SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of April 15,
2004, by and between OMNI ENERGY SERVICES CORP., a Louisiana corporation (the
"Company"), and each of the entities whose names appear on the signature pages
hereof. Such entities are each referred to herein as an "Investor" and,
collectively, as the "Investors".
The Company wishes to issue and sell to each Investor, and each
Investor wishes to purchase, on the terms and subject to the conditions set
forth in this Agreement, (i) a 6.5% Convertible Debenture, in the form attached
hereto as Exhibit A (a "Debenture" and, collectively, the "Debentures"), and
(ii) a Warrant in the form attached hereto as Exhibit B (a "Warrant" and,
collectively, the "Warrants"). The Warrants will entitle the Investors to
purchase an aggregate of 150,000 shares of Common Stock and will have an
exercise price equal to $9.00 per share (subject to adjustment as provided
therein). The Warrants will be allocated to the Investors pro rata in proportion
to the principal amount of the Debentures purchased by each such Investor.
The shares of Common Stock into which the Debentures are convertible
are referred to herein as the "Conversion Shares" and the shares of Common Stock
into which the Warrants are exercisable are referred to herein as the "Warrant
Shares". The Debentures, the Conversion Shares, the Warrants and the Warrant
Shares are collectively referred to herein as the "Securities".
The Company has agreed to use its best efforts to effect the
registration of the Conversion Shares and the Warrant Shares under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to an
Amended and Restated Registration Rights Agreement in the form attached hereto
as Exhibit C (the "Registration Rights Agreement"). The sale of the Debentures
and the Warrants by the Company to the Investors will be effected in reliance
upon the exemption from securities registration afforded by the provisions of
Regulation D ("Regulation D"), as promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act.
In consideration of the mutual promises made herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Investor hereby agree as follows:
1. PURCHASE AND SALE OF DEBENTURES AND WARRANTS.
1.1 Purchase of Debentures and Warrants. Upon the terms and
subject to the satisfaction or waiver of the conditions set forth herein, the
Company agrees to sell and each Investor agrees to purchase (i) a Debenture
having the principal amount set forth below such Investor's name on the
signature pages hereof, and (ii) a Warrant. The purchase price for the Debenture
and Warrant being purchased by an Investor (the "Purchase Price") shall be equal
to the principal amount set forth below its signature to this Agreement, and the
Purchase Price shall be allocated between such Debenture and Warrant as may be
agreed between the Company and such Investor. The date on which the closing of
the purchase and sale of the Debentures and Warrants occurs (the "Closing") is
hereinafter referred to
as the "Closing Date". Subject to the satisfaction or waiver of the conditions
set forth herein, the Closing will be deemed to occur when (A) this Agreement
and the other Transaction Documents (as defined below) have been executed and
delivered by the Company, and (B) full payment of each Investor's Purchase Price
has been made by all such Investors to the Company by wire transfer of
immediately available funds against physical delivery by the Company of duly
executed originals of the Debentures and Warrants purchased by all such
Investors at the Closing.
1.2 Certain Definitions. When used herein, the following terms
shall have the respective meanings indicated:
"Affiliate" means, as to any Person (the "subject
Person"), any other Person (a) that directly or indirectly through one or more
intermediaries controls or is controlled by, or is under direct or indirect
common control with, the subject Person, (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
equity of the subject Person, or (c) ten percent (10%) or more of the voting
equity of which is directly or indirectly beneficially owned or held by the
subject Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, through representation on such Person's Board of Directors or other
management committee or group, by contract or otherwise.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which the New York Stock Exchange or commercial banks located
in New York City are authorized or permitted by law to close.
"Cap Amount" means 19.99% of the Common Stock
outstanding on February 12, 2004 (subject to adjustment upon a stock split,
stock dividend or similar event).
"Common Stock" means the common stock, par value
$0.01 per share, of the Company.
"Conversion Price" has the meaning specified in the
Debentures.
"Debt" means, as to any Person at any time: (a) all
indebtedness, liabilities and obligations of such Person for borrowed money; (b)
all indebtedness, liabilities and obligations of such Person to pay the deferred
purchase price of Property or services, except trade accounts payable of such
Person arising in the ordinary course of business that are not past due by more
than 90 days; (c) all capital lease obligations of such Person; (d) all Debt of
others guaranteed by such Person; (e) all indebtedness, liabilities and
obligations secured by a Lien existing on Property owned by such Person, whether
or not the indebtedness, liabilities or obligations secured thereby have been
assumed by such Person or are non-recourse to such Person; (f) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds and similar
instruments; and (g) all indebtedness, liabilities and obligations of such
Person to redeem or retire shares of capital stock of such Person.
"Debenture Shares" means the Conversion Shares, the
Interest Payment Shares (as defined in the Debenture) and the Put Payment Shares
(as defined in the Debenture).
"Effective Date" has the meaning set forth in the
Registration Rights Agreement.
"Environmental Law" means any federal, state,
provincial, local or foreign law, statute, code or ordinance, principle of
common law, rule or regulation, as well as any Permit, order, decree, judgment
or injunction issued, promulgated, approved or entered thereunder, relating to
pollution or the protection, cleanup or restoration of the environment or
natural resources, or to the public health or safety, or otherwise governing the
generation, use, handling, collection, treatment, storage, transportation,
recovery, recycling, discharge or disposal of hazardous materials.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations and published interpretations
thereunder.
"Exchange Act" means the Securities Exchange Act of
1934, as amended (or any successor act), and the rules and regulations
thereunder (or respective successors thereto).
"Exercise Price" shall have the meaning specified in
the Warrants.
"GAAP" means generally accepted accounting
principles, applied on a consistent basis, as set forth in (i) opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (ii) statements of the Financial Accounting Standards Board (iii)
interpretations of the Commission and the Staff of the Commission and each of
their respective successors and which are applicable in the circumstances as of
the date in question. Accounting principles are applied on a "consistent basis"
when the accounting principles applied in a current period are comparable in all
material respects to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or
government, any state, provincial or political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including without limitation any stock
exchange, securities market or self-regulatory organization.
"Governmental Requirement" means any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, license or other directive or requirement of any federal, state,
county, municipal, parish, provincial or other Governmental Authority or any
department, commission, board, court, agency or any other instrumentality of any
of them.
"Intellectual Property" means any U.S. or foreign
patents, patent rights, patent applications, trademarks, trade names, service
marks, brand names, logos and other trade designations (including unregistered
names and marks), trademark and service xxxx registrations and applications,
copyrights and copyright registrations and applications, inventions, invention
disclosures, protected formulae, formulations, processes, methods, trade
secrets, computer software,
computer programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights.
"Lien" means, with respect to any Property, any
mortgage or mortgage, pledge, hypothecation, assignment, deposit arrangement,
security interest, tax lien, financing statement, pledge, charge, or other lien,
charge, easement, encumbrance, preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever on or with respect
to such Property (including, without limitation, any conditional sale or other
title retention agreement having substantially the same economic effect as any
of the foregoing).
"Material Adverse Effect" means an effect that has a
material and adverse effect on (i) the consolidated business, operations,
properties, financial condition, prospects or results of operations of the
Company and its Subsidiaries taken as a whole or (ii) the ability of the Company
to perform its obligations under this Agreement or the other Transaction
Documents (as defined below).
"Material Contracts" means, as to the Company, any
agreement required pursuant to Item 601 of Regulation S-K promulgated under the
Securities Act to be filed as an exhibit to any report, schedule, registration
statement or definitive proxy statement filed or required to be filed by the
Company with the Commission under the Exchange Act or any rule or regulation
promulgated thereunder, and any and all amendments, modifications, supplements,
renewals or restatements thereof.
"NASD" means the National Association of Securities
Dealers, Inc.
"Pension Plan" means an employee benefit plan (as
defined in ERISA) maintained by the Company for employees of the Company or any
of its Affiliates.
"Permitted Liens" means the following:
(a) encumbrances consisting of easements,
rights-of-way, zoning restrictions or other restrictions on the use of
real Property or imperfections to title that do not (individually or in
the aggregate) materially impair the ability of the Company or any of
its Subsidiaries to use such Property in its businesses, and none of
which is violated in any material respect by existing or proposed
structures or land use;
(b) Liens for taxes, assessments or other
governmental charges that are not delinquent or which are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the Property
subject to such Liens, and for which adequate reserves (as determined
in accordance with GAAP) have been established; and
(c) Liens of mechanics, materialmen, warehousemen,
carriers, landlords or other similar statutory Liens securing
obligations that are not yet due and are incurred in
the ordinary course of business or which are being contested in good
faith by appropriate proceedings.
"Person" means any individual, corporation, trust,
association, company, partnership, joint venture, limited liability company,
joint stock company, Governmental Authority or other entity.
"Property" means property and/or assets of all kinds,
whether real, personal or mixed, tangible or intangible (including, without
limitation, all rights relating thereto).
"Principal Market" means the principal exchange or
market on which the Common Stock is listed or traded.
"Registrable Securities" has the meaning set forth in
the Registration Rights Agreement.
"SEC Documents" has the meaning specified in Section
3.4 hereof.
"Senior Lender" means Xxxxxxx Business Credit
Corporation (f/k/a Whitehall Business Credit Corporation), its successors and
assigns.
"Senior Loan Agreement" means that certain Credit and
Security Agreement, dated as of December 23, 2003, by and among the Company,
American Helicopters Inc. and OMNI Energy Services Corp.-Mexico, as borrowers,
and Senior Lender, as such agreement may be amended, modified and supplemented
from time to time.
"Subordination Agreement" means the Subordination
Agreement to be entered into by and between the Investors and the Senior Lender
at Closing pursuant to which certain rights of the Investors under the
Debentures will be subordinated to the rights of the Senior Lender under the
Senior Loan Agreement.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which at least a majority of the outstanding
shares of stock or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors (or Persons
performing similar functions) of such corporation or entity (irrespective of
whether or not at the time, in the case of a corporation, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries.
"Trading Day" means any day on which the Common Stock
is purchased and sold on the Principal Market.
"Transaction Documents" means (i) this Agreement,
(ii) the Warrants, (iii) the Registration Rights Agreement, (iv) the Debentures
and (v) all other agreements, documents and
other instruments executed and delivered by or on behalf of the Company or any
of its officers at the Closing.
1.3 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR.
Each Investor hereby makes the following representations and warranties
to the Company and agrees with the Company that, as of the date of this
Agreement and as of the Closing Date:
2.1 Authorization; Enforceability. Such Investor is duly and
validly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization as set forth below such
Investor's name on the signature page hereof and is duly qualified to transact
business and is in good standing in each jurisdiction in which it conducts
business except where the failure so to qualify has not had or would not
reasonably be expected to have a material adverse effect on such Investor. Each
Investor has the requisite corporate power and authority to purchase the
Debentures and Warrants and to execute and deliver the Transaction Documents to
which such Investor is a party and to perform the provisions hereof and thereof.
This Agreement constitutes, and upon execution and delivery thereof, each other
Transaction Document to which such Investor is a party will constitute, such
Investor's valid and legally binding obligation, enforceable in accordance with
its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
2.2 No Conflict with Other Instruments. The (i) execution,
delivery and performance of this Agreement by each Investor and the other
Transaction Documents to which such Investor is a party, and (ii) consummation
of the transactions contemplated hereby and thereby by such Investor has not and
will not result in any violation of any provisions of such Investor's
organizational documents or in default (and no event has occurred which, with
notice or lapse of time or both, would constitute a default) under any provision
of any instrument or contract to which such Investor is a party or by which such
Investor or any of its property is bound, or in violation of any provision of
any Governmental Requirement applicable to such Investor, except for violations
or defaults that has not had or would not reasonably be expected to have a
material adverse effect on such Investor.
2.3 Consent. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
Governmental Authority is required on the part of such Investor in connection
with the execution and delivery by such Investor of the Transaction Documents to
which such Investor is a party, except such filings as shall have been made
prior to and shall be effective on and as of the Closing and such filings
required to be made after the Closing under applicable federal and state
securities laws.
2.4 Accredited Investor. Such Investor is an accredited investor
as that term is defined in Rule 501 of Regulation D, and is acquiring the
Debentures and Warrants solely for its own account as a principal and not with a
present view to the public resale or distribution of all or any part thereof,
except pursuant to sales that are exempt from the registration requirements of
the Securities Act and/or sales registered under the Securities Act; provided,
however that in making such representation, such Investor does not agree to hold
the Securities for any minimum or specific term and reserves the right to sell,
transfer or otherwise dispose of the Securities at any time in accordance with
the provisions of the Transaction Documents and with Federal and state
securities laws applicable to such sale, transfer or disposition. Such Investor
has the knowledge and experience in business and financial matters so as to
enable it to understand the risks of and form an investment decision with
respect to its investment in the Securities.
2.5 Information. The Company has provided such Investor and its
advisors and representatives, if any, with information regarding the business,
operations and financial condition of the Company, and has granted to such
Investor the opportunity to ask questions of and receive answers from
representatives of the Company, its officers, directors, employees and agents
concerning the Company and materials relating to the terms and conditions of the
purchase and sale of the Debentures and Warrants hereunder. The Company answered
all of the questions asked by such Investor, its advisors or representatives.
Neither such information nor any other investigation conducted by such Investor
or any of its representatives shall modify, amend or otherwise affect such
Investor's right to rely on the Company's representations and warranties
contained in this Agreement.
2.6 No Governmental Review. Such Investor understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
2.7 Limitations on Disposition. Such Investor acknowledges that,
except as provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the Securities Act and may not be
transferred or resold without registration under the Securities Act or unless
pursuant to an exemption therefrom.
2.8 Legend. Such Investor understands that the certificates
representing the Securities, except as set forth below, shall bear at issuance a
restrictive legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, and
may not be offered for sale, sold, transferred or assigned
unless a registration statement under the Securities Act and
applicable state securities laws shall have become effective
with regard thereto, or an exemption from registration under
the Securities Act and applicable state securities laws is
available in connection with such offer or sale."
Notwithstanding the foregoing, it is agreed that, as long as
(A) the resale or transfer (including without limitation a pledge) of any of the
Securities is registered pursuant to an effective registration statement, (B)
such Securities have been sold pursuant to Rule 144 under the Securities Act or
any successor provision ("Rule 144"), subject to receipt by the Company of
customary documentation in connection therewith, or (C) such Securities are
eligible for resale under Rule 144(k) or any successor provision, such
Securities shall be issued without any legend or other restrictive language and,
with respect to Securities upon which such legend is stamped, the Company shall
issue new certificates without such legend to the holder upon request.
2.9 Reliance on Exemptions. Such Investor understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations and warranties of such Investor set forth in this Section 2 in
order to determine the availability of such exemptions and the eligibility of
such Investor to acquire the Securities.
2.10 Non-Affiliate Status; Common Stock Ownership. Such Investor is
not an Affiliate of the Company or of any other Investor and is not acting in
association or concert with any other Investor in regard to its purchase of the
Debentures and Warrants or otherwise in regard to the Company. Such Investor's
investment in the Debentures and Warrants is not for the purpose of acquiring,
directly or indirectly, control of, and it has no intent to acquire or exercise
control of, the Company or to influence the decisions or policies of the
Company's Board of Directors.
2.11 No Net Short Position in Company Securities. Neither such
Investor nor any Person trading on its behalf or at its direction has
established a net short position on the Common Stock or any other securities of
the Company as of the Trading Day immediately preceding the Closing Date. For
purposes hereof, an Investor will be deemed to have established a "net short
position" if such Investor has a short position that represents a number of
shares of Common Stock in excess of the sum of (A) the number of shares of
Common Stock then held by such Investor plus (B) the aggregate number of shares
of Common Stock then issuable under such Investor's Debentures, Warrants, First
Debentures and First Warrants (without giving effect to any limitations on the
conversion or exercise thereof).
2.12 Fees. Such Investor is not obligated to pay any compensation
or other fee, cost or related expenditure to any underwriter, broker, agent or
other representative in connection with the transactions contemplated hereby.
Such Investor will indemnify and hold harmless the Company from and against any
cost or expense incurred by the Company as a result of the inaccuracy of the
foregoing representation.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby makes
the following representations and warranties to each Investor and agrees with
each Investor that, as of the date of this Agreement and as of the Closing Date:
3.1 Organization, Good Standing and Qualification. Each of the
Company and its active Subsidiaries (all of which are listed on Schedule 3.1) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
power and authority to carry on its business as now conducted. Each of the
Company and its active Subsidiaries (all of which are listed on Schedule 3.1) is
duly qualified to transact business and is in good standing in each jurisdiction
in which it conducts business except where the failure so to qualify has not had
or would not reasonably be expected to have a Material Adverse Effect. For
purposes hereof, a Subsidiary is an "active" Subsidiary if it holds or leases
any assets or other property or if any business or operations are conducted by
or through it.
3.2 Authorization; Consents. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
the Transaction Documents, to issue and sell the Debentures and the Warrants to
the Investors in accordance with the terms hereof and thereof, to issue the
Debenture Shares issuable upon conversion of or otherwise under the Debentures
and to issue the Warrant Shares upon exercise of the Warrants. All corporate
action on the part of the Company by its officers, directors and stockholders
necessary for the authorization, execution and delivery of, and the performance
by the Company of its obligations under, the Debentures and the Transaction
Documents has been taken, and no further consent or authorization of the
Company, its Board of Directors, stockholders, any Governmental Authority or
organization (other than such approval as may be required under the Securities
Act and applicable state securities laws in respect of the Registration Rights
Agreement), or any other Person is required (pursuant to any rule of the
National Association of Securities Dealers ("NASD") or otherwise). The Company's
Board of Directors has determined, at a duly convened meeting or by unanimous
written consent, that the issuance and sale of the Securities, and the
consummation of the transactions contemplated hereby and the other Transaction
Documents (including without limitation the issuance of Debenture Shares and
Warrant Shares) are in the best interests of the Company.
3.3 Enforcement. Each of the Transaction Documents constitutes the
valid and legally binding obligation of the Company, enforceable against it in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization or other similar laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
3.4 Disclosure Documents; Agreements; Financial Statements; Other
Information. The Company is subject to the reporting requirements of the
Exchange Act and has filed with the Commission all reports, schedules,
registration statements and definitive proxy statements that the Company was
required to file with the Commission on or after December 31, 2002
(collectively, the "SEC Documents"). The Company is not aware of any event
occurring or expected to occur on or prior to the Closing Date (other than the
transactions effected hereby) that would require the filing of, or with respect
to which the Company intends to file, a Form 8-K after the Closing. Each SEC
Document, as of the date of the filing thereof with the Commission, complied in
all material respects with the requirements of the Securities Act or Exchange
Act, as applicable, and the rules and regulations promulgated thereunder and, as
of the date of such filing (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), such SEC Document
(including all exhibits and schedules thereto and documents incorporated by
reference therein) did not contain an untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All documents required to be filed as exhibits to the SEC
Documents have been filed
as required. Except as set forth in the SEC Documents filed at least one
Business Day prior to the date of this Agreement (the "Disclosure Documents"),
the Company has no liabilities, contingent or otherwise, other than liabilities
incurred in the ordinary course of business which, under GAAP, are not required
to be reflected in the financial statements included in the Disclosure Documents
and which, individually or in the aggregate, are not material to the
consolidated business or financial condition of the Company and its Subsidiaries
taken as a whole. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto. Such financial statements
have been prepared in accordance with GAAP consistently applied at the times and
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments).
3.5 Capitalization; Debt Schedule. The capitalization of the
Company as of the date hereof, including its authorized capital stock, the
number of shares issued and outstanding, the number of shares issuable and
reserved for issuance pursuant to the Company's stock option plans, the number
of shares issuable and reserved for issuance pursuant to securities (other than
the Debentures and Warrants) exercisable for, or convertible into or
exchangeable for any shares of Common Stock and the number of shares initially
to be reserved for issuance upon conversion of the Debentures and exercise of
the Warrants is set forth on Schedule 3.5 hereto. All of such outstanding shares
of capital stock have been, or upon issuance will be, validly issued, fully paid
and non-assessable. Except as disclosed on Schedule 3.5 hereto, the Company owns
all of the capital stock of each Subsidiary, which capital stock is validly
issued, fully paid and non-assessable, and no shares of the capital stock of the
Company or any of its Subsidiaries are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any such Subsidiary or any
Liens created by or through the Company or any such Subsidiary. Except as
disclosed on Schedule 3.5, or as contemplated herein, as of the date of this
Agreement and as of the Closing Date, there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
or exchangeable for, any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries (whether pursuant to anti-dilution, "reset" or other
similar provisions). Schedule 3.5 identifies all Debt of the Company outstanding
as of the date hereof exceeding $250,000.
3.6 Due Authorization; Valid Issuance. The Debentures and Warrants
are each duly authorized and, when issued, sold and delivered in accordance with
the terms hereof, (i) will be duly and validly issued, free and clear of any
Liens imposed by or through the Company and (ii) assuming the accuracy of each
Investor's representations in this Agreement, will be issued, sold and delivered
in compliance with all applicable Federal and state securities laws. The
Debenture Shares are duly authorized and reserved for issuance and, when issued
in accordance with the terms of the Debentures, will be duly and validly issued,
fully paid and nonassessable, free and clear of any Liens imposed by or through
the Company. The Warrant Shares are duly authorized and reserved for issuance
and, when
issued in accordance with the terms of the Warrants, will be duly and validly
issued, fully paid and nonassessable, free and clear of any Liens imposed by or
through the Company.
3.7 No Conflict with Other Instruments. Except as disclosed on
Schedule 3.7 hereto, neither the Company nor any of its Subsidiaries is in
violation of any provisions of its Articles of Incorporation, Bylaws or any
other governing document or in default (and no event has occurred which, with
notice or lapse of time or both, would constitute a default) under any provision
of any instrument or contract to which it is a party or by which it or any of
its Property is bound, or in violation of any provision of any Governmental
Requirement applicable to it, except for violations of any provision of a
Governmental Requirement that has not had or would not reasonably be expected to
have a Material Adverse Effect. Except as disclosed on Schedule 3.7 hereto,
neither the (i) execution, delivery and performance of this Agreement and the
other Transaction Documents, and (ii) consummation of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Debentures and the Warrants and the reservation for issuance and issuance of
the Debenture Shares and the Warrant Shares) has not and will not result in any
violation referred to in the previous sentence or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument or contract or an event which
results in the creation of any Lien upon any assets of the Company or of any of
its Subsidiaries or the triggering of any preemptive or anti-dilution rights
(including without limitation pursuant to any "reset" or similar provisions) or
rights of first refusal or first offer, or any other rights that would allow or
permit the holders of the Company's securities to purchase shares of Common
Stock or other securities of the Company (whether pursuant to a shareholder
rights plan provision or otherwise), on the part of holders of the Company's
securities, other than such rights as are disclosed on Schedule 3.7 hereto.
3.8 Financial Condition; Taxes; Litigation.
3.8.1 Except as disclosed on Schedule 3.8 hereto, the
Company's financial condition is, in all material respects, as described in the
Disclosure Documents, except for changes in the ordinary course of business and
normal year-end adjustments that are not, in the aggregate, materially adverse
to the consolidated business or financial condition of the Company and its
Subsidiaries taken as a whole. Except as otherwise described in the Disclosure
Documents, there has been no (i) material adverse change to the Company's
business, operations, properties, financial condition, prospects or results of
operations since the date of the Company's most recent audited financial
statements contained in the Disclosure Documents or (ii) change by the Company
in its accounting principles, policies and methods except as required by changes
in GAAP.
3.8.2 The Company and each of its Subsidiaries has prepared
in good faith and duly and timely filed all tax returns required to be filed by
it and such returns are complete and accurate in all material respects and the
Company and each of its Subsidiaries has paid all taxes required to have been
paid by it, except for taxes which it reasonably disputes in good faith or the
failure of which to pay has not had or would not reasonably be expected to have
a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
any material liability with respect to taxes that accrued on or before September
30, 2003 in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in the Disclosure Documents filed
prior to the date hereof.
3.8.3 Neither the Company nor any of its Subsidiaries is
the subject of any pending or, to the Company's knowledge, threatened inquiry,
investigation or administrative or legal proceeding by the Internal Revenue
Service, the taxing authorities of any state or local jurisdiction, the
Commission, the NASD, any state securities commission or other Governmental
Authority.
3.8.4 Except as described in the Disclosure Documents and
as disclosed on Schedule 3.8 hereto, there is no material claim, litigation or
administrative proceeding pending, or, to the Company's knowledge, threatened or
contemplated, against the Company or any of its Subsidiaries, or against any
officer, director or employee of the Company or any such Subsidiary in
connection with such person's employment therewith. Neither the Company nor any
of its Subsidiaries is a party to or subject to the provisions of, any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality that has had or would reasonably be expected to have a Material
Adverse Effect.
3.9 Reporting Company; Form S-3. The Company is subject to the
reporting requirements of the Exchange Act, has a class of securities registered
under Section 12 of the Exchange Act, and has filed all reports required
thereby. The Company is eligible to register the Debenture Shares and Warrant
Shares for resale in a secondary offering by each Investor on a registration
statement on Form S-3 pursuant to Rule 415 under the Securities Act. To the
Company's knowledge, there exist no facts or circumstances (including without
limitation any required approvals or waivers of any circumstances that may delay
or prevent the obtaining of accountant's consents) that could reasonably be
expected to prohibit or delay the preparation, filing or effectiveness of any
such registration statement.
3.10 Acknowledgement of Dilution. The Company acknowledges that the
issuance of the Debenture Shares upon conversion of or otherwise under the
Debentures and the issuance of the Warrant Shares upon exercise of the Warrants
may result in dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The Company further
acknowledges its obligation to issue Debenture Shares upon conversion of or
otherwise under the Debentures in accordance with the terms of the Debentures,
and to issue Warrant Shares upon exercise of the Warrants in accordance with the
terms of the Warrants, regardless of the effect of any such dilution.
3.11 Intellectual Property. The Company and its Subsidiaries each
owns or possesses adequate rights or licenses to use all Intellectual Property
that is necessary for the operation of its businesses as presently conducted and
as proposed to be conducted, except where the failure to own or possess such
rights would not result, either individually or in the aggregate, in a Material
Adverse Effect. The consummation of the transactions contemplated by this
Agreement, the other Transaction Documents and the Debentures will not
materially alter or impair, individually or in the aggregate, any of such rights
of the Company. To the Company's knowledge, except as described in the
Disclosure Documents, none of its planned or current products or services
infringes upon any Intellectual Property of any other Person, and no claim or
litigation is pending or, to the knowledge of the Company, threatened against
the Company contesting its right to sell or otherwise use any product or
material or service which has had or would reasonably be expected to have a
Material Adverse Effect. Except as described in the Disclosure Documents, there
is no violation by the
Company with respect to any Intellectual Property owned or used by the Company
that would reasonably be expected to have a Material Adverse Effect on the
Company. Except as described in the Disclosure Documents, the Company's rights
to such Intellectual Property are valid and enforceable and no registration
relating thereto has lapsed, expired or terminated or, to the Company's
knowledge, is the subject of any claim or proceeding that could result in any
such lapse, expiration or termination. The Company and its Subsidiaries each has
complied in all material respects with its obligations pursuant to any agreement
relating to the Intellectual Property Rights that are the subject of licenses
granted by third parties.
3.12 Registration Rights. Except as described on Schedule 3.12
hereto, 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
has not been satisfied in full prior to the date hereof.
3.13 Solicitation; Other Issuances of Securities. Except as
described on Schedule 3.13 hereto, neither the Company nor any of its
Subsidiaries or Affiliates, nor any Person acting on its or their behalf, (i)
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the offer or sale of the
Securities, (ii) has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under any circumstances
that would require registration of the Securities under the Securities Act or
(iii) has issued any shares of Common Stock or shares of any series of preferred
stock or other securities or instruments convertible into, exchangeable for or
otherwise entitling the holder thereof to acquire shares of Common Stock which
would be integrated with the sale of the Securities to such Investor or the
issuance of the Debenture Shares for purposes of the Securities Act or of any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the NASD, nor will the Company or any of its
Subsidiaries or Affiliates take any action or steps that would require
registration of any of the Securities under the Securities Act or cause the
offering of the Securities to be so integrated with other offerings.
3.14 Fees. Except as described on Schedule 3.14 hereto, the Company
is not obligated to pay any compensation or other fee, cost or related
expenditure to any underwriter, broker, agent or other representative in
connection with the transactions contemplated hereby. The Company will indemnify
and hold harmless such Investor from and against any claim by any Person
alleging that such Investor is obligated to pay any such compensation, fee, cost
or related expenditure in connection with the transactions contemplated hereby.
3.15 Foreign Corrupt Practices. To the knowledge of the Company,
neither the Company, nor any of its Subsidiaries nor any director, officer,
agent, employee or other person acting on behalf of the Company or any
Subsidiary, has (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, or (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
3.16 Employees. Each executive officer (as defined in Rule 501(f)
of the Securities Act) of the Company (each, a "Key Employee") is currently
serving in the capacity indicated in the most recently filed Disclosure
Documents. The Company has no knowledge of any fact or circumstance (including
without limitation (i) the terms of any agreement to which such person is a
party or any litigation in which such person is or may become involved and (ii)
any illness or medical condition that could reasonably be expected to result in
the disability or incapacity of such person) that would limit or prevent any
such person from serving in such capacity on a full-time basis in the
foreseeable future, or of any intention on the part of any such person to limit
or terminate his or her employment with the Company. No Key Employee has
borrowed money pursuant to a currently outstanding loan that is secured by
Common Stock or any right or option to receive Common Stock. There is no strike,
labor dispute or union organization activities pending or, to the knowledge of
the Company, threatened between it and its employees. None of the Company's
employees belong to any union or collective bargaining unit. The Company has
complied in all material respects with all applicable federal and state equal
opportunity and other laws related to employment.
3.17 Environment. Except as disclosed in the Disclosure Documents
(i) the Company and its Subsidiaries have no liabilities under any Environmental
Law, nor, to the Company's knowledge, do any factors exist that are reasonably
likely to give rise to any such liability, affecting any of the properties of
the Company or any of its Subsidiaries that, individually or in the aggregate,
has had or would reasonably be expected to have a Material Adverse Effect and
(ii) neither the Company nor any of the Subsidiaries has violated any
Environmental Law applicable to it now or previously in effect, other than such
violations or infringements that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Material Adverse Effect.
3.18 ERISA. Except as described on Schedule 3.18, the Company does
not maintain or contribute to, or have any obligation under, any Pension Plan.
The Company is in compliance in all material respects with the presently
applicable provisions of ERISA and the United States Internal Revenue Code of
1986, as amended, with respect to each Pension Plan except in any such case for
any such matters that, individually or in the aggregate, have not had, and would
not reasonably be expected to have, a Material Adverse Effect.
3.19 Disclosure. No written statement, information, report,
representation or warranty made by the Company in any Transaction Document
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances in which made, not misleading. There is no fact known to the
Company, which has had a Material Adverse Effect, and there is no fact known to
the Company that could reasonably be expected to have a Material Adverse Effect
except as may have been disclosed in writing to such Investor. The Company has
not disclosed to such Investor any event, circumstance or fact that would
constitute material non-public information as of the date of this Agreement or
the Closing Date. The Company acknowledges and agrees that following the
issuance of the press release in accordance with Section 4.1 hereof, such
Investor will not possess any material non-public information concerning the
Company or any Subsidiary, and that such Investor is relying on the
representations, acknowledgements and agreements made by the Company in this
Section 3.19 in making trading and other decisions concerning the Company's
securities.
3.20 Insurance. The Company maintains insurance for itself and its
Subsidiaries in such amounts and covering such losses and risks as is reasonably
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. No notice of cancellation has been received for any of
such policies and the Company is in compliance with all of the terms and
conditions thereof. The Company has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost. Without limiting
the generality of the foregoing, the Company maintains Director's and Officer's
insurance in an amount not less than $20 million for each covered occurrence.
3.21 Property. The Company and its Subsidiaries have good and
marketable title in fee simple to all of its real property and good and
marketable title to all personal Property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
Liens, except for Permitted Liens. Any Property held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made or proposed to be made of such Property by the Company and its
Subsidiaries. Schedule 3.21 sets forth all of the Real Property owned by the
Company or any of its Subsidiaries.
3.22 Regulatory Permits. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
3.23 Listing. The Company's Common Stock is listed on The Nasdaq
National Market (the "Nasdaq Stock Market"). The Company currently meets the
continuing eligibility requirements for listing on the Nasdaq Stock Market and
has not received any notice from the Nasdaq Stock Market that it may not
currently satisfy such requirements or that such continued listing is in any way
threatened. The Company has taken no action designed to, or which, to the
knowledge of the Company, is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market.
3.24 Investment Company Status. The Company is not, and immediately
after receipt of payment for the Debentures and the Warrants issued under this
Agreement will not be, an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.
3.25 Transfer Taxes. No stock transfer or other taxes (other than
income taxes) are required to be paid in connection with the issuance and sale
of any of the Securities, other than such taxes for which the Company has
established appropriate reserves and intends to pay in full on or before the
Closing.
3.26 Internal Controls and Procedures. The Company maintains
internal accounting controls, policies and procedures, and such books and
records as are reasonably designed to provide
reasonable assurance that (i) all transactions to which the Company or any
Subsidiary is a party or by which its properties are bound are effected by a
duly authorized employee or agent of the Company, supervised by and acting
within the scope of the authority granted by the Company's senior management;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; and (iii) all transactions to which
the Company or any Subsidiary is a party, or by which its properties are bound,
are recorded (and such records maintained) in accordance with all Government
Requirements and as may be necessary or appropriate to ensure that the financial
statements of the Company are prepared in accordance with GAAP.
3.27 Embargoed Person. At all times while any Debentures remain
outstanding: to the Company's knowledge (a) none of the funds or other assets of
the Company shall constitute property of, or shall be beneficially owned,
directly or indirectly, by any Person subject to trade restrictions under United
States law, including, but not limited to, the International Emergency Economic
Powers Act, 50 U.S.C. Section 1701 et seq., The Trading with the Enemy Act, 50
U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated under
any such United States laws (each, an "Embargoed Person"), with the result that
the investments evidenced by the Securities are or would be in violation of law;
(b) no Embargoed Person shall have any interest of any nature whatsoever in the
Company with the result that the investments evidenced by the Securities are or
would be in violation of law; and (c) none of the funds of the Company shall be
derived from any unlawful activity with the result that the investments
evidenced by the Securities are or would be in violation of law.
3.28 No Other Agreements. The Company has not, directly or
indirectly, entered into any agreement with or granted any right to any Investor
relating to the terms or conditions of the transactions contemplated by the
Transaction Documents, except as expressly set forth in the Transaction
Documents.
4. COVENANTS OF THE COMPANY AND EACH INVESTOR.
4.1 The Company agrees with each Investor that it will, following
the Closing:
(a) file a Form D with respect to the Securities
issued at the Closing as required under Regulation D and to provide a copy
thereof to such Investor promptly after such filing;
(b) take such action as the Company reasonably
determines upon the advice of counsel is necessary to qualify the Debentures and
Warrants issued at the Closing for sale under applicable state or "blue-sky"
laws or obtain an exemption therefrom, and shall provide evidence of any such
action to such Investor at such Investor's request; and
(c) (i) on or before 5:00 pm eastern time on the date
on which this Agreement is executed and delivered by the Company and each
Investor, issue a press release disclosing the material terms of this Agreement
and the transactions contemplated by this Agreement substantially in the form
attached hereto as Exhibit D and (ii) prior to 5:00 p.m. on the second (2nd)
Business Day following Closing, file with the Commission a Current Report on
Form 8-K disclosing the material terms of this Agreement and the transactions
contemplated hereby and
including as exhibits this Agreement, the other Transaction Documents and the
Debentures; provided, however, that each Investor shall have a reasonable
opportunity to review and comment on any such press release or Form 8-K prior to
the issuance or filing thereof. Thereafter, the Company shall timely file any
filings and notices required by the Commission or applicable law with respect to
the transactions contemplated hereby.
4.2 The Company agrees that it will, as long as any Debentures
purchased at Closing remain outstanding or ten percent (10%) or more of the
Warrants purchased at Closing remain outstanding:
(a) maintain its corporate existence in good
standing;
(b) maintain, keep and preserve all of its Properties
necessary in the proper conduct of its businesses in good repair, working order
and condition (ordinary wear and tear excepted) and make all necessary repairs,
renewals and replacements and improvements thereto, except where the failure to
do so would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(c) pay or discharge before becoming delinquent (a)
all taxes, levies, assessments and governmental charges imposed on it or its
income or profits or any of its Property and (b) all lawful claims for labor,
material and supplies, which, if unpaid, might become a Lien upon any of its
Property, except where the failure to do so would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; provided,
however, that the Company shall not be required to pay or discharge any tax,
levy, assessment or governmental charge, or claim for labor, material or
supplies, whose amount, applicability or validity is being contested in good
faith by appropriate proceedings being diligently pursued and for which adequate
reserves have been established under GAAP;
(d) comply with all Governmental Requirements
applicable to the operation of its business, except for instances of
noncompliance that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;
(e) comply with all agreements, documents and
instruments binding on it or affecting its Properties or business, including,
without limitation, all Material Contracts, except for instances of
noncompliance that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;
(f) provide such Investor with copies of all
materials sent to its stockholders, in each such case promptly after the filing
thereof with the Commission; and
(g) timely file with the Commission all reports
required to be filed pursuant to the Exchange Act and refrain from terminating
its status as an issuer required by the Exchange Act to file reports thereunder
even if the Exchange Act or the rules or regulations thereunder would permit
such termination.
4.3 Reservation of Common Stock. The Company shall, on the Closing
Date, have authorized and reserved for issuance, free from any preemptive
rights, a number of shares of Common Stock (the "Reserved Amount") equal to at
least one hundred and fifty percent (150%) of the maximum number of shares of
Common Stock issuable upon (A) conversion of the outstanding Debentures in full
at the Conversion Price then in effect and (B) exercise of the outstanding
Warrants in full at the Exercise Price then in effect, in each such case without
regard to any limitation or restriction on such conversion or exercise that may
be set forth in the Transaction Documents. In the event that the Reserved Amount
is less than one hundred and twenty-five percent (125%) of the number of
Debenture Shares then issuable upon conversion of or otherwise under all of the
Debentures and the number of Warrant Shares then issuable upon exercise of all
of the Warrants then outstanding (without regard to any limitation or
restriction on such conversion or exercise that may be set forth in the
Transaction Documents), the Company shall take action (including without
limitation seeking stockholder approval for the authorization or reservation of
additional shares of Common Stock) as soon as practicable (but in no event later
than the tenth (10th) business day or, in the event that stockholder approval is
required, the sixtieth (60th) day following such date) to increase the Reserved
Amount to no less than one hundred and fifty percent (150%) of the number of
Debenture Shares then issuable upon conversion of or otherwise under such
outstanding Debentures and the number of Warrant Shares then issuable upon
exercise of such outstanding Warrants are exercisable. The Company shall not
reduce the number of shares reserved for issuance hereunder without the written
consent of the holders of seventy-five percent (75%) of the Registrable
Securities into which all of the Debentures and Warrants then outstanding are
convertible or exercisable (without regard to any limitation on such conversion
or exercise that may be set forth in the Transaction Documents). The initial
Reserved Amount shall be allocated pro rata among the Investors based on the
principal amount of the Debentures issued to each Investor at the Closing. Each
increase in the Reserved Amount shall be allocated pro rata among the Investors
based on the amount of Registrable Securities into which all of the Debentures
and Warrants held by each such Investor at the time of such increase are
convertible or exercisable (without regard to any limitation on such conversion
or exercise that may be set forth in the Transaction Documents). In the event
that an Investor shall sell or otherwise transfer any of such Investor's
Debentures, each transferee shall be allocated a pro rata portion of such
transferor's Reserved Amount. Any portion of the Reserved Amount which remains
allocated to any Person which does not hold any Debentures shall be reallocated
to the remaining Investors pro rata based on the amount of Registrable
Securities into which all of the outstanding Debentures and Warrants at the time
of such increase are convertible or exercisable (without regard to any
limitation on such conversion or exercise that may be set forth in the
Transaction Documents).
4.4 Use of Proceeds. The Company shall use the proceeds from the
sale of the Debentures and Warrants for general corporate purposes only, in the
ordinary course of its business and consistent with past practice, and, at the
Company's election, use such proceeds to redeem all of the shares of its
preferred stock outstanding as of the date hereof; provided, however, that the
Company may not use such proceeds to repurchase or redeem any other securities
issued by the Company or any Subsidiary or to repay any loan made to or incurred
by any Affiliate of the Company without the prior written consent of the holders
of a majority of the Registrable Securities into which all of the Debentures and
Warrants then outstanding are convertible or exercisable (without regard to any
limitation on such conversion or exercise that may be set forth in the
Transaction Documents).
4.5 Quotation on Nasdaq. The Company shall (i) promptly following
the Closing, take such action as may be necessary to include all of the
Debenture Shares and Warrant Shares that may be issued by the Company (or such
surviving entity) under the Debentures and Warrants on the Nasdaq Stock Market,
and (ii) use its commercially reasonable efforts to maintain the designation and
quotation, or listing, of the Common Stock on the Nasdaq Stock Market or the New
York Stock Exchange for a minimum of five (5) years following the Closing Date.
4.6 Use of Investor Name. Except as may be required by applicable
law, the Company shall not use, directly or indirectly, any Investor's name or
the name of any of its affiliates in any advertisement, announcement, press
release or other similar communication unless it has received the prior written
consent of any Investor for the specific use contemplated or as otherwise
required by applicable law or regulation.
4.7 Company's Instructions to Transfer Agent. On or prior to the
Closing Date, the Company shall execute and deliver irrevocable written
instructions to the transfer agent for its Common Stock (the "Transfer Agent"),
and provide each Investor with a copy thereof, directing the Transfer Agent (i)
to issue certificates representing Debenture Shares upon conversion of or other
issuance under the Debentures and receipt of a valid Conversion Notice (as
defined in the Debentures) from an Investor, in the amount specified in such
Conversion Notice, in the name of such Investor or its nominee, (ii) to issue
certificates representing Warrant Shares upon exercise of the Warrants and (iii)
to deliver such certificates to such Investor no later than the close of
business on the third (3rd) Business Day following the related Conversion Date
(as defined in the Debentures) or Exercise Date (as defined in the Warrants), as
the case may be. Such certificates may bear legends pursuant to applicable
provisions of this Agreement or applicable law. As long as the Company shall
instruct the transfer agent that, in lieu of delivering physical certificates
representing shares of Common Stock to an Investor upon conversion of the
Debentures, or exercise of the Warrants, and as long as the Transfer Agent is a
participant in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, and such Investor has not informed the Company that it wishes
to receive physical certificates therefor, and no legend is required to appear
on any physical certificate if issued, the transfer agent may effect delivery of
Debenture Shares or Warrant Shares, as the case may be, by crediting the account
of such Investor or its nominee at DTC for the number of shares for which
delivery is required hereunder within the time frame specified above for
delivery of certificates. The Company represents to and agrees with each
Investor that it will not give any instruction to the Transfer Agent that will
conflict with the foregoing instruction or otherwise restrict such Investor's
right to convert the Debentures or to receive Debenture Shares in accordance
with the terms of the Debentures or to exercise the Warrant or to receive
Warrant Shares upon exercise of the Warrants. In the event that the Company's
relationship with the Transfer Agent should be terminated for any reason, the
Company shall use its commercially reasonable efforts to cause the Transfer
Agent to continue acting as transfer agent pursuant to the terms hereof until
such time that a successor transfer agent is appointed by the Company and
receives the instructions described above.
4.8 No Adverse Action. The Company and its Subsidiaries shall
refrain, while any Debentures are outstanding, from taking any action or
entering into any arrangement that in any way materially and adversely affects
(i) the rights, privileges or benefits available to a holder of Debentures or
(ii) the rights, privileges or benefits available to a holder of a Warrant.
4.9 Limitations on Disposition. Each Investor shall not sell,
transfer, assign or dispose of any Securities, unless:
(a) there is then in effect an effective registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(b) such Investor has notified the Company in writing
of any such disposition and furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration of such Securities under the Securities Act; provided, however,
that no such opinion of counsel will be required (A) if the sale, transfer or
assignment is made to an Affiliate of such Investor, (B) if the sale, transfer
or assignment is made pursuant to Rule 144 and such Investor provides the
Company with evidence reasonably satisfactory to the Company and its legal
counsel that the proposed transaction satisfies the requirements of Rule 144 or
(C) in connection with a bona fide pledge or hypothecation of any Securities
under a margin arrangement with a broker-dealer or other financial institution.
4.10 Limitations on Conversion. Until Shareholder Approval (as
defined below) is obtained, or an Investor obtains an opinion of counsel
reasonably satisfactory to the Company and its counsel that such approval is not
required, no Investor shall be issued Debenture Shares pursuant to a conversion
of such Investor's Debenture or exercise of its Put Option (as defined in the
Debentures) in an amount greater than the product of (A) the Cap Amount
multiplied by (B) a fraction, the numerator of which is the aggregate principal
amount of such Debenture plus the aggregate principal amount of the First
Debenture, if any, purchased by such Investor and the denominator of which is
the aggregate principal amount of all Debentures and all First Debentures
purchased by all Investors and First Investors under this Agreement and the
First Purchase Agreement (the "Allocation Amount"). In the event that any
Investor shall sell or otherwise transfer any of such Investor's Debentures, the
remaining Debenture Shares constituting such transferring Investor's Allocation
Amount shall be allocated between the transferring Investor and transferee pro
rata in proportion to the number of Registrable Shares issuable under the
Debentures transferred to such transferee and the number of Registrable Shares
and the First Registrable Shares issuable under the Debentures and First
Debentures retained by such transferring Investor. In the event that any
Investor shall put or convert all of such Investor's Debentures and First
Debentures, if any, into a number of shares of Common Stock which, in the
aggregate, is less than such Investor's Allocation Amount, then the difference
between such Investor's Allocation Amount and the number of Debenture Shares and
First Debenture Shares actually issued to such Investor shall be allocated to
the respective Allocation Amounts of the remaining Investors and the First
Investors on a pro rata basis in proportion to the number of Registrable Shares
and First Registrable Shares then issuable under the Debentures and First
Debentures held by each such Investor or First Investor. As used herein, the
term "First Purchase Agreement" means the Securities Purchase Agreement, dated
as of February 12, 2004, between the Company and the Investors named therein, as
amended, modified and supplemented, and the terms "First Debentures", "First
Warrants", "First Investors", "First Debenture Shares" and "First Registrable
Shares" shall have the meanings given to the terms "Debentures", "Warrants",
"Investors", Debenture Shares" and "Registrable Shares", respectively, in the
First Purchase Agreement.
4.11 Shareholder Approval. From and after the Closing Date, the
Company shall use its best efforts to seek the approval of its shareholders of
the transactions described herein and the other Transaction Documents
("Shareholder Approval") and, in furtherance thereof, the Company shall, at the
first meeting of its shareholders held after the Closing Date, recommend to its
shareholders that such approval be given. In furtherance of the foregoing, the
Company shall hold its next annual meeting of shareholders on a date that is no
later than June 30, 2004. In the event that Shareholder Approval is not obtained
at the next meeting of the Company's shareholders, the Company shall continue to
use its best efforts to seek Shareholder Approval as soon as practicable after
such meeting but no less frequently than quarterly thereafter.
4.12 Restrictions on Issuances of Convertible Securities having
Fluctuating Conversion Price. While any Debentures or Warrants are outstanding,
the Company shall not issue any securities or other instruments which are
convertible into or exercisable or exchangeable for Common Stock at a
fluctuating conversion price or exchange ratio.
4.13 Leverage Ratio Restrictions. While any Debentures or Warrants
are outstanding, the Company shall not fail to maintain the leverage ratio set
forth in Section 8.4 of the Senior Loan Agreement.
4.14 Disclosure of Information. The Company agrees that it will not
at any time disclose material non-public information to any Investor without
first receiving such Investor's written consent to such disclosure.
4.15 Senior Debt. The Company shall not refinance its Debt under
the Senior Loan Agreement, and will not incur any additional Debt senior to the
Debentures, without the prior written consent of the holders of two-thirds of
the aggregate principal amount of the Debentures then outstanding.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Investors' Obligations at the Closing. Each
Investor's obligations to effect the Closing, including without limitation its
obligation to purchase the Debentures and Warrants at the Closing, are
conditioned upon the fulfillment or waiver by such Investor of each of the
following events as of the Closing Date:
5.1.1 the representations and warranties of the Company set
forth in this Agreement shall be true and correct in
all respects as of such date as if made on such date
(except that to the extent that any such
representation or warranty relates to a particular
date, such representation or warranty shall be true
and correct in all respects as of that particular
date);
5.1.2 the Company shall have complied with or performed in
all material respects all of the agreements,
obligations and conditions set forth in this
Agreement that are required to be complied with or
performed by the Company on or before the closing;
5.1.3 the Closing Date shall occur on a date that is not
later than April 15, 2004;
5.1.4 the Company shall have delivered to such Investor a
certificate, signed by the Chief Executive Officer
and Chief Financial Officer of the Company,
certifying that the conditions specified in this
paragraph 5.1 have been fulfilled as of the Closing,
it being understood that such Investor may rely on
such certificate as though it were a representation
and warranty of the Company made herein;
5.1.5 the Company shall have delivered to such Investor an
opinion of counsel for the Company, dated as of such
date, in substantially the form set forth on Exhibit
5.1.5 hereto;
5.1.6 the Company shall have delivered duly executed
certificates representing the Debentures and the
Warrants being purchased by such Investor;
5.1.7 the Company shall have executed and delivered the
Registration Rights Agreement;
5.1.8 the Common Stock shall be quoted and actively traded
on the Nasdaq Stock Market;
5.1.9 there shall have been no material adverse change in
the Company's consolidated business or condition
(financial or otherwise) since the date of the
Company's most recent audited financial statements
contained in the Disclosure Documents;
5.1.10 the Company shall have authorized and reserved for
issuance at least one hundred and fifty percent
(150%) of the aggregate number of shares of Common
Stock issuable upon conversion of all of the
Debentures and exercise of all of the Warrants to be
issued at the Closing (such number to be determined
using the Conversion Price and Exercise Price in
effect on the Closing Date and without regard to any
restriction on the ability of an Investor to convert
Debentures or exercise the Warrants as of such date);
5.1.11 there shall be no injunction, restraining order or
decree of any nature of any court or Government
Authority of competent jurisdiction that is in effect
that restrains or prohibits the consummation of the
transactions contemplated hereby, by the other
Transaction Documents or by the Debentures;
5.1.12 the aggregate Purchase Price to be paid by the
Investors for all of the Debentures and Warrants to
be issued hereunder shall be at least $5,050,000;
5.1.13 the Company shall have obtained a consent from Senior
Lender in form and substance reasonably satisfactory
to such Investor consenting to the execution,
delivery and performance by the Company of all of the
transactions contemplated by the Transaction
Documents (the "Senior Lender Consent"); and
5.1.14 the form and substance of the Subordination Agreement
shall be reasonably satisfactory to such Investor.
5.2 Conditions to Company's Obligations at the Closing. The
Company's obligations to effect the Closing are conditioned upon the fulfillment
or waiver by the Company of each of the following events as of the date of the
closing:
5.2.1 the representations and warranties of each Investor
shall be true and correct in all respects as of such
date as if made on such date (except that to the
extent that any such representation or warranty
relates to a particular date, such representation or
warranty shall be true and correct in all respects as
of that particular date);
5.2.2 each Investor shall have complied with or performed
all of the agreements, obligations and conditions set
forth in this Agreement that are required to be
complied with or performed by such Investor on or
before the Closing;
5.2.3 there shall be no injunction, restraining order or
decree of any nature of any court or Government
Authority of competent jurisdiction that is in effect
that restrains or prohibits the consummation of the
transactions contemplated hereby, by the other
Transaction Documents or by the Debentures; and
5.2.4 the Company shall have obtained the Senior Lender
Consent.
6. MISCELLANEOUS.
6.1 Survival; Severability. The representations,
warranties, covenants and indemnities made by the parties herein and the other
Transaction Documents shall survive the Closing notwithstanding any due
diligence investigation made by or on behalf of the party seeking to rely
thereon. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that in such case the parties shall negotiate in good faith
to
replace such provision with a new provision which is not illegal, unenforceable
or void, as long as such new provision does not materially change the economic
benefits of this Agreement to the parties.
6.2 Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. No Investor may assign its
rights and obligations hereunder without the prior written consent of the
Company, which consent shall not be unreasonably withheld; provided, however,
that no such consent shall be required for an assignment to an Affiliate of an
Investor. If the Company consents to such transfer (or such transfer is to an
Affiliate of an Investor), the transferee shall execute an acknowledgment
agreeing to be bound by the applicable provisions of this Agreement, in which
case the term "Investor" shall be deemed to refer to such transferee as though
such transferee were an original signatory hereto. The Company may not assign it
rights or obligations under this Agreement without the prior written consent of
the holders of two-thirds of the aggregate principal amount of the Debentures
then outstanding .
6.3 No Reliance. Each party acknowledges that (i) it has
such knowledge in business and financial matters as to be fully capable of
evaluating this Agreement and the other Transaction Documents, and the
transactions contemplated hereby and thereby, (ii) it is not relying on any
advice or representation of any other party in connection with entering into
this Agreement, the other Transaction Documents, or such transactions (other
than the representations made in this Agreement or the other Transaction
Documents), (iii) it has not received from such party any assurance or guarantee
as to the merits (whether legal, regulatory, tax, financial or otherwise) of
entering into this Agreement or the other Transaction Documents or the
performance of its obligations hereunder and thereunder, and (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement and the other Transaction Documents based on its own
independent judgment and on the advice of its advisors as it has deemed
necessary, and not on any view (whether written or oral) expressed by such other
party.
6.4 Independent Nature of Investors' Obligations and
Rights. The obligations of each Investor hereunder are several and not joint
with the obligations of the other Investors hereunder, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor hereunder. Nothing contained herein or in any other agreement or
document delivered at the Closing, and no action taken by any Investor pursuant
hereto or thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Investor shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement or the other Transaction
Documents, and it shall not be necessary for any other Investor to be joined as
an additional party in any proceeding for such purpose.
6.5 Injunctive Relief. The Company acknowledges and
agrees that a breach by it of its obligations hereunder will cause irreparable
harm to each Investor and that the remedy or remedies at law for any such breach
will be inadequate and agrees, in the event of any such breach, in addition to
all other available remedies, such Investor shall be entitled to an injunction
restraining any breach and requiring immediate and specific performance of such
obligations without the necessity of showing economic loss.
6.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed under the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New York. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the state
and federal courts sitting in the City of New York, borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
6.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
6.8 Headings. The headings used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
6.9 Notices. Any notice, demand or request required or
permitted to be given by the Company or an Investor pursuant to the terms of
this Agreement shall be in writing and shall be deemed delivered (i) when
delivered personally or by verifiable facsimile transmission, unless such
delivery is made on a day that is not a Business Day, in which case such
delivery will be deemed to be made on the next succeeding Business Day, (ii) on
the next Business Day after timely delivery to an overnight courier and (iii) on
the Business Day actually received if deposited in the U.S. mail (certified or
registered mail, return receipt requested, postage prepaid), addressed as
follows:
If to the Company:
OMNI Energy Services Corp.
0000 XX Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx & Xxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to any Investor, to such address for such Investor as shall appear on the
signature page hereof executed by such Investor, or as shall be designated by
such Investor in writing to the Company in accordance with this Section 6.9.
6.10 Expenses. The Company and each Investor shall pay all
costs and expenses that it incurs in connection with the negotiation, execution,
delivery and performance of this Agreement, provided, however, that that the
Company shall pay up to $25,000 in immediately available funds, at the Closing
and promptly upon receipt of any further invoices relating to same, for all
reasonable out-of-pocket expenses (including without limitation legal fees and
expenses) incurred by Gemini Investment Strategies, LLC ("Gemini") in connection
its due diligence investigation of the Company and the negotiation, preparation,
execution, delivery and performance of this Agreement and the other Transaction
Documents (regardless of whether the Closing occurs). At the Closing, the
Company shall pay the amount due for such reasonable fees and expenses (which
may include fees and expenses estimated to be incurred for completion of the
transaction including post-closing matters) and Gemini may net such amount from
its Purchase Price. In the event the amount so paid by the Company is less than
the actual reasonable fees and expenses, the Company shall promptly pay such
deficiency within thirty (30) days following receipt of an invoice regarding
same. In no event shall the Company be required to pay Gemini under this Section
6.10 an amount exceeding $25,000.
6.11 Entire Agreement; Amendments. This Agreement and the
other Transaction Documents constitute the entire agreement between the parties
with regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and the Investors holding at least two-thirds (2/3) of the aggregate
principal amount of the Debentures then outstanding, and no provision hereof may
be waived other than by a written instrument signed by the party against whom
enforcement of any such waiver is sought.
[Signature Pages to Follow]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
OMNI ENERGY SERVICES CORP.
By: /s/ G. Xxxxx Xxxx
----------------------------------
G. Xxxxx Xxxx
Chief Financial Officer
PROVIDENT PREMIER MASTER FUND LTD.
By: Gemini Investment Strategies, LLC, as Attorney-in-Fact
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxxx Xxxxxxx
Authorized Signatory
ADDRESS:
c/o Gemini Investment Strategies, LLC
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000 0000
Principal Amount of Debenture to be Purchased: $1,250,000
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
OMNI ENERGY SERVICES CORP.
By: /s/ G. Xxxxx Xxxx
--------------------------------
G. Xxxxx Xxxx
Chief Financial Officer
PORTSIDE GROWTH AND OPPORTUNITY FUND
By: /s/ Xxxxxxx Xxxxx
----------------------------
Xxxxxxx Xxxxx
Authorized Signatory
ADDRESS:
c/o Ramius Capital Group, LLC
000 Xxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Xxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Principal Amount of Debenture to be Purchased: $1,250,000
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
OMNI ENERGY SERVICES CORP.
By: /s/ G. Xxxxx Xxxx
--------------------------
G. Xxxxx Xxxx
Chief Financial Officer
MANCHESTER SECURITIES CORP.
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------
Xxxxxx Xxxxxxxxx
Vice President
ADDRESS:
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Principal Amount of Debenture to be Purchased: $2,500,000
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
OMNI ENERGY SERVICES CORP.
By: /s/ G. Xxxxx Xxxx
----------------------
G. Xxxxx Xxxx
Chief Financial Officer
GEMINI MASTER FUND, LTD.
By: Gemini Investment Strategies, LLC, as Investment Manager
By: /s/ Xxxxxx Xxxxxxx
-------------------------
Xxxxxx Xxxxxxx
Authorized Signatory
ADDRESS:
c/o Gemini Investment Strategies, LLC
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000 0000
Principal Amount of Debenture to be Purchased: $50,000
