to which disclosure is required pursuant to court order or
subpoena. The provisions of this Section 8.15 shall not in any way amend or
supercede the provisions of any other confidentiality, non-disclosure or similar
agreement with the Company to which any Purchaser is bound.
8.16. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Escrow
Agreement, the Registration Rights Agreements, the Subscription Agreement and
the other Agreements constitute the entire understanding and agreement between
the Purchasers and the Company with regard to the subject matter. Except as
expressly provided herein, this Agreement, any of the other Agreements or any
term hereof may be amended, modified, waived or discharged only by a written
instrument signed by the party waiving any term, condition, or right or remedy
that benefits it hereunder.
8.17. TERMINATION UPON FAILURE TO CLOSE THE ACQUISITION. Except as
otherwise set forth herein and other than the Company's obligations to cause the
Escrow Agent to disburse the Escrow Funds to the Purchasers as set forth under
Section 2.2 therein, in the event that the Company fails to close the
Acquisition on or prior to the Expiration Date, then this Agreement shall
automatically and immediately terminate and be of no further force or effect.
[The remainder of this page has been intentionally left blank.]
SCHEDULE OF PURCHASERS
PURCHASERS OF THE SHARES PURCHASERS OF THE NOTES
------------------------ -----------------------
Millennium Technology Ventures LLP Crestview Capital Fund I, LP
Leaf Investment Partners LP Crestview Capital Fund II, LP
Leaf Offshore Investment Fund Ltd. Amaranth LLC
Xxxxxxx Xxxxx Xxxx XxXxxx
Xxxxxx Xxxxxxxxx Xxxxxxx XxXxxx
Xxxxxx Xxxxxxx Xxxxx Omicron Master Trust
JR Squared, LLC Cranshire Capital, LP
Xxxxxx Xxxxx F. Nathan & Xxxxxxx X. Xxxxx Trust FBO Xxxx X. Xxxxxx,
ETAL U/Art 3rd - B - U/W Xxxxx X. Xxxxxx 12/3/92
Xxxxxx Partners XX Xxxxxx Partners XX
Xxxxxx Gept Partners XX Xxxxxx Gept Partners XX
Xxxxxx Spelman Partners XX Xxxxxx Xxxxxxx Partners LP
Alza Corporation Retirement Plan SAS Trust #1
Xxxxxxx Xxxxx SF Capital Partners Ltd.
Xxxxxx Trust Co. of the Bahamas Ltd DMG Legacy Fund LLC
Xxxxxx Xxxxxxx DMG Legacy Institutional Fund LLC
City of Milford Pension & Retirement Fund DMG Legacy International Ltd.
Public Employee Retirement System of Idaho Bay Star Capital II, LP
Xxxxx Xxxxxx Bay Star International II Ltd.
Theeuwes Family Trust Warburg, Xxxxxx Investors LP
Psychology Associates PAW Long Term Partners, XX
Xxxxxx Capital LLC Xxxxxx Xxxxxxx
Xxxxxxx Xxxxx Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx Xxxxxxx Xxxxx
HBL Charitable Unitrust
Xxxxx Xxxx
Xxxxx Xxxx Xxxxxxx
Xxxxxx Foundation
Xxxxx Foundation
Asphalt Green Inc.
NFIB Serp Assets
Crown Investment Partners XX
Xxxxxxx, Xxxxxx Investors LP
PAW Offshore Fund, Ltd.
PAW Partners, LP
Xxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxx Family Trust
Xxxxx Xxxxxxx Family Trust
TIU Grandchildren's Trust
Xxxxxxxx & Xxxxxxxx Xxxxxxxxx Foundation
CEUT Capital Partners I, LP
UT Technology Partners I, LP
UT Technology Partners II, LP
UT Technology Fund, Ltd.
Xxxxxx Xxxx
Xxxxxx Xxxx ACF Xxxxxxx
Xxxx Xxxxxx Xxxx ACF Xxxxx Xxxxxxxx Xxxx
Xxxxxxxxx Xxxx
Xxxxx Xxxxxx
Valor Holdings, Inc.
Kensington LP
Xxxxx Xxxxx
