EXHIBIT 10.15
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COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this "AGREEMENT") is made
as of this 28th day of February, 2001 between SeaChange International, Inc., a
Delaware corporation (the "COMPANY"), and Comcast SC Investment, Inc., a
Delaware corporation (the "PURCHASER").
RECITALS
WHEREAS, the Company and the Purchaser entered into that certain Common
Stock and Warrant Purchase Agreement dated as of December 1, 2000 (the "INITIAL
AGREEMENT"), pursuant to which the Company agreed to issue and sell to the
Purchaser, and the Purchaser agreed to purchase from the Company, shares of the
Company's Common Stock, $0.01 par value per share (the "COMMON STOCK"), and a
warrant to purchase additional shares of Common Stock, which Initial Agreement
was terminated by mutual written consent of the Company and the Purchaser
pursuant to Section 9.1(a) thereof; and
WHEREAS, the Company now desires to issue and sell to the Purchaser, and
the Purchaser desires to purchase from the Company, shares of the Company's
Common Stock and a warrant to purchase additional shares of Common Stock, all on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
SECTION 1
PURCHASE AND SALE OF COMMON STOCK AND WARRANT
1.1 PURCHASE AND SALE OF COMMON STOCK AND WARRANT. Upon the terms and
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subject to the conditions of this Agreement, at the Closing (as defined in
Section 2.1 below), the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, 756,144 shares (the "SHARES") of
Common Stock and a warrant (the "WARRANT") to purchase 100,000 shares of Common
Stock, subject to increase and adjustment as provided therein (the "WARRANT
SHARES"), for an aggregate purchase price of $10,000,004.40 (the "PURCHASE
PRICE"). The Warrant shall have the rights, preferences, privileges and
restrictions set forth in the form of Warrant attached hereto as Exhibit A (the
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"WARRANT CERTIFICATE").
1.2 POST-CLOSING ADJUSTMENT.
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(a) If, on the Effective Date (as defined in Section 7.1(a)(ii)
below), the Effective Price (as defined below) of the Common Stock is less than
$13.225, the Company shall issue to the Purchaser, without any additional
consideration therefor, such number of additional shares of Common Stock,
rounded up or down to the nearest whole share (the "ADDITIONAL SHARES") as is
equal to the difference between (i) the number obtained by dividing (A) the
Purchase Price by (B) the Effective Price of the Common Stock on the Effective
Date, and (ii) the number of Shares actually issued and sold to the Purchaser on
the Closing Date. Notwithstanding the foregoing, in no event shall the number of
Additional Shares that the Company is required to issue pursuant to this Section
1.2 exceed such number of shares of Common Stock as would require the Company to
obtain shareholder approval pursuant to The Nasdaq Stock Market Rule 4350(i)(D)
(the "NASDAQ RULE"); provided, that, in the event that the number of Additional
Shares to be issued pursuant the terms of this Section 1.2 and/or the Warrant
Number (as such term is defined in the Warrant) would be required to be so
limited as a result of the Nasdaq Rule, the Warrant Number shall be limited
first by the amount of the Additional Warrant Number (as such term is defined in
the Warrant) and the number of Additional Shares to be issued pursuant hereto
shall only be limited to the extent required as a result of the Nasdaq Rule
after such limitation imposed upon the Warrant Number. No adjustment shall be
made if the Effective Price of the Common Stock is equal to or greater than
$13.225 on the Effective Date.
(b) For purposes of this Section 1.2, the following terms shall have
the following meanings:
(i) "EFFECTIVE PRICE" on the Effective Date shall mean the lesser
of (A) ninety-two percent (92%) of the Closing Price (as defined below) of the
Common Stock on the Effective Date or (B) the average of the Closing Prices of
the Common Stock for the five consecutive Trading Days (as defined below) ending
on the Effective Date.
(ii) "CLOSING PRICE" shall mean, for any given day, the reported
last sale price regular way of the Common Stock on such day (and, in case no
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way on such day shall be used in place of the reported
last sale price regular way) on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the Nasdaq National Market System or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted on
the Nasdaq National Market System, the average of the closing bid and asked
prices in the over-the-counter market on such day as furnished by any New York
Stock Exchange member firm reasonably selected from time to time by the Board of
Directors of the Company for that purpose.
(iii) "TRADING DAY" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday other than any day on which the Common Stock is not traded
on the applicable securities exchange or in the applicable securities market.
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SECTION 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the Shares and
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the Warrant hereunder (the "CLOSING") shall be held (i) at the offices of the
Company at 5:00 p.m. on the date hereof, or (ii) at such other time and place as
the Company and the Purchaser mutually agree (the date of the Closing being
hereinafter referred to as the "CLOSING DATE").
2.2 DELIVERY. At the Closing, the Company shall deliver, or shall instruct
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its transfer agent to deliver, to the Purchaser (i) a certificate or
certificates representing the Shares, registered in the name of the Purchaser or
its assigns, and (ii) the Warrant, in each case against payment of the Purchase
Price therefor by wire transfer of immediately available funds to an account
designated in writing by the Company.
2.3 POST-CLOSING DELIVERY. Within two days following the Effective Date,
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the Company shall (a) compute the number of Additional Shares required to be
issued pursuant to Section 1.2 above, (b) prepare a certificate signed by the
treasurer of the Company setting forth the number of Additional Shares (even if
such number is zero), showing in reasonable detail the facts upon which the
calculation of such number of Additional Shares is based, (c) deliver a copy of
such certificate to the Purchaser in accordance with the notice provisions of
Section 9.6, and (d) if the Company is required to issue any Additional Shares,
deliver, or instruct its transfer agent to deliver, to the Purchaser a
certificate or certificates representing such Additional Shares, registered in
the name of the Purchaser or its assigns.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a document referring specifically to the
representations and warranties in this Agreement that identifies by section
number the section and subsection to which such disclosure relates and is
delivered by the Company to the Purchaser prior to the execution of this
Agreement, the Company hereby represents and warrants to the Purchaser as
follows:
3.1 ORGANIZATION. The Company is a corporation duly organized and validly
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existing under the laws of the State of Delaware and is in good standing under
such laws. Each of the Company's subsidiaries is a corporation duly organized
and validly existing under the laws of the jurisdiction of its organization and
is in good standing under such laws. The Company has the requisite corporate
power to own, lease and operate its properties and assets and to carry on its
business as presently conducted and as proposed to be conducted. The Company and
each of its subsidiaries is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which the ownership of its
property or the nature of its business requires such qualification, except where
the failure to be so qualified would not, individually or in the aggregate, have
a materially adverse effect on the business, financial condition, results of
operations or prospects of the Company and its subsidiaries taken as a whole (a
"MATERIAL ADVERSE EFFECT").
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3.2 AUTHORIZATION. All corporate action on the part of the Company
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necessary for the authorization, execution, delivery and performance of this
Agreement, the Warrant and the First Amended and Restated Registration Rights
Agreement substantially in the form attached hereto as Exhibit B (the
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"REGISTRATION RIGHTS AGREEMENT") by the Company and the authorization, sale,
issuance and delivery of the Shares and Additional Shares (if any) hereunder and
the Warrant Shares pursuant to the Warrant has been taken. This Agreement, the
Warrant and the Registration Rights Agreement constitute legal, valid and
binding obligations of the Company enforceable in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to Section 7.1(e) of this Agreement and
Section 6 of the Registration Rights Agreement. Upon their issuance and delivery
pursuant to this Agreement, the Shares, the Additional Shares (if any) and the
Warrant will be duly authorized, validly issued, fully paid and nonassessable.
Upon their issuance and delivery pursuant to the Warrant, the Warrant Shares
will be duly authorized, validly issued, fully paid and nonassessable. The
Shares, the Additional Shares (if any) and the Warrant, upon their issuance and
delivery pursuant to this Agreement, and the Warrant Shares, upon their issuance
and delivery pursuant to the Warrant, will be free of any liens or encumbrances
other than as a result of any action by the Purchaser. The rights, preferences,
privileges and restrictions of the Shares, the Additional Shares (if any) and
the Warrant Shares are as stated in the Company's Certificate of Incorporation.
The rights, preferences, privileges and restrictions of the Warrant are as
stated in the Warrant Certificate. The Warrant Shares have been duly and validly
reserved for issuance. The issuance and sale of the Shares, the Additional
Shares (if any) and the Warrant and the subsequent issuance of the Warrant
Shares upon exercise of the Warrant are not subject to and will not give rise to
any preemptive rights or rights of first refusal applicable to the Company.
3.3 COMPLIANCE WITH LAW AND OTHER INSTRUMENTS; NO CONFLICT.
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(a) Neither the Company nor any of its subsidiaries is in violation of or
default under, and has not received any notices of violation or default with
respect to, (i) any provision of the Certificate of Incorporation or Bylaws of
the Company, (ii) any mortgage, indenture, lease, contract or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries, properties or assets may be bound,
or (iii) any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation of any federal, state or local
government, court, administrative agency or commission or other governmental
authority (each, a "GOVERNMENTAL ENTITY") applicable to the Company or any of
its subsidiaries, properties or assets, including, but not limited to, any
statute, law, ordinance, rule or regulation relating to the protection of the
environment or concerning the handling, storage, disposal or discharge or toxic
materials, except, in the case of (ii) and (iii), to the extent the effect of
any such violation or default would not, individually or in the aggregate, have
a Material Adverse Effect.
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(b) The execution and delivery of this Agreement, the Warrant and the
Registration Rights Agreement, the issuance of the Shares, the Additional Shares
(if any) and the Warrant and, upon exercise of the Warrant, the Warrant Shares,
and the consummation of the transactions contemplated hereby and thereby do not
and will not conflict with, result in any violation of or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under, (i) any provision of the Certificate of Incorporation or
Bylaws of the Company, (ii) any mortgage, indenture, lease, contract or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries, properties or assets
may be bound, or (iii) any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation of any Governmental
Entity applicable to the Company or any of its subsidiaries, properties or
assets, except (A) in the case of (ii) and (iii), to the extent the effect of
any such conflict, violation, default, termination, cancellation, acceleration
or loss would not, individually or in the aggregate, have a Material Adverse
Effect, or impair, delay or restrict the Company's power to perform its
obligations with respect to the transactions contemplated hereby, and (B) in the
case of (iii), any filings, consents or approvals required under the HSR Act (as
defined in Section 7.7 below) that may be required with respect to the issuance
of the Warrant Shares.
3.4 SEC DOCUMENTS.
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(a) The Company has filed all required reports, schedules, forms,
statements and other documents required to be filed by the Company with the
Securities and Exchange Commission (the "SEC") since January 1, 2000 (the "SEC
DOCUMENTS"). As of their respective dates, (i) the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (including the rules and regulations of the SEC promulgated thereunder,
the "SECURITIES ACT") or the Securities Exchange Act of 1934, as amended
(including the rules and regulations of the SEC promulgated thereunder, the
"EXCHANGE ACT"), as the case may be, and (ii) none of the SEC Documents, except
to the extent that information contained in any SEC Document has been revised or
superseded by a later Filed SEC Document (as defined in Section 3.5 below),
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. When the Registration Statement (as defined in Section 7.1(a)(i)
below), as such may be amended from time to time, is declared effective by the
SEC, such Registration Statement will comply in all material respects with the
requirements of the Securities Act and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The financial statements of the Company (including, in each case, any
related notes thereto) included in the SEC Documents (including, without
limitation, the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999) (i)
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (ii) have been prepared in accordance with U.S. generally accepted
accounting principles
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("GAAP") applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and (iii) fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operation and cashflows for
the periods then ending in accordance with GAAP (subject, in the case of the
unaudited statements, to normal year end audit adjustments). Except as set forth
in the Filed SEC Documents, neither the Company nor any of its subsidiaries has
any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and its consolidated subsidiaries or
in the notes thereto, that would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the SEC
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Documents filed and publicly available on the XXXXX system by December 31, 2000
"FILED SEC DOCUMENTS"), since the date of the most recent audited financial
statements included in the Filed SEC Documents, there has not been (i) any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to any of the Company's capital stock,
(ii) any redemption, repurchase or other acquisition by the Company or any of
its subsidiaries of any of the capital stock or other securities of the Company;
(iii) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, (iv)
any damage, destruction or loss of property, whether or not covered by
insurance, that has or is likely to have a Material Adverse Effect, (v) any
change in accounting methods, principles or practices by the Company materially
affecting its assets, liabilities, or business, except insofar as may have been
required by a change in GAAP, or (vi) any other development or event, or series
of developments or events, that has or is likely to have a Material Adverse
Effect, other than, in the case of (vi), changes affecting the industry in which
the Company operates generally and changes affecting the world, United States or
regional economy generally. To the Company's knowledge, there is no fact, matter
or event as of the date hereof that would permit, and as of the Closing Date
that will permit, the Company to effect a Sales Blackout Period (as defined in
Section 7.1(d)(i) below).
3.6 GOVERNMENTAL CONSENTS. In reliance on the representations of the
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Purchaser contained herein, no consent, approval, order or authorization of, or
registration, designation, declaration or filing with, any Governmental Entity
on the part of the Company is required in connection with the valid execution
and delivery of this Agreement, the Warrant or the Registration Rights
Agreement, the offer, sale or issuance of the Shares, the Additional Shares (if
any), the Warrant and, upon exercise of the Warrant, the Warrant Shares, or the
consummation of any other transaction contemplated hereby or thereby to occur at
Closing, except such filings as may be required to be made with the SEC and the
National Association of Securities Dealers, Inc. and, with respect to the
issuance of the Warrant Shares, any filings, consents or approvals required
under the HSR Act.
3.7 LITIGATION. Except as is disclosed in the Filed SEC Documents, there
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is no private or governmental suit, action, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal, foreign or domestic,
or, to the knowledge of the Company, threatened, against the Company, any of its
subsidiaries, or any of their respective officers or
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directors (in their capacities as such), properties or assets, that, if
determined adversely to the Company, would, individually or in the aggregate,
(i) have a Material Adverse Effect, (ii) impair the ability of the Company to
perform its obligations under this Agreement, the Warrant or the Registration
Rights Agreement, or (iii) prevent the consummation of any of the transactions
contemplated by said agreements. Except as is disclosed in the Filed SEC
Documents, there is no judgment, decree or order against the Company, any of its
subsidiaries or, to the knowledge of the Company, any of their respective
officers or directors (in their capacities as such) relating to the business of
the Company or any of its subsidiaries, the existence of which would,
individually or in the aggregate, (i) have a Material Adverse Effect, (ii)
impair the ability of the Company to perform its obligations under this
Agreement, the Warrant or the Registration Rights Agreement, or (iii) prevent
the consummation of any of the transactions contemplated by said agreements.
3.8 CAPITALIZATION.
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(a) The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.01
per share, of the Company (the "PREFERRED STOCK").
(b) As of February 23, 2001, there were (1) 22,048,424 shares of Common
Stock issued and outstanding, (2) 40,500 shares of Common Stock held in the
treasury of the Company, and (3) no shares of Preferred Stock issued and
outstanding. As of February 23, 2001, there were 3,440,988 shares of Common
Stock reserved for issuance upon exercise of outstanding stock options issued by
the Company to current or former employees, directors and consultants of the
Company and its subsidiaries.
(c) All outstanding shares of the Common Stock are duly authorized,
validly issued, fully paid and nonassessable, free from any liens created by the
Company with respect to the issuance and delivery thereof and not subject to
preemptive rights or other similar rights, and were issued in compliance with
all applicable laws concerning the issuance of securities.
(d) Other than (i) as disclosed in the Filed SEC Documents and (ii) stock
options issued and employee stock purchases made under the Company's stock
option, stock incentive and stock purchase plans described in the Filed SEC
Documents, there are no outstanding (A) securities convertible into or
exchangeable for the capital stock of the Company, (B) options, warrants or
other rights to purchase or subscribe for any capital stock of the Company or
securities convertible into or exchangeable for the capital stock of the
Company, or (C) any other contracts, commitments, agreements, understandings,
arrangements or other rights of any kind (including preemptive rights, anti-
dilution rights, rights of first refusal and registration rights) to which the
Company is a party or by which the Company is bound, or, to the Company's
knowledge, to which any other Person is a party or by which any other Person is
bound, relating to the issuance, conversion, registration, voting, sale or
transfer of any equity interests or other securities of the Company or
obligating the Company to purchase or redeem any such equity interests or other
securities of the Company.
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3.9 STOCKHOLDERS' CONSENT. No consent or approval of the stockholders of
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the Company is required for the Company to enter into this Agreement, the
Warrant and the Registration Rights Agreement, to issue the Shares, the
Additional Shares (if any) and the Warrant and, upon exercise of the Warrant,
the Warrant Shares, or to consummate the transactions contemplated hereby and
thereby.
3.10 INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries (a)
either owns or possesses adequate licenses or other rights to use all patents,
trademarks, service marks, trade names, copyrights, technology, software, know-
how and trade secrets (collectively, "INTELLECTUAL PROPERTY") necessary to
conduct the business now conducted by the Company and its subsidiaries and (b)
either owns or possesses, or can acquire on commercially reasonable terms,
adequate licenses or other rights to use all Intellectual Property necessary to
conduct the business proposed to be conducted by the Company and its
subsidiaries. Neither the Company nor any of its subsidiaries has received any
notice of infringement of or conflict with (and knows of no such infringement of
or conflict with) asserted rights of others with respect to any Intellectual
Property used in the business of the Company and its subsidiaries, as such
business is now conducted and as it is proposed to be conducted, and, to the
Company's knowledge, none of the discoveries, inventions, products, services and
processes used in the business of the Company and its subsidiaries, as such
business is now conducted and as it is proposed to be conducted, infringe upon
or conflict with any right or patent of any third party or any discovery,
invention, product, service or process that is the subject of a patent
application filed by any third party.
3.11 AGREEMENTS WITH AFFILIATES; EMPLOYMENT AGREEMENTS; SPECIAL BENEFITS.
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(a) Except as otherwise disclosed in the Filed SEC Documents, there
are no agreements, understandings or proposed transactions, in any such case
involving obligations (contingent or otherwise) of, or payments to, the Company
in excess of $500,000, between the Company and any of its officers, directors,
Affiliates (as defined below) or any Affiliate thereof. For purposes of this
Agreement, "AFFILIATE" means any Person directly or indirectly controlled by,
controlling or under common control with another Person. For purposes of this
definition, "CONTROL" means the power to direct the management of the Person in
question.
(b) Each of the Company's Chief Executive Officer, Chief Financial
Officer and its four other most highly compensated executive officers has
executed an employee noncompetition, nondisclosure and developments agreement
with the Company in the form attached hereto as Exhibit C, without any
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modifications thereto, and has not entered into any other agreements with the
Company relating to his or her employment, other than stock option agreements
substantially in the form of the Company's standard Incentive Stock Option
Agreement or Non-Qualified Stock Option Agreement.
(c) There exist no provisions contained in any employment or
severance agreement or benefit plan of the Company that provide for the payment,
accrual or acceleration of any benefit to any Person as a result of the
consummation of the transactions contemplated hereby.
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3.12 OFFERING VALID. Assuming the accuracy of the Purchaser's
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representations and warranties contained in Sections 4.3 through 4.7 hereof, the
offer, issuance and sale of the Shares, the Additional Shares (if any) and the
Warrant pursuant to the terms of this Agreement, and the Warrant Shares pursuant
to the terms of the Warrant, will be exempt from the registration requirements
of the Securities Act and will have been registered or qualified, or will be
exempt from registration and qualification, under the requirements of all other
applicable securities laws. None of the Company or any of its Affiliates, nor
any Person acting on its or their behalf, has offered to sell or sold any Common
Stock by means of any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the Securities Act that would subject the
issuance and sale of the Shares, the Additional Shares (if any), the Warrant or
the Warrant Shares to the registration provisions of the Securities Act.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
4.1 ORGANIZATION. The Purchaser is a corporation duly organized and
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validly existing and in good standing under the laws of Delaware, and Comcast
Corporation, a Pennsylvania corporation, directly or indirectly owns all of the
currently outstanding stock of the Purchaser.
4.2 AUTHORITY. All corporate action on the part of the Purchaser
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necessary for the authorization, execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Purchaser has been taken.
This Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Purchaser and constitute legal, valid and binding obligations
of the Purchaser, enforceable in accordance with their respective terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy as they may apply
to Section 7.1(e) of this Agreement and Section 6 of the Registration Rights
Agreement. The execution and delivery of said agreements do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with or result in any violation of any obligation under any provision
of the Certificate of Incorporation or Bylaws of the Purchaser or any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Purchaser.
4.3 INVESTMENT. The Purchaser is acquiring the Shares, the Additional
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Shares (if any), the Warrant and the Warrant Shares for investment for its own
account, not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof other than in compliance with
applicable securities laws. The Purchaser understands that the sale of the
Shares, the Additional Shares (if any) and the Warrant hereunder and the Warrant
Shares upon exercise of the Warrant has not been registered under the Securities
Act by reason of a specific exemption from the registration provisions of the
Securities Act that depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations and
warranties contained in this Section 4. It is understood that transfers by the
Purchaser of the Shares, the Additional Shares (if any), the Warrant or the
Warrant Shares, or any
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portion thereof, to one or more members of the Purchaser Group (as defined in
Section 9.4 below) shall not be deemed to be inconsistent with this Section 4.3,
and the Purchaser shall be permitted to make such transfers from time to time
without restriction, so long as any such transfer complies with the Securities
Act and any applicable state securities laws.
4.4 DISCLOSURE OF INFORMATION. The Purchaser has had full access to all
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information it considers necessary or appropriate to make an informed investment
decision with respect to the Shares, the Additional Shares (if any) and the
Warrant to be purchased by the Purchaser under this Agreement. The Purchaser
further has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Shares, the
Additional Shares (if any), the Warrant and the Warrant Shares and to obtain
additional information necessary to verify any information furnished to the
Purchaser or to which the Purchaser had access.
4.5 INVESTMENT EXPERIENCE. The Purchaser understands that the purchase of
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the Shares, the Additional Shares (if any), the Warrant and, upon exercise of
the Warrant, the Warrant Shares involves substantial risk. The Purchaser has
experience as an investor in securities of companies and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment in the
Shares, the Additional Shares (if any), the Warrant and the Warrant Shares and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of this investment in the Shares, the
Additional Shares (if any), the Warrant and the Warrant Shares and protecting
its own interests in connection with this investment.
4.6 ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited investor"
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within the meaning of Regulation D promulgated under the Securities Act.
4.7 RESTRICTED SECURITIES.
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(a) The Purchaser understands that the Shares, the Additional Shares
(if any) and the Warrant to be purchased by the Purchaser hereunder and the
Warrant Shares to be purchased upon exercise of the Warrant are characterized as
"restricted securities" under the Securities Act inasmuch as they are being
acquired from the Company in a transaction not involving a public offering, and
that, under the Securities Act and applicable regulations thereunder, such
securities may not be resold except as provided in Section 8 hereof.
(b) The Purchaser acknowledges that the Shares, the Additional Shares
(if any), the Warrant and the Warrant Shares have not been registered under the
Securities Act and must be held indefinitely by the Purchaser unless they are
registered under the Securities Act or an exemption from registration is
available. The Purchaser further acknowledges that the Company is under no
obligation to register the Warrant or, except as contemplated in the
Registration Rights Agreement and Section 7.1 hereof, the Shares, the Additional
Shares (if any) or the Warrant Shares.
10
(c) The Purchaser is familiar with Rule 144 of the Securities Act, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act in general.
4.8 GOVERNMENTAL CONSENTS. Partially in reliance on the representations of
---------------------
the Company contained herein, no consent, approval, order or authorization of,
or registration, designation, declaration or filing with, any Governmental
Entity on the part of the Purchaser is required in connection with the valid
execution and delivery of this Agreement or the Registration Rights Agreement or
the consummation of any transaction contemplated hereby or thereby to occur at
Closing, except such filings as may be required to be made with the SEC and the
National Association of Securities Dealers, Inc.
SECTION 5
CONDITIONS TO OBLIGATION OF THE PURCHASER
The Purchaser's obligation to purchase the Shares and the Warrant at the
Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions:
5.1 NO ORDER PENDING. There shall not then be in effect any order,
----------------
injunction or decree of any nature by any Governmental Entity enjoining or
restraining the transactions contemplated by this Agreement.
5.2 NO LAW PROHIBITING OR RESTRICTING SALE OF THE SHARES. There shall not
----------------------------------------------------
be in effect any law, rule or regulation prohibiting or restricting the sale of
the Shares, the Additional Shares (if any), the Warrant or the Warrant Shares,
or requiring any consent or approval of any individual, partnership,
corporation, business trust, trust, unincorporated association, joint venture,
Governmental Entity or other entity of whatever nature (each, a "PERSON") that
shall not have been obtained to issue the Shares, the Additional Shares (if
any), the Warrant or the Warrant Shares, except, with respect to the issuance of
the Warrant Shares, any filings, consents or approvals required under the HSR
Act.
5.3 REGISTRATION RIGHTS AGREEMENT. The Company shall have executed and
-----------------------------
delivered the Registration Rights Agreement.
5.4 OPINION OF COUNSEL. The Purchaser shall have received an opinion dated
------------------
as of the Closing Date of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel to the
Company, substantially in the form attached as Exhibit D.
5.5 CLOSING DELIVERIES. The Company shall have delivered to the Purchaser
------------------
all items required to be delivered by the Company at the Closing pursuant to
Section 2.2 hereof.
5.6 ORGANIZATIONAL DOCUMENTS AND BOARD APPROVAL. The Company shall have
-------------------------------------------
delivered to the Purchaser copies of (a) the Certificate of Incorporation of the
Company, (b) the Bylaws of the Company and (c) resolutions duly adopted by the
Board of Directors of the Company authorizing and approving (i) the consummation
of the transactions contemplated
11
hereby, (ii) the Company's execution and delivery of this Agreement and (iii)
the Company's execution and delivery of the other documents described herein, in
each case certified as true, complete and in full force and effect as of the
Closing Date by an appropriate officer of the Company.
SECTION 6
CONDITIONS TO OBLIGATION OF THE COMPANY
The Company's obligation to issue and sell the Shares and the Warrant at
the Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions:
6.1 NO ORDER PENDING. There shall not then be in effect any order,
----------------
injunction or decree of any nature by any Governmental Entity enjoining or
restraining the transactions contemplated by this Agreement.
6.2 NO LAW PROHIBITING OR RESTRICTING THE SALE OF THE SHARES. There shall
--------------------------------------------------------
not be in effect any law, rule or regulation prohibiting or restricting the sale
of the Shares, the Additional Shares (if any), the Warrant or the Warrant
Shares, or requiring any consent or approval of any Person that shall not have
been obtained to issue the Shares, the Additional Shares (if any), the Warrant
or the Warrant Shares, except, with respect to the issuance of the Warrant
Shares, any filings, consents or approvals required under the HSR Act.
6.3 PURCHASE PRICE. The Purchaser shall have paid the Purchase Price by
--------------
wire transfer of immediately available funds to an account designated in writing
by the Company.
12
SECTION 7
COVENANTS
7.1 REGISTRATION RIGHTS.
-------------------
(a) Company Registration.
--------------------
(i) The Company shall file with the SEC, within two business
days after the Closing Date, (A) a registration statement on Form S-1 (the
"REGISTRATION STATEMENT") covering the registration of the resale of the Shares
and the Warrant Shares under the Securities Act, (B) the Company's quarterly
report on Form 10-Q for the period ended April 30, 2000 (the "APRIL 10-Q"), and
(C) amendments to (1) the Company's quarterly report on Form 10-Q for the period
ended July 31, 2000, (2) the Company's quarterly report on Form 10-Q for the
period ended October 31, 2000 and (3) the Company's annual report on Form 10-K
for the fiscal year ended December 31, 1999, in each case (1), (2) and (3)
addressing those comments raised by the SEC in its letter dated January 4, 2001
to the Company.
(ii) The Company shall use its best efforts to cause the
Registration Statement to become effective under the Securities Act as promptly
as possible and remain effective during the period from the date the
Registration Statement is declared effective by the SEC (the "EFFECTIVE DATE")
until the earlier of (A) the second anniversary of the Effective Date, or (B)
the date on which all Shares and Warrant Shares registered thereunder have been
sold (such period, as the case may be, the "REGISTRATION PERIOD").
(iii) During the Registration Period, the Company shall:
(A) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration
Statement effective during the Registration Period and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of the Shares and the Warrant Shares by the Purchaser or any other member of the
Purchaser Group, and furnish to the Purchaser any such supplement or amendment
prior to it being used and/or filed with the SEC;
(B) comply in all material respects with the provisions
of the Securities Act applicable to the Company with respect to the disposition
of all securities covered by the Registration Statement;
(C) furnish to the Purchaser (1) such number of copies
(including manually executed and conformed copies) of the Registration Statement
and of each amendment thereof and supplement thereto (including all annexes,
appendices, schedules and exhibits), (2) such number of copies of the prospectus
used in connection with the Registration Statement (including each preliminary
prospectus, any summary prospectus and the final prospectus and including
prospectus supplements), and (3) such number of copies of other
13
documents, if any, incorporated by reference in the Registration Statement or
prospectus, in each case as the Purchaser may reasonably request;
(D) notify the Purchaser promptly and, if requested by
the Purchaser, confirm such notification in writing, (1) when a prospectus or
any prospectus supplement has been filed with the SEC and when the Registration
Statement or any post-effective amendment thereto has been filed with and
declared effective by the SEC, (2) of the issuance by the SEC of any stop order
or the coming to its knowledge of the initiation of any proceedings for that
purpose, (3) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Shares or the Warrant Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, (4) of the occurrence of any event that requires the making of
any changes to the Registration Statement or related prospectus so that such
documents will not contain any untrue statement of a material fact or omit to
state any 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 (and the Company shall promptly prepare and furnish to the
Purchaser, upon request, a reasonable number of copies of a supplemented or
amended prospectus such that, as thereafter delivered to the purchasers of the
Shares or the Warrant Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading), and (5) of the
Company's determination that the filing of a post-effective amendment to the
Registration Statement shall be necessary or appropriate; and, upon the receipt
of any notice from the Company of the occurrence of any event of the kind
described in this Section 7.1(a)(iii)(D)(2), (3) (but only with respect to the
jurisdiction suspending qualification), (4) or (5), (I) the Purchaser shall
forthwith discontinue any offer and disposition of the Shares and the Warrant
Shares pursuant to the Registration Statement covering such Shares and Warrant
Shares and, if so directed by the Company, shall deliver to the Company all
copies (other than permanent file copies) of the defective prospectus covering
such Shares and Warrant Shares that are then in the Purchaser's possession or
control, and (II) the Company shall, as promptly as practicable thereafter
(subject, in the case of Section 7.1(a)(iii)(D)(4), to the provisions of Section
7.1(d)), take such action as shall be necessary to remedy such event to permit
the Purchaser to continue to offer and dispose of the Shares and the Warrant
Shares, including, without limitation, preparing and filing with the SEC and
furnishing to the Purchaser a supplement or amendment to such prospectus so
that, as thereafter deliverable to the purchasers of the Shares and the Warrant
Shares, such prospectus will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(E) use its best efforts to register or qualify the
Shares and the Warrant Shares covered by such Registration Statement under and
to the extent required by such other securities or state blue sky laws of such
jurisdictions as the Purchaser shall request, and do any and all other acts and
things that may be necessary under such securities or blue sky laws to enable
the Purchaser to consummate the public sale or other disposition in such
jurisdictions of the Shares and the Warrant Shares owned by the Purchaser,
except that the Company shall not for any such purpose be required to qualify to
do business as a foreign corporation in any
14
jurisdiction wherein it is not so qualified or submit to liability for state or
local taxes where it would not otherwise be liable for such taxes;
(F) if requested by the Purchaser, promptly incorporate
in a prospectus supplement or post-effective amendment such information as is
required by the applicable rules and regulations of the SEC and as the Purchaser
specifies should be included therein relating to the terms of the sale of the
Shares and the Warrant Shares, including, without limitation, information with
respect to the number of Shares and Warrant Shares being sold by the Purchaser
or any other member of the Purchaser Group, the name and description of the
Purchaser or such other member of the Purchaser Group, the offering price of
such Shares and Warrant Shares and any other terms of the offering of the Shares
and the Warrant Shares by the Purchaser or such other member of the Purchaser
Group; and make all required filings of such prospectus supplement or post-
effective amendment promptly after notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(G) use its best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state or
local, that may be required to effect such registration or the offering or sale
in connection therewith or to enable the Purchaser and any other member of the
Purchaser Group to offer, or to consummate the disposition of, the Shares and
the Warrant Shares;
(H) furnish to the Purchaser on a timely basis and at the
Company's expense, certificates free of any restrictive legends representing
ownership of the Shares or the Warrant Shares sold in such denominations and
registered in such names as the Purchaser shall request, and notify the transfer
agent of the Company's securities that it may effect transfers of the Shares and
the Warrant Shares upon notification from the Purchaser that it has complied
with this Agreement and the prospectus delivery requirements of the Securities
Act; and
(I) comply with all applicable rules and regulations of
the SEC, and make generally available to its securityholders, as soon as
practicable but in any event not later than 18 months after the Effective Date,
an earnings statement of the Company and its subsidiaries complying with Section
11(a) of the Securities Act (including, at the option of the Company, Rule 158
thereunder).
(b) Payment of Expenses. All expenses incurred by the Company in
-------------------
connection with any registration, qualification or compliance pursuant to the
provisions of this Section 7.1 (including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses and the expenses of any special audits
incident to or required by any such registration, but excluding all applicable
underwriting discounts and selling commissions) shall be borne by the Company.
(c) Information Furnished by the Purchaser. It shall be a
--------------------------------------
condition precedent to the Company's obligations under this Section 7.1 that the
Purchaser furnish to the Company in writing such information regarding the
Purchaser and the distribution of the Shares and the
15
Warrant Shares proposed by the Purchaser as the Company may reasonably request
to complete or amend the information required by the Registration Statements.
(d) Information Blackout; No Stabilization.
--------------------------------------
(i) At any time when the Registration Statement is
effective, upon written notice from the Company to the Purchaser that the
Company, after consultation with outside counsel, has determined reasonably and
in good faith that the sale of Shares and Warrant Shares pursuant to the
Registration Statement would require disclosure of non-public material
information, the disclosure of which at such time could reasonably be expected
to have a material adverse effect on the business or affairs of the Company or a
material adverse effect on any proposal or plan by the Company or any of its
subsidiaries to engage in any extraordinary engagement or activity by the
Company, including, without limitation, any material acquisition of assets or
any merger, consolidation, tender offer or similar transaction, the Purchaser
shall suspend sales of the Shares and the Warrant Shares pursuant to the
Registration Statement until the earlier of (A) 45 days after the Company
notifies the Purchaser of such good faith determination, and (B) such time as
the Company notifies the Purchaser that such material information has been
disclosed to the public or has ceased to be material or that sales pursuant to
the Registration Statement may otherwise be resumed (the number of days from
such suspension of sales by the Purchaser until the day when such sales may be
resumed hereunder is hereinafter called a "SALES BLACKOUT PERIOD"). A Sales
Blackout Period shall not preclude any sales of Shares or Warrant Shares that
the Purchaser may effect in compliance with Rule 144; provided that the
Purchaser otherwise conforms with the requirements under the Securities Act and
the Exchange Act.
(ii) No Sales Blackout Period shall be commenced by the
Company within 90 days after the Effective Date or the end of a Sales Blackout
Period, and the Company shall not be permitted to commence more than two Sales
Blackout Periods in any 12 month period.
(iii) The Purchaser shall not, during the Registration
Period, (A) effect any stabilization transactions or engage in any stabilization
activity in connection with the Common Stock or other equity securities of the
Company in contravention of Regulation M under the Exchange Act, or (B) permit
any "Affiliated Purchaser" (as that term is defined in Regulation M under the
Exchange Act) to bid for or purchase for any account in which the Purchaser has
a beneficial interest, or attempt to induce any other Person to purchase, any
shares of Common Stock or Shares or Warrant Shares in contravention of
Regulation M under the Exchange Act.
16
(e) Indemnification.
---------------
(i) With respect to the offering and sale of the Shares
and the Warrant Shares made pursuant to the Registration Statement only, the
Company shall indemnify and hold harmless the Purchaser, its officers,
directors, members and partners, and each Person, if any, who controls any of
the foregoing within the meaning of the Securities Act ("PURCHASER
INDEMNITEES"), from and against any and all claims, liabilities, losses,
damages, expenses and judgments, joint or several, to which they or any of them
may become subject, including any amount paid in settlement of any litigation
commenced or threatened, and shall promptly reimburse them, as and when
incurred, for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as such losses,
claims, damages, liabilities or actions shall arise out of, or shall be based
upon, any violation or alleged violation by the Company of the Securities Act,
any blue sky laws or securities laws of any state or county in which the Shares
and the Warrant Shares are offered, and relating to action taken or action or
inaction required of the Company in connection with such offering, or shall
arise out of, or shall be based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in any
preliminary or final prospectus included therein) relating to the offering and
sale of the Shares and the Warrant Shares, or any amendment thereof or
supplement thereto, or in any document incorporated by reference therein, or any
omission or alleged omission to state therein 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; provided, however, the
Company shall not be liable to any Purchaser Indemnitee in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement, or any omission
or alleged omission, if such statement or omission shall have been made in
reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of any Purchaser Indemnitee for inclusion in the
Registration Statement (or in any preliminary or final prospectus included
therein), or any amendment thereof or supplement thereto. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Purchaser Indemnitee and shall survive the transfer of such
securities. The foregoing indemnity agreement is in addition to any liability
that the Company may otherwise have to any Purchaser Indemnitee.
(ii) With respect to the offering and sale of the Shares
and the Warrant Shares made pursuant to the Registration Statement only, the
Purchaser shall indemnify and hold harmless the Company, its officers and
directors and each Person, if any, who controls any of the foregoing within the
meaning of the Securities Act (the "COMPANY INDEMNITEES"), from and against any
and all claims, liabilities, losses, damages, expenses and judgments, joint or
several, to which they or any of them may become subject, including any amount
paid in settlement of any litigation commenced or threatened, and shall promptly
reimburse them, as and when incurred, for any legal or other expenses incurred
by them in connection with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities or actions shall arise
out of, or shall
17
be based upon, any violation or alleged violation by the Purchaser of the
Securities Act, any blue sky laws or securities laws of any state or country in
which the Shares and the Warrant Shares are offered and relating to action taken
or action or inaction required of the Purchaser in connection with such
offering, or shall arise out of, or shall be based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in any preliminary or final prospectus included therein) relating
to the offering and sale of the Shares and the Warrant Shares or any amendment
thereof or supplement thereto, or any omission or alleged omission to state
therein 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, but in each case only to the extent that such untrue statement
is contained in, or such fact is omitted from, information furnished to the
Company in writing by or on behalf of the Purchaser for inclusion in the
Registration Statement (or in any preliminary or final prospectus included
therein). Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Company Indemnitee. The foregoing
indemnity is in addition to any liability that the Purchaser may otherwise have
to any Company Indemnitee.
(iii) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to this Section 7.1(e), such Person (the
"INDEMNIFIED PARTY") shall promptly notify the Person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing. No
indemnification provided for in subsection (i) or (ii) shall be available to any
Person who shall fail to give notice as provided in this subsection (iii) if the
indemnifying party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability that it or they may
have to the indemnified party for indemnification pursuant to subsection (i) or
(ii) to the extent it was not materially prejudiced. In case any such proceeding
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred the fees and expenses of the counsel
retained by the indemnified party in the event (A) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel, (B) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel, in the written opinion of
such counsel, would be inappropriate due to actual or potential differing
interests between them, or (C) the indemnifying party does not promptly defend
the indemnified party. The indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties (in addition to local counsel if required). Such firm shall
be designated in writing by the Purchaser in the case of Purchaser Indemnitees
and by the Company in the case of Company Indemnitees. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent (which consent shall not be unreasonably withheld) but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party shall indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment. The obligations
18
of the Company and the Purchaser under this Section 7.1(e) shall survive the
completion of any offering of Shares or Warrant Shares pursuant to the
Registration Statement.
(iv) The indemnity provided for hereunder shall not inure
to the benefit of any indemnified party to the extent that the claim is based on
such indemnified party's failure to comply with the applicable prospectus
delivery requirements of the Securities Act as then applicable to the Person
asserting the loss, claim, damage or liability for which indemnity is sought.
(v) If the indemnification provided for in this Section
7.1(e) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any claims, liabilities, losses, damages,
expenses or judgments referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent permitted by
applicable law contribute to the amount paid or payable by such indemnified
party as a result of such claim, liability, loss, damage, expense or judgment in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the circumstances that resulted in such claim, liability, loss,
damage, expense or judgment, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.1(e) were determined by pro
rata allocation or any other method of allocation that does not take into
account the equitable consideration referred to in this paragraph (v).
(vi) In no event shall the liability of the Purchaser under
this Section 7.1(e), whether for indemnification or contribution, exceed the net
proceeds received by the Purchaser from the sale of the Shares and the Warrant
Shares pursuant to the Registration Statement.
(f) Rule 144. With a view to making available to the Purchaser
---- ---
the benefits of Rule 144 and any other rule or regulation of the SEC that may at
any time permit the Purchaser to sell securities of the Company to the public
without registration, in addition to the foregoing provisions of this Section
7.1, the Company shall, from and after the filing with the SEC of the April 10-
Q:
(i) make and keep adequate current public information
with respect to the Company available, as those terms are understood and defined
in Rule 144;
(ii) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
19
(iii) furnish to the Purchaser upon written request (A) a
written statement by the Company as to whether it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act, (B)
a copy of the most recent annual or quarterly report of the Company, and (C)
such other reports and documents of the Company as the Purchaser may reasonably
request and as is publicly available to enable the Purchaser to avail itself of
any rule or regulation of the SEC that permits the selling of any such
securities without registration.
7.2 OBSERVER RIGHTS. On and after the Closing until the earlier of (i) the
---------------
fifth anniversary of this Agreement or (ii) the date on which the Purchaser
Group (as defined in Section 9.4 below) ceases to collectively own a number of
shares of Common Stock equal to at least thirty percent (30%) of the shares of
Common Stock held collectively by the Purchaser Group immediately after the
Closing (as adjusted for stock splits, stock dividends, combinations,
reorganizations, reclassifications and other similar events), the Company shall
permit one (1) representative designated by the Purchaser and reasonably
acceptable to the Company (the "PURCHASER OBSERVER") to attend, in a non-voting
observer capacity, each meeting of the Board of Directors of the Company and
each meeting of any committee thereof and to participate in all discussions
during each such meeting. The Company shall send to the Purchaser Observer
notice of the time and place of any such meeting, in the same manner and at the
same time as notice is sent to its directors. The Company shall also provide to
the Purchaser Observer copies of all notices, reports, minutes, contracts and
other documents, at the time and in the same manner as such documents are
provided to the Board of Directors of the Company. Any materials furnished to
the Purchaser Observer and the discussions and presentations in connection with
or at any meeting shall be considered confidential information and the Purchaser
Observer will keep such materials and discussions confidential and will not
disclose or divulge such materials and discussions to any third party.
Notwithstanding the foregoing, the Company reserves the right to exclude the
Purchaser Observer from access to any materials or meetings or portions thereof
if the Board of Directors or management of the Company shall reasonably
determine, upon advice of counsel in the case of (A) or (B), that such exclusion
is necessary (A) to preserve the attorney-client privilege, (B) to prevent a
conflict of interest, (C) to protect confidential proprietary information or (D)
because the Purchaser Observer's presence may otherwise be detrimental to the
business interests of the Company. The Company expressly acknowledges that any
of the following persons would be acceptable to the Company if selected by the
Purchaser to serve as Purchaser Observer: Xxxxxx Xxxx, Xxxx Xxxxx, Xxxx Xxxx,
and Xxxxx Xxxx.
7.3 FUTURE AND CURRENT INVESTMENTS AND ACTIVITIES; INFORMATION.
----------------------------------------------------------
(a) The Company acknowledges that (i) the Purchaser and its
Affiliates engage in a wide variety of activities and have investments in many
other companies, (ii) it is critical to the Purchaser that the Purchaser and its
Affiliates be permitted to continue to develop their current and future
businesses and investment activities without any restriction arising from an
investment by the Purchaser or any of its Affiliates in the Company, the right
of the Purchaser to designate a Purchaser Observer or any relationship,
contractual or otherwise, between the Purchaser or any of its Affiliates and the
Company or any of its Affiliates, and (iii) from time to time, in connection
with the foregoing activities of the Purchaser and its current and future
Affiliates (the "ACTIVITIES"), the Purchaser and its Affiliates may have
information that may be
20
useful to the Company (which information may or may not be known by the
Purchaser Observer). The Company further acknowledges that (I) the Company does
not intend or desire that the relationship of the Purchaser and any of its
Affiliates with the Company and any of its Affiliates (A) interfere with or
impose conditions or restrictions on any of the Activities of the Purchaser or
any of its current or future Affiliates, or (B) confer upon the Company any
right to participate in any of the Activities of the Purchaser or any of its
Affiliates, and (II) the Company intends and desires that (X) the Purchaser and
its Affiliates shall be free to engage in the Activities in any capacity,
whether active or passive, without any obligation or liability to the Company or
to its shareholders, including, without any limitation, any obligation to offer
the Company a right to acquire, participate or have any interest of any nature
whatsoever in any of such Activities, and (Y) the Purchaser, its Affiliates and
the Purchaser Observer shall have no duty to disclose any information known to
such person to the Company; provided, however, that this Section 7.3 shall not
relieve the Purchaser, its Affiliates or the Purchaser Observer of its or his
duty of confidentiality with respect to information pertaining to the Company.
(b) The Company acknowledges that, except as expressly set forth in any
written agreement between the Company or any of its Affiliates and the Purchaser
or any of its Affiliates, neither the Purchaser nor any of its Affiliates shall
have any duty or obligation to use or promote the use of any of the goods,
products, equipment or services offered by the Company.
7.4 MOST FAVORED INVESTOR TREATMENT.
-------------------------------
(a) From the date hereof until the date six months following the
Closing Date, in the event that the Company or any of its Affiliates sells or
issues, or enters into any agreements (whether oral or written) regarding the
sale or issuance of, (i) any shares of the Company's Common Stock, (ii) any
securities convertible into or exchangeable for any shares of the Company's
Common Stock or (iii) any options, warrants or other rights to purchase shares
of the Company's Common Stock or securities convertible into or exchangeable for
shares of the Company's Common Stock, on terms (including, but not limited to,
(A) a greater than 8% discount in the purchase price from the then current
market value of the shares of Common Stock or other securities so purchased, (B)
the number of options, warrants or other purchase rights issued as a percentage
of the number of shares of Common Stock or other securities purchased and the
terms (including, without limitation, the duration and exercise price) of such
options, warrants or other purchase rights, and (C) the registration rights
granted with respect to the securities so purchased) that are more favorable to
the purchaser thereof than those terms contained in this Agreement, the Warrant
and the Registration Rights Agreement, the Company shall take such measures
(including, without limitation, the issuance of additional shares of Common
Stock, an adjustment to the terms of the Warrant and the number of shares
issuable thereunder and an amendment to the Registration Rights Agreement) to
ensure that the Purchaser is afforded the benefit of such terms, without any
additional consideration and applied retroactively to the terms of this
Agreement, the Warrant and the Registration Rights Agreement. The "most favored
investor" status afforded the Purchaser hereunder shall apply by comparison of
all of the terms contained in this Agreement, the Warrant and the Registration
Rights Agreement to all of the terms pertaining to any subsequent sale or
issuance of securities, such that the overall investment by any third party
shall be on no more favorable terms than the overall investment by the Purchaser
hereunder, each taken in its entirety. The Purchaser
21
acknowledges that a third party may have more favorable terms with regard to a
specific line item, and such shall not in and of itself constitute a violation
or breach of this Section 7.4.
(b) Notwithstanding the foregoing, no provision of this Section 7.4
shall apply to the issuance of (i) stock options or stock grants to employees of
the Company pursuant to the Company's stock option, stock incentive and stock
purchase plans described in the Filed SEC Documents or otherwise approved by the
Board of Directors of the Company or (ii) shares of the Company's Common Stock
in connection with a public offering of such shares by the Company for its own
account.
7.5 LISTING OF THE SHARES. The Company shall use its best efforts to cause
---------------------
the Shares, the Additional Shares (if any) and the Warrant Shares to be listed
on the Nasdaq National Market System or such other securities exchange or
quotation system on which the Common Stock is then listed or quoted.
7.6 WARRANT SHARES. The Company shall at all times reserve and keep
--------------
available, solely for issuance and delivery upon the exercise of the Warrant,
the number of shares of Common Stock issuable from time to time upon such
exercise.
7.7 HSR ACT FILINGS. In the event that, as the result of the Purchaser's
---------------
decision to exercise the Warrant or any other warrants hereinafter issued by the
Company to the Purchaser or for any other reason, it becomes necessary at any
time after the Closing for the Purchaser to make any filings under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the
Company shall cooperate with the Purchaser in connection with any such filings
by (i) making all filings required to be made on the Company's part under the
HSR Act and (ii) promptly furnishing, or causing to be furnished, any
information that may be required by the Federal Trade Commission or the
Department of Justice under the HSR Act.
7.8 FULFILLMENT OF CONDITIONS. Each of the Company and the Purchaser shall
-------------------------
use its reasonable efforts to perform, comply with and fulfill all obligations,
covenants and conditions required by this Agreement to be performed, complied
with or fulfilled by it on or after the Closing Date, including, without
limitation, all actions required under any law, rule or regulation adopted
subsequent to the date hereof.
7.9 CONFIDENTIALITY; COMPLIANCE WITH SECURITIES LAWS. At Closing, the
------------------------------------------------
Purchaser and the Company shall execute a Confidentiality Agreement
substantially in the form attached hereto as Exhibit E. In addition, in
connection with the Purchaser's observer rights pursuant to Section 7.2 hereof
or otherwise through its relationship with the Company, the Purchaser hereby
acknowledges that it may become aware of material non-public information
concerning the Company and that the United States securities laws generally
prohibit any person who has material non-public information concerning an issuer
from publicly purchasing, selling or otherwise trading in securities of such
issuer, and it shall comply with all applicable securities laws to the extent it
receives any such information.
22
SECTION 8
COMPLIANCE WITH SECURITIES ACT; RESTRICTIONS ON TRANSFERABILITY
8.1 COMPLIANCE WITH SECURITIES ACT. The Shares, the Additional Shares (if
------------------------------
any), the Warrant and the Warrant Shares shall not be transferable except upon
the conditions specified in Section 8.3, which conditions are intended, among
other things, to ensure compliance with the provisions of the Securities Act and
applicable state securities laws in respect of any such transfer.
8.2 RESTRICTIVE LEGEND. The certificate or certificates representing the
------------------
Shares, the Additional Shares (if any) and the Warrant Shares shall each be
subject to the following legend restricting transfer under the Securities Act:
THE TRANSACTION IN WHICH THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ACQUIRED WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE
SHARES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS
SUCH TRANSFER IS MADE (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS, OR (B) IN A TRANSACTION THAT QUALIFIES AS AN EXEMPT
TRANSACTION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS AND FOR WHICH, SUBJECT TO LIMITED EXCEPTIONS, AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT HAS
BEEN PROVIDED.
The Company shall remove this legend from the certificate or certificates
representing any of the Shares, the Additional Shares (if any) or the Warrant
Shares upon the termination of the restrictions on transferability with respect
to such Shares, the Additional Shares (if any) or Warrant Shares, in accordance
with the last sentence of Section 8.4.
8.3 RESTRICTIONS ON TRANSFERABILITY. The Company shall not be required to
-------------------------------
register the transfer of the Shares, the Additional Shares (if any), the Warrant
or the Warrant Shares on the books of the Company unless the Company shall have
been provided with an opinion of counsel in form and substance reasonably
satisfactory to the Company that the Shares, the Additional Shares (if any), the
Warrant or the Warrant Shares, as applicable, are eligible for transfer without
registration under the Securities Act; provided, however, that no such opinion
of counsel shall be necessary in order to effectuate a transfer of any of the
Shares, the Additional Shares (if any), the Warrant or Warrant Shares (i) in
accordance with the provisions of Rule 144(k) promulgated under the Securities
Act, (ii) with respect to the Shares, the Additional Shares (if any) and the
Warrant Shares, in accordance with the intended method of disposition set forth
in the applicable Registration Statement or (iii) with respect to the Warrant
Shares, in accordance with the intended method of disposition set forth in any
other registration statement
23
filed by the Company and covering the Warrant Shares pursuant to the
Registration Rights Agreement.
8.4 TERMINATION OF RESTRICTIONS ON TRANSFERABILITY. The conditions
----------------------------------------------
precedent imposed by this Section 8 upon the transferability of the Shares, the
Additional Shares (if any), the Warrant and the Warrant Shares shall cease and
terminate as to any of the Shares, the Additional Shares (if any), the Warrant
and the Warrant Shares (i) when such securities shall have been registered under
the Securities Act and sold or otherwise disposed of in accordance with the
intended method of disposition by the seller or sellers thereof set forth in the
registration statement covering such securities (including, without limitation,
the Registration Statements), (ii) at such time as the Company shall have been
provided with an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the restrictive legend on such
securities is no longer required in order to establish compliance with the
provisions of the Securities Act, or (iii) when such securities are transferred
pursuant to Rule 144 or become transferable in accordance with the provisions of
Rule 144(k) promulgated under the Securities Act. Whenever the conditions
imposed by this Section 8 shall terminate as hereinabove provided with respect
to any of the Shares, the Additional Shares (if any) or the Warrant Shares, the
holder of any such securities bearing the legend set forth in Section 8.2 shall
be entitled to receive from the Company, without expense (except for the payment
of any applicable transfer taxes) and as expeditiously as possible, new stock
certificates not bearing such legend.
SECTION 9
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed in all respects by the
-------------
internal laws of the State of Delaware as applied to contracts entered into
solely between residents of, and to be performed entirely within, such state,
and without reference to principles of conflicts of laws or choice of laws.
9.2 SPECIFIC ENFORCEMENT; VENUE. The parties hereto acknowledge and agree
---------------------------
that each would be irreparably damaged if any of the provisions of this
Agreement are not performed by the other in accordance with their specific terms
or are otherwise breached. It is accordingly agreed that each party shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement by the other and to enforce this Agreement and the terms and
provisions hereof specifically against the other, in addition to any other
remedy to which such aggrieved party may be entitled at law or in equity. Any
action or proceeding seeking to enforce any provision of, or based on any rights
arising out of, this Agreement may be brought against any of the parties in the
courts of the State of Delaware, County of New Castle, or in the United States
District Court for the District of Delaware, and each of the parties consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
9.3 SURVIVAL. The representations and warranties in Sections 3 and 4 of
--------
this Agreement shall survive the Closing and shall not merge in the performance
of any obligation by
24
any party hereto; provided, however, that the representations and warranties
made shall only be deemed to have been made as of the date hereof and as of the
Closing Date (or such other date referenced in such representation or warranty).
9.4 SUCCESSORS AND ASSIGNS. The rights and obligations set forth herein
----------------------
may not be assigned or delegated by the Company or the Purchaser without the
prior written consent of the other, except that the Purchaser may assign, in
whole or in part, its rights and delegate its obligations hereunder (including,
without limitation, the right to purchase any or all of the Shares, the
Additional Shares (if any) and the Warrant and the obligation to pay all or any
portion of the Purchase Price) to any Affiliate of the Purchaser (collectively,
together with the Purchaser, the "PURCHASER GROUP") without obtaining the prior
written consent of the Company. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
9.5 ENTIRE AGREEMENT; AMENDMENT. Except as expressly provided to the
---------------------------
contrary in any separate agreement, this Agreement, the Warrant and the
Registration Rights Agreement constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof, and supersede all prior agreements and understandings among the parties
relating to the subject matter hereof and thereof (including, without
limitation, the Initial Agreement). Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
9.6 NOTICES. All notices, requests, demands or other communications that
-------
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given: (i) on the date of delivery
if personally delivered by hand, (ii) upon the third day after such notice is
(a) deposited in the United States mail, if mailed by registered or certified
mail, postage prepaid, return receipt requested, or (b) sent by a nationally
recognized overnight express courier, or (iii) by facsimile upon written
confirmation (other than the automatic confirmation that is received from the
recipient's facsimile machine) of receipt by the recipient of such notice:
(a) if to the Company, to it at:
SeaChange International, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
25
with a copy to:
Xxxxxxx X. Xxxxxxx, Xx., Esq.
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile Number: (000) 000-0000
(b) if to the Purchaser, to it at:
c/o Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxx
Facsimile Number: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxx, Esq.
Drinker Xxxxxx & Xxxxx LLP
One Xxxxx Square
18th and Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Facsimile Number: (000) 000-0000
or to such other address or facsimile number as either party may have furnished
to the other in writing in accordance herewith, except that notices of change of
address or facsimile number shall be effective only upon receipt.
9.7 BROKERS.
-------
(a) The Company has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Company shall indemnify and hold harmless
the Purchaser from and against all fees, commissions or other payments owing to
any party acting on behalf of the Company hereunder.
(b) The Purchaser has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Purchaser shall indemnify and hold harmless
the Company from and against all fees, commissions or other payments owing to
any party acting on behalf of the Purchaser hereunder.
9.8 FEES, COSTS AND EXPENSES. All fees, costs and expenses (including
------------------------
attorneys' fees and expenses) incurred by either party hereto in connection with
the preparation, negotiation and execution of this Agreement, the Warrant and
the Registration Rights Agreement and the
26
consummation of the transactions contemplated hereby and thereby, shall be the
sole and exclusive responsibility of such party.
9.9 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
-------------------
or remedy accruing to any Person hereunder shall impair any such right, power or
remedy nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in 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
Person hereunder of any breach or default under this Agreement, or any waiver on
the part of any such Person 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 shall be cumulative and not alternative.
9.10 SEVERABILITY. If any term, provision, covenant or restriction of this
------------
Agreement, the Warrant or the Registration Rights Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restriction of this Agreement, the Warrant
or the Registration Rights Agreement, as applicable, shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.
9.11 COUNTERPARTS. This Agreement may be executed in two or more partially
------------
or fully executed counterparts and by facsimile signatures, each of which shall
be deemed an original and shall bind the signatory, but all of which together
shall constitute but one and the same instrument. The execution and delivery of
the signature page to this Agreement by any party hereto who shall have been
furnished the final form of this Agreement shall constitute the execution and
delivery of this Agreement by such party.
9.12 PUBLIC ANNOUNCEMENT. The Company and the Purchaser shall agree on the
-------------------
form and content of any public announcement that shall be made concerning this
Agreement, the Warrant and the Registration Rights Agreement and the
transactions contemplated hereby and thereby, and neither the Company nor the
Purchaser shall make any such public announcement without the consent of the
other, except as required by law.
9.13 FURTHER ASSURANCES. The Company and the Purchaser shall each use its
------------------
reasonable efforts at any time and from time to time prior to, at and after the
Closing to execute and deliver to the other such further documents and
instruments and to take all such further actions as the other may reasonably
request in order to convey and transfer the Shares, the Additional Shares (if
any), the Warrant and, upon exercise of the Warrant, the Warrant Shares, and to
consummate the transactions contemplated by this Agreement, the Warrant and the
Registration Rights Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the date first above
written.
COMCAST SC INVESTMENT, INC.
By: /s/ Xxxxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxxxx X. Xxxx
---------------------------------
Title: Vice President
--------------------------------
SEACHANGE INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------------------
Title: Vice President
--------------------------------
[SIGNATURE PAGE TO COMMON STOCK AND WARRANT PURCHASE AGREEMENT]
28
EXHIBIT A
---------
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THIS
WARRANT SHALL BE VALID OR EFFECTIVE UNLESS SUCH TRANSFER IS MADE (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (B) IN A TRANSACTION THAT
QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS AND FOR WHICH, SUBJECT TO LIMITED EXCEPTIONS, AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH
EFFECT HAS BEEN PROVIDED.
Warrant No. S-__ Date: February 28, 2001
WARRANT TO PURCHASE COMMON STOCK
OF
SEACHANGE INTERNATIONAL, INC.
Void after 5:00 P.M. (United States Eastern Time)
on February 27, 2006, as provided herein.
This certifies that, for value received, receipt and sufficiency of which
are hereby acknowledged, Comcast SC Investment, Inc., or its registered assigns
(the "HOLDER"), is entitled, subject to the terms and conditions set forth
below, to purchase from SeaChange International, Inc., a Delaware corporation
(the "COMPANY"), the number calculated pursuant to Section 1(a) below (the
"WARRANT NUMBER") of validly issued, fully paid and nonassessable shares (the
"WARRANT SHARES") of Common Stock of the Company, par value $0.01 per share (the
"COMMON STOCK"), subject to adjustment as provided herein, at a purchase price
calculated pursuant to Section 1(b) below (the "EXERCISE PRICE"), subject to
adjustment as provided herein.
The term "WARRANT" as used herein shall mean this Warrant, and any warrants
delivered in substitution or exchange therefor as provided herein.
1. Calculation of Warrant Number and Exercise Price.
------------------------------------------------
(a) The Warrant Number shall equal (i) One Hundred Thousand (100,000)
plus (ii) if the Effective Date (as such term is defined in that certain Common
Stock and Warrant Purchase Agreement dated as of February 28, 2001 between the
Company and the initial purchaser of this Warrant (the "PURCHASE AGREEMENT"))
has not occurred on or before March 31, 2001, Twenty-Five Thousand (25,000) plus
(iii) if the Effective Date has not occurred on or
1
before April 30, 2001, Three Hundred Thirty-Three and Thirty-Three Hundredths
(333.33) per day beginning on and including May 1, 2001 for each day up to and
including the Effective Date (the amount of the increase in the Warrant Number
pursuant to clauses (ii) and (iii) of this Section 1(a) being herein referred to
as the "ADDITIONAL WARRANT NUMBER"), the entirety of which shall be subject to
adjustment as provided in Section 7. For purposes of illustration only, if the
Effective Date were to occur on June 29, 2001, the Warrant Number would be One
Hundred Forty-Four Thousand Nine Hundred Ninety-Nine and Eight Tenths
(144,999.8). Notwithstanding the foregoing, in no event shall the Additional
Warrant Number exceed such number as would require the Company to obtain
shareholder approval pursuant to The Nasdaq Stock Market Rule 4350(i)(D) (the
"NASDAQ RULE") in connection with the issuance of this Warrant and the Shares
and Additional Shares (as such terms are defined in the Purchase Agreement)
pursuant to the terms of the Purchase Agreement; provided that, in the event
that the Warrant Number (pursuant to the terms hereof) and/or the number of
Additional Shares to be issued pursuant to the Purchase Agreement (pursuant to
the terms thereof) would be required to be so limited as a result of the Nasdaq
Rule, the Warrant Number shall be limited first by the amount of the Additional
Warrant Number and the number of Additional Shares to be issued pursuant to the
Purchase Agreement shall only be limited to the extent required as a result of
the Nasdaq Rule after such limitation imposed upon the Warrant Number.
(b) The Exercise Price shall equal (i) from the date hereof until the
Effective Date, $13.225 per share, subject to adjustment as provided in
Section 7, and (ii) from the Effective Date until the expiration date for this
Warrant, the lowest of (A) the Exercise Price in effect immediately prior to the
Effective Date as determined pursuant to clause (i) of this Section 1(b) and
adjusted pursuant to Section 7, (B) ninety-two percent (92%) of the Current
Market Price (as defined in Section 7(i) below) of the Common Stock on the
Effective Date, or (C) the average of the Current Market Prices of the Common
Stock for the five consecutive Trading Days (as defined below) ending on the
Effective Date, in any case subject to further adjustment as provided in Section
7. For purposes of this Warrant, the term "TRADING DAY" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday other than any day on which the Common
Stock is not traded on the applicable securities exchange or in the applicable
securities market.
(c) Within two days following the Effective Date, the Company shall
(i) compute the Warrant Number and the Exercise Price based on the calculations
described in subsections (a) and (b) of this Section 1, including any
adjustments made thereto pursuant to Section 7 through the Effective Date, (ii)
prepare a certificate signed by the treasurer of the Company setting forth the
Warrant Number and the Exercise Price as of the Effective Date, showing in
reasonable detail the facts upon which such calculations are based, and (iii)
mail a copy of such certificate to the Holder of the Warrant at its last address
as shall appear in the Warrant Register (as defined in Section 8(a) below).
2. Term of Warrant. Subject to the terms and conditions set forth herein,
---------------
this Warrant shall be exercisable, in whole or in part, during the term
commencing on February 28, 2001 and ending at 5:00 P.M. (United States Eastern
Time) on February 27, 2006 (subject to extension as provided below, the
"EXERCISE PERIOD"); provided, however, that (a) in the event that the expiration
date of this Warrant shall fall on a Saturday, Sunday or United States federally
recognized holiday, the expiration date for this Warrant shall be extended to
5:00 P.M. (United
2
States Eastern Time) on the Business Day (as defined in Section 7(i)) following
such Saturday, Sunday or recognized holiday, (b) in the event that, on the
expiration date of this Warrant, the Company is then required, pursuant to an
effective demand therefor under that certain First Amended and Restated
Registration Rights Agreement dated as of February 28, 2001 between the Company,
the initial purchaser hereof and an affiliate of the initial purchaser (the
"REGISTRATION RIGHTS AGREEMENT") to use its best efforts to effect, or is in the
process of effecting, a registration under the Securities Act of 1933, as
amended (the "SECURITIES ACT") for a public offering in which Warrant Shares are
entitled to be included as provided in the Registration Rights Agreement, or if
the Company is in default of any such obligations to register the sale of such
Common Stock, the right to exercise this Warrant shall continue until the later
of 5:00 P.M. (United States Eastern Time) on the 30th day following the date on
which such registration shall have become effective or the 30th day following
the date all such defaults shall have been cured, and (c) in the event that, on
the expiration date of this Warrant, the Holder and the Company are in the
process of complying with the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), in accordance with the
provisions of Section 3(d) below, the right to exercise this Warrant shall
continue until 5:00 P.M. (United States Eastern Time) on the 30th day following
the date on which any waiting period under the HSR Act applicable to the
exercise of the Warrant shall have expired or been terminated; provided that, in
the case of (b), the Holder has requested that the Company commence the
registration of Warrant Shares at least 30 days prior to the expiration date of
the Exercise Period.
3. Exercise of Warrant.
-------------------
(a) This Warrant may be exercised by the Holder, in whole or in part,
by (i) the surrender of this Warrant to the Company, with the Notice of Exercise
annexed hereto duly completed and executed on behalf of the Holder, at the
office of the Company (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company) during the Exercise Period and (ii) the
delivery of payment to the Company of the Exercise Price for the number of
Warrant Shares specified in the Notice of Exercise in any manner specified in
subsection (c) of this Section 3.
(b) The Company agrees that such Warrant Shares shall be deemed to be
issued to the Holder as the record holder of such Warrant Shares as of the close
of business on the date on which this Warrant shall have been surrendered and
payment made for the Warrant Shares as aforesaid. A stock certificate or
certificates for the Warrant Shares specified in the Notice of Exercise shall be
delivered to the Holder as promptly as practicable, and in any event within ten
days thereafter. If this Warrant shall have been exercised only in part, the
Company shall, at the time of delivery of the stock certificate or certificates,
deliver to the Holder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other respects be
identical with this Warrant. No adjustments shall be made on Warrant Shares
issuable on the exercise of this Warrant for any cash dividends paid or payable
to holders of record of Common Stock prior to the date as of which the Holder
shall be deemed to be the record holder of such Warrant Shares.
(c) The Exercise Price shall be payable (i) in cash or its
equivalent, payable by wire transfer of immediately available funds to a bank
account specified by the Company or by
3
certified or bank cashiers' check in lawful money of the United States of
America; (ii) by surrendering to the Company the right to purchase a number of
Warrant Shares equal to the product obtained by multiplying the number of
Warrant Shares to be purchased (including any Warrant Shares to be surrendered)
by a fraction, the numerator of which is the Exercise Price and the denominator
of which is the Current Market Price of the Common Stock on the date of exercise
of the Warrant, or (iii) in any combination of (i) or (ii). In the event the
Exercise Price is to be paid, in whole or in part, in accordance with the
payment method described in clause (ii), and compliance with the provisions of
the HSR Act is required in accordance with subsection (d) of this Section 3
prior to the consummation of such exercise, the Current Market Price of the
Common Stock shall be calculated as of the date on which the Holder notifies the
Company of its decision to exercise the Warrant, pending compliance with the
provisions of the HSR Act, rather than the date of the consummation of such
exercise.
(d) The Holder agrees that any exercise of this Warrant is, to the
extent applicable, subject to compliance with the provisions of the HSR Act. The
Company agrees that, in the event that the exercise of this Warrant by the
Holder requires compliance with any provisions of the HSR Act, the Company shall
cooperate with the Holder in connection with any such filings by (i) making all
filings required to be made on the Company's part under the HSR Act and (ii)
promptly furnishing, or causing to be furnished, any information that may be
required by the Federal Trade Commission or the Department of Justice under the
HSR Act.
4. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Current Market
Price multiplied by such fraction or, at the Company's option, round such
fractional share to the nearest whole share.
5. Replacement of Warrant. On receipt of evidence reasonably satisfactory
----------------------
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and substance to the Company or, in
the case of mutilation, on surrender and cancellation of this Warrant, the
Company at its expense shall execute and deliver, in lieu of this Warrant, a new
warrant of like tenor and amount.
6. Rights of Stockholders. Subject to the provisions of Sections 7(l) and
----------------------
9 hereof, the Holder shall not be entitled to vote or receive dividends or be
deemed the holder of Common Stock or any other securities of the Company that
may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, or change of stock to no par value, consolidation, merger,
conveyance or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have been
exercised as provided herein.
4
7. Antidilution Provisions. The Exercise Price and the Warrant Number
-----------------------
(including any increases pursuant to Section 1) shall be subject to adjustment
from time to time as provided in this Section 7.
(a) In case the Company shall pay or make a dividend or other
distribution on the Common Stock of the Company in Common Stock or any other
security convertible into or exchangeable for shares of Common Stock (other than
any rights, options or warrants described in subsection (b) of this Section 7),
the Exercise Price in effect immediately prior to the opening of business on the
next Business Day following the date fixed for determination of stockholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination and (ii) the denominator shall be the sum
of (A) such number of shares referred to in clause (i) and (B) the total number
of shares of Common Stock constituting such dividend or other distribution (or,
in the case of a dividend or distribution of securities convertible into or
exchangeable for shares of Common Stock, the total number of shares of Common
Stock underlying such securities), such reduction to become effective
immediately prior to the opening of business on the next Business Day following
the date fixed for such determination. For the purposes of this subsection (a),
the number of shares of Common Stock at any time outstanding shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock.
(b) In case the Company shall hereafter issue rights, options or
warrants to all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock or any other security convertible into or
exchangeable for shares of Common Stock (such rights, options or warrants not
being available on an equivalent basis to Holders of the Warrants upon exercise)
at a price per share less than the Current Market Price of the Common Stock on
the date fixed for the determination of stockholders entitled to receive such
rights, options or warrants (other than pursuant to a dividend reinvestment
plan), (i) the Exercise Price in effect immediately prior to the opening of
business on the next Business Day following the date fixed for such
determination shall be reduced by multiplying the Exercise Price in effect
immediately prior to the close of business on the date fixed for the
determination of holders of Common Stock entitled to receive such rights,
options or warrants by a fraction of which (A) the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock that the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Current Market Price
and (B) the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for subscription or
purchase (or such number of shares of Common Stock underlying any convertible
securities so offered for subscription or purchase), such reduction to become
effective immediately prior to the opening of business on the next Business Day
following the date fixed for such determination (for the purposes of this
subsection (b), the number of shares of Common Stock at any time outstanding
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock), and (ii) if any such rights, options or
warrants expire or terminate without having been exercised or are exercised for
a consideration different from that utilized in the computation of any
adjustment or adjustments on account of such rights, options or warrants,
5
the Exercise Price with respect to any Warrant not theretofore exercised shall
be readjusted such that the Exercise Price would be the same as would have
resulted had such adjustment been made without regard to the issuance of such
expired or terminated rights, options or warrants or based upon the actual
consideration received upon exercise thereof, as the case may be, which
readjustment shall become effective upon such expiration, termination or
exercise, as applicable; provided, however, that all readjustments in the
Exercise Price based upon any expiration, termination or exercise for a
different consideration of any such right, option or warrant, in the aggregate,
shall not cause the Exercise Price to exceed the Exercise Price immediately
prior to the time such rights, options or warrants were initially issued
(without regard to any other adjustments of such number under this subsection
(b) that may have been made since the date of the issuance of such rights,
options or warrants).
(c) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Exercise Price
in effect immediately prior to the opening of business on the next Business Day
following the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case the outstanding shares of
Common Stock shall each be combined into a smaller number of shares of Common
Stock, the Exercise Price in effect immediately prior to the opening of business
on the next Business Day following the day upon which such combination becomes
effective shall be proportionately increased.
(d) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its indebtedness or assets
(including securities, but excluding any rights, options or warrants referred to
in subsection (b) of this Section 7, any dividend or distribution paid
exclusively in cash and any dividend referred to in subsection (a) of this
Section 7), the Exercise Price shall be adjusted so that the same shall equal
the price determined by multiplying the Exercise Price in effect immediately
prior to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of which (i)
the numerator shall be the Current Market Price at the close of business on the
date fixed for such determination less the then fair market value of the portion
of the assets or evidences of indebtedness so distributed applicable to one
share of Common Stock, and (ii) the denominator shall be such Current Market
Price, such adjustment to become effective immediately prior to the opening of
business on the next Business Day following the date fixed for the determination
of stockholders entitled to receive such distribution.
(e) The Company may make such reductions in the Exercise Price, in
addition to those required by subsections (a), (b), (c) and (d) of this Section
7, as it considers to be advisable in order that any event treated for Federal
income tax purposes as a dividend of stock or stock rights shall not be taxable
to the recipients.
(f) In case of any reclassification, recapitalization or other change
in the outstanding securities of the class issuable upon exercise of this
Warrant (including any such reclassification, recapitalization or other change
upon a consolidation or merger in which the Company is the continuing
corporation, but not including any transactions for which an adjustment is
provided in subsection (c), (d) or (g) of this Section 7), the Company shall
execute and deliver to the Holder a new warrant certificate, satisfactory in
form and substance to the Holder and without payment of any additional
consideration therefor, providing that the Holder
6
shall have the right thereafter, during the period such Warrant shall be
outstanding, to exercise such Warrant into the kind and amount (if any) of
securities, cash and other property receivable upon such reclassification,
recapitalization or other change by a holder of the number of shares of Common
Stock issuable upon exercise of this Warrant had it been exercised immediately
prior to such reclassification, recapitalization or other change. Such new
Warrant shall provide for adjustments that, for events subsequent to the
effective date of such new Warrant, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 7. The above
provisions of this subsection (f) shall similarly apply to successive
reclassifications, recapitalizations and other changes in the outstanding
securities of the class issuable upon exercise of this Warrant.
(g) In case of any consolidation of the Company with, or merger of
the Company into, any other person, any merger of another person into the
Company (other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of the Common Stock)
or any sale or transfer of all or substantially all of the assets of the
Company, at the election of the Holder of the Warrant represented hereby, the
person formed by such consolidation or resulting from such merger or that
acquires such assets, as the case may be, shall execute and deliver to the
Holder a new warrant certificate, satisfactory in form and substance to the
Holder and without payment of any additional consideration therefor, providing
that the Holder shall have the right thereafter, during the period such Warrant
shall be outstanding, to exercise such Warrant into the kind and amount (if any)
of securities, cash and other property receivable upon such consolidation,
merger, sale of transfer by a holder of the number of shares of Common Stock
issuable upon exercise of this Warrant had it been exercised immediately prior
to such consolidation, merger, sale or transfer. If the holders of the Common
Stock may elect from choices the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer, then for
the purpose of this Section 7 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer shall be
deemed to be the choice specified by the Holder, which specification shall be
made by the Holder by the later of (i) ten Business Days after the Holder is
provided with a final version of all information required by law or regulation
to be furnished to holders of Common Stock concerning such choice, or, if no
such information is required, ten Business Days after the Holder is provided
with a final version of all information that was otherwise furnished to the
holders of Common Stock concerning such choice, and (ii) the last time at which
holders of Common Stock are permitted to make their specification known to the
Company. If the Holder fails to make any specification, the Holder's choice
shall be deemed to be whatever choice is made by a plurality of holders of
Common Stock not affiliated with the Company or the other person to the merger
or consolidation. Such new Warrant shall provide for adjustments that, for
events subsequent to the effective date of such new Warrant, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
7. The above provisions of this subsection (g) shall similarly apply to
successive consolidations, mergers, sales or transfers.
(h) Whenever there shall be any change in the Exercise Price under
this Section 7, then there shall be an adjustment (to the nearest thousandth of
a share) in the Warrant Number, which adjustment shall become effective at the
time such change in the Exercise Price becomes effective and shall be made by
multiplying the Warrant Number in effect immediately before
7
such change in the Exercise Price by a fraction the numerator of which is the
Exercise Price immediately before such change and the denominator of which is
the Exercise Price immediately after such change.
(i) For the purpose of any computation under subsection (b) of
Section 1, subsection (c) of Section 3, Section 4 or subsection (b) or (d) of
this Section 7, the current market price per share of Common Stock (the "CURRENT
MARKET PRICE") on any day shall be deemed to be the closing price per share on
the earlier of the day in question or the day before the Ex Date (as defined
below) with respect to the issuance, payment or distribution. For this purpose,
the term "EX DATE," when used with respect to any issuance or distribution,
shall mean the first date on which the Common Stock trades regular way on the
applicable securities exchange or in the applicable securities market without
the right to receive such issuance or distribution. The closing price for each
day shall be the reported last sale price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange or,
if the Common Stock is not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq National Market System or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on the Nasdaq National Market System, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm reasonably selected from time to time by the Board
for that purpose. For purposes of this Warrant, the term "BUSINESS DAY" shall
mean any day except a Saturday, Sunday or any day on which banking institutions
are authorized or required to close in the city of New York, New York.
(j) No adjustment in the Exercise Price shall be required
unless such adjustment (plus any adjustments not previously made by reason of
this subsection (j)) would require an increase or decrease of at least 1% in
such Exercise Price; provided, however, that any adjustments that by reason of
this subsection (j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
subsection (j) shall be made to the nearest cent or to the nearest 1/100 of a
share of Common Stock, as the case may be. Notwithstanding the foregoing, any
adjustment required by this subsection (j) shall be made no later than the
expiration of the right to exercise the Warrant or a portion thereof.
(k) Whenever the Exercise Price is adjusted as herein
provided:
(i) the Company shall compute the adjusted Exercise Price in
accordance with Section 7 and shall prepare a certificate signed by the
treasurer of the Company setting forth the adjusted Exercise Price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with any transfer agent; and
(ii) a notice stating that the Exercise Price has been adjusted
and setting forth the adjusted Exercise Price shall forthwith be required, and
as soon as practicable after it is required, such notice (together with a copy
of the certificate prepared under Section 7(k)(i) hereof) shall be mailed by the
Company to the Holder of the Warrant at its last address as shall appear in the
Warrant Register (as defined in Section 8(a)).
8
(l) In case:
(i) the Company shall declare a dividend or other distribution on
its Common Stock (other than a dividend payable exclusively in cash that would
not cause an adjustment to the Exercise Price to take place pursuant to Section
7 above);
(ii) the Company or any of its subsidiaries shall make a tender
offer for the Common Stock;
(iii) the Company shall authorize the granting to all Holders of its
Common Stock of rights, options or warrants to subscribe for or purchase any
shares of capital stock of any class;
(iv) of any reclassification of the Common Stock (other than a
subdivision or combination of its outstanding shares of Common Stock), or of any
consolidation, merger or share exchange to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(v) of the voluntary of involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with any warrant agent, and shall cause
to be mailed to the Holder of this Warrant at its last address as shall appear
in the Warrant Register, at least ten days prior to the effective date
hereinafter specified, a notice stating (A) the date on which a record has been
taken for the purpose of such dividend, distribution or grant of rights, options
or warrants, or, if record is not to be taken, the date as of which the identity
of the holders of Common Stock of record entitled to such dividend,
distribution, rights, options or warrants is to be determined, or (B) the date
on which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up. Neither the failure to give such notice nor any defect therein
shall affect the legality or validity of the proceedings described in clauses
(i) through (v) of this subsection (l).
8. Transfer of Warrant.
-------------------
(a) Warrant Register. The Company will maintain a register (the
----------------
"WARRANT REGISTER") containing the names and addresses of the Holder or Holders.
Any Holder of this Warrant or any portion thereof may change his address as
shown on the Warrant Register or transfer this Warrant in accordance with the
terms of this Warrant by written notice to the Company requesting such change.
Any notice or written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until receipt by the
Company of written notice from the Holder requesting a change of address or the
transfer of this
9
Warrant, the Company may treat the Holder as shown on the Warrant Register as
the absolute owner of this Warrant for all purposes.
(b) Warrant Agent. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in subsection (a) of this Section 8, issuing the Common Stock or other
securities then issuable upon the exercise of this Warrant, exchanging this
Warrant, replacing this Warrant, or any or all of the foregoing. Thereafter, any
such registration, issuance, exchange, or replacement, as the case may be, shall
be made at the office of such agent.
(c) Transferability. Subject to the restrictions on transfer set
forth in subsection (d) of this Section 8, title to this Warrant may be
transferred, in whole or in part, by endorsement (by the Holder executing the
Assignment Form annexed hereto) and delivery in the same manner as a negotiable
instrument transferred by endorsement and delivery. Upon surrender of this
Warrant for transfer, properly endorsed on the Assignment Form, the Company at
its expense shall issue, on the order of the Holder, a new warrant or warrants
of like tenor, in such name as the Holder (on payment by the Holder of any
applicable transfer taxes) may direct, for the number of shares issuable upon
exercise hereof. Each holder of this Warrant, by holding it, agrees that this
Warrant, when endorsed in blank, may be deemed negotiable, and that, when this
Warrant shall have been so endorsed, the holder of this Warrant may be treated
by the Company and all other persons dealing with this Warrant as the absolute
owner of this Warrant for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer of this Warrant on the
books of the Company, any notice to the contrary notwithstanding.
(d) Compliance with Securities Laws.
-------------------------------
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that the transfer of this Warrant and the Warrant Shares is subject
to the Holder's compliance with the provisions of the Securities Act and any
applicable state securities laws in respect of any such transfer.
(ii) The certificate or certificates representing any Warrant
Shares acquired upon exercise of this Warrant, and any Common Stock or other
securities issued in respect of such Warrant Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall be
stamped or otherwise imprinted with the following legend (unless such a legend
is no longer required under the Securities Act):
THE TRANSACTION IN WHICH THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ACQUIRED WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE
SHARES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS
SUCH TRANSFER IS MADE (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS, OR (B) IN A TRANSACTION THAT QUALIFIES AS AN EXEMPT
10
TRANSACTION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS AND FOR WHICH, SUBJECT TO LIMITED EXCEPTIONS, AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT HAS
BEEN PROVIDED.
(iii) The Company shall not be required to register the transfer
of this Warrant or the Warrant Shares on the books of the Company unless the
Company shall have been provided with an opinion of counsel in form and
substance reasonably satisfactory to the Company that this Warrant or the
Warrant Shares, as applicable, are eligible for transfer without registration
under the Securities Act; provided, however, that no such opinion of counsel
shall be necessary in order to effectuate a transfer of this Warrant or any of
the Warrant Shares (A) in accordance with the provisions of Rule 144(k)
promulgated under the Securities Act or (B) with respect to the Warrant Shares,
in accordance with the intended method of disposition set forth in the
registration statement to be filed by the Company pursuant to the Purchase
Agreement or any other registration statement filed by the Company and covering
the Warrant Shares pursuant to the Registration Rights Agreement.
(iv) The conditions precedent imposed by this subsection (d)
upon the transferability of this Warrant and the Warrant Shares shall cease and
terminate as to this Warrant and any of the Warrant Shares (A) when such
securities shall have been registered under the Securities Act and sold or
otherwise disposed of in accordance with the intended method of disposition by
the seller or sellers thereof set forth in the registration statement covering
such securities, (B) at such time as the Company shall have been provided with
an opinion of counsel in form and substance reasonably satisfactory to the
Company to the effect that the restrictive legend on such securities is no
longer required in order to establish compliance with the provisions of the
Securities Act, or (C) when such securities are transferred pursuant to Rule 144
or become transferable in accordance with the provisions of Rule 144(k)
promulgated under the Securities Act. Whenever the conditions imposed by this
subsection (d) shall terminate as hereinabove provided with respect to any of
the Warrant Shares, the holder of any such securities bearing the legend set
forth in Section 8(d)(ii) shall be entitled to receive from the Company, without
expense (except for the payment of any applicable transfer taxes) and as
expeditiously as possible, new stock certificates not bearing such legend.
9. Covenants of the Company. The Company hereby covenants and agrees
------------------------
that:
(a) during the term of this Warrant, the Company will reserve a
sufficient number of shares of authorized and unissued Common Stock to provide
for the issuance of Common Stock, which shares shall be duly authorized, fully
paid and non-assessable, upon the exercise of this Warrant and, from time to
time, will take all steps necessary to amend its Certificate of Incorporation to
provide sufficient reserves of shares of Common Stock issuable upon exercise of
the Warrant;
(b) the Company will not, by amendment of its Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder by the Company;
11
(c) all shares that may be issued upon the exercise of this Warrant,
upon exercise of this Warrant and payment of the Exercise Price, all as set
forth herein, will be free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein);
(d) issuance of this Warrant by the Company shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant; and
(e) the Company shall use its best efforts to cause all Warrant
Shares upon issuance to be listed on the Nasdaq National Market System or the
principal such other securities exchange or quotation system on which the Common
Stock is then listed or quoted.
10. Notices. Notices under this Warrant to the Company and the Holder
-------
shall be provided in the manner, and to the addresses of the Company and the
Holder, set forth in the Registration Rights Agreement, or to such other address
as any party may have furnished to the others in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
11. Amendments. Neither this Warrant nor any term hereof may be amended,
----------
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
12. Governing Law. This Warrant shall be governed in all respects by the
-------------
internal laws of the State of Delaware as applied to contracts entered into
solely between residents of, and to be performed entirely within, such state,
and without reference to principles of conflicts of laws or choice of laws.
13. Successors and Assigns. This Warrant shall be binding upon the
----------------------
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and assigns.
14. Attorney's Fees. In the event of a dispute with regard to the
---------------
interpretation of this Warrant, the prevailing party may collect the cost of
reasonable attorney's fees, litigation expenses or such other expenses as may be
incurred in the enforcement of the prevailing party's rights hereunder.
12
IN WITNESS WHEREOF, SEACHANGE INTERNATIONAL, INC. has caused this Warrant
to be executed by its authorized officer.
Dated: February __, 2001
SEACHANGE INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
13
NOTICE OF EXERCISE
To: SEACHANGE INTERNATIONAL, INC.
The undersigned hereby elects to purchase _______________ shares of Common
Stock of SeaChange International, Inc., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.
In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon exercise are
being acquired solely for the account of the undersigned and not as a nominee
for any other party, or for investment, and that the undersigned will not offer,
sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the registration provisions
of the Securities Act of 1933, as amended, or any applicable state securities
laws.
Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
________________________________
(Name)
________________________________
(Name)
15. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
________________________________
(Name)
________________ ________________________________
(Date) (Signature)
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:
No of
Name of Assignee Address Shares
---------------- ------- ------
and does hereby irrevocably constitute and appoint as Attorney
__________________to make such transfer on the books of SEACHANGE INTERNATIONAL,
INC., maintained for the purpose, with full power of substitution in the
premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances that will not result in a
violation of the registration provisions of the Securities Act of 1933, as
amended, or any applicable state securities laws.
Dated:
-----------------------------
-------------------------------
Signature of Holder
Exhibit B
Incorporated by reference to Exhibit 10.16 filed herewith.
EXHIBIT C
---------
EMPLOYEE NONCOMPETITION,
NONDISCLOSURE AND DEVELOPMENTS AGREEMENT
----------------------------------------
In consideration and as a condition of my employment or continued
employment by SeaChange International, Inc. (the "Company"), I hereby agree with
the Company as follows:
1. During the period of my employment by the Company (the "Employment
Period"), I will devote my full time and best efforts to the business of the
Company. Further, during the period of my employment by the Company and for one
year thereafter, I agree that I will not, directly or indirectly, alone or as a
partner, officer, director, employee or stockholder of any entity, (a) engage in
any business activity which is in competition with the products or services
being developed, manufactured or sold by the Company or (b) solicit, interfere
with or endeavor to entice away any employee of the Company. The period
following the termination of my employment during which these restrictions apply
(the "Post-employment Period") shall be extended by the length of any period of
time during the Post-employment Period during which I am in violation of this
paragraph.
2. I will not at any time, whether during or after the Employment Period,
reveal to any person or entity any of the trade secrets or confidential
information concerning the organization, business or finances of the Company or
of any third party which the Company is under an obligation to keep confidential
(including but not limited to trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals), except as may be required in the ordinary course
of performing my duties as an employee of the Company, and I shall keep secret
all matters entrusted to me and shall not use or attempt to use any such
information in any manner which may injure or cause loss or may be calculated to
injure or cause loss, whether directly or indirectly, to the Company. Further, I
agree that during and after the Employment Period I shall not make, use or
permit to be used any notes, memoranda, reports, lists, records, drawings,
sketches, specifications, software programs, data, documentation or other
materials of any nature relating to any matter within the scope of the business
of the Company or concerning any of its dealings or affairs otherwise than for
the benefit of the Company, it being agreed that all of the foregoing shall be
and remain the sole and exclusive property of the Company, and that immediately
upon the termination of my employment I shall deliver all of the foregoing, and
all copies thereof, to the Company, at its main office.
3. If at any time or times during my employment, I shall (either alone or
with others) make, conceive, create, discover, invent or reduce to practice any
invention, modification, discovery, design, development, improvement, process,
software program, work of authorship, documentation, formula, data, technique,
know-how, trade secret or intellectual property right whatsoever or any interest
therein (whether or not patentable or registrable under copyright, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments")
1
that (i) relates to the business of the Company or any customer of or supplier
to the Company or any of the products or services being developed, manufactured
or sold by the Company or which may be used in relation therewith, (ii) results
from tasks assigned me by the Company or (iii) results from the use of premises
or personal property (whether tangible or intangible) owned, leased or
contracted for by the Company, then:
(a) such Developments and the benefits thereof are and shall
immediately become the sole and absolute property of the Company and its
assigns, as works made for hire or otherwise;
(b) I shall promptly disclose to the Company (or any persons
designated by it) each such Development;
(c) as may be necessary to ensure the Company's ownership of such
Developments, I hereby assign any rights (including, but not limited to,
any copyrights and trademarks) I may have or acquire in the Developments
and benefits and/or rights resulting therefrom to the Company and its
assigns without further compensation; and
(d) I shall communicate, without cost or delay, and without
disclosing to others the same, all available information relating thereto
(with all necessary plans and models) to the Company.
4. I will, during and after the Employment Period, at the request and
cost of the Company, promptly sign, execute, make and do all such deeds,
documents, acts and things as the Company and its duly authorized agents may
reasonably require:
(a) to apply for, obtain, register and vest in the name of the
Company alone (unless the Company otherwise directs) letters patent,
copyrights, trademarks or other analogous protection in any country
throughout the world and when so obtained or vested to renew and restore
the same; and
(b) to defend any judicial, opposition or other proceedings in
respect of such applications and any judicial, opposition or other
proceedings or petitions or applications for revocation of such letters
patent, copyright, trademark or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure
my signature on any application for letters patent, copyright or trademark
registration or other documents regarding any legal protection relating to a
Development, whether because of my physical or mental incapacity or for any
other reason whatsoever, I hereby irrevocably designate and appoint the Company
and its duly authorized officers and agents as my agent and attorney-in-fact, to
act for and in my behalf and stead to execute and file any such application or
applications or other documents and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyright or trademark
registrations or any other legal protection thereon with the same legal force
and effect as if executed by me.
2
5. I agree that any breach of this Agreement by me will cause irreparable
damage to the Company and that in the event of such breach the Company shall
have, in addition to any and all remedies of law, the right to an injunction,
specific performance or other equitable relief to prevent the violation of my
obligations hereunder. I further agree and acknowledge that the post-employment
non-competition provision set forth in Paragraph 1 hereof, and the remedies set
forth in this paragraph, are necessary and reasonable to protect the business of
the Company.
6. I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my employment.
7. No claim of mine against the Company shall serve as a defense against
the Company's enforcement of any provision of this Agreement.
8. I represent that the Developments identified in the pages, if any,
attached hereto as Exhibit A comprise all the unpatented and unregistered
copyrightable Developments which I have made, conceived or created prior to the
Employment Period, which Developments are excluded from this Agreement. I
understand that it is only necessary to list the title and purpose of such
Developments but not details thereof.
9. I further represent that my performance of all of the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement, either written or oral,
in conflict with the terms of this Agreement.
10. Any waiver by the Company of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
11. I hereby agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses herein.
Moreover, if one or more of the provisions contained in this Agreement shall for
any reason be held to be excessively broad as to scope, activity, subject or
otherwise so as to be unenforceable at law, such provision or provisions shall
be construed by the appropriate judicial body by limiting or reducing it or
them, so as to be enforceable to the maximum extent compatible with the
applicable law as it shall then appear.
12. My obligations under this Agreement shall survive the termination of
my employment regardless of the manner of such termination and shall be binding
upon my heirs, executors, administrators and legal representatives.
13. The term "Company" shall include SeaChange International, Inc. and any
of its subsidiaries, subdivisions or affiliates. The Company shall have the
right to assign this Agreement to its successors and assigns, and all covenants
and agreements hereunder shall inure to the benefit of and be enforceable by
said successors or assigns.
3
14. This Agreement shall be governed by and construed in accordance with
the internal laws of the Commonwealth of Massachusetts. Any claims or legal
actions by one party against the other arising out of the relationship between
the parties contemplated herein (whether or not arising under this Agreement)
shall be governed by the laws of the Commonwealth of Massachusetts and shall be
commenced and maintained in any state or federal court located in Boston,
Massachusetts, and both parties hereby submit to the jurisdiction and venue of
any such court.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
________________________, 2000.
Signature
______________________________
4
EXHIBIT D
---------
February __, 2001
Comcast SC Investment, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel for SeaChange International, Inc., a Delaware
corporation (the "Company"), in connection with the Common Stock and Warrant
Purchase Agreement dated February __, 2001 by and between you and the Company
(the "Stock Purchase Agreement"). This opinion is furnished to you pursuant to
and in satisfaction of Section 5.4 of the Stock Purchase Agreement. Capitalized
terms used herein, unless otherwise defined herein, shall have meanings assigned
to such terms in the Stock Purchase Agreement.
In rendering our opinion, we have examined and relied upon originals or
certified copies of the certificate of incorporation and by-laws, each as
amended, of the Company, the Stock Purchase Agreement, the Warrant and the
Registration Rights Agreement (the Stock Purchase Agreement, the Warrant and the
Registration Rights Agreement together constitute the "Transaction Documents"),
the certificate for the shares of Common Stock to be issued and delivered under
the Stock Purchase Agreement, and such other documents as we have deemed
necessary as a basis for the opinions hereinafter expressed.
As to all matters of fact relevant to this opinion, we have assumed the
completeness and accuracy of, and are relying upon, the statements set forth in
certificates of public officials, officers of the Company and the
representations and warranties of the Company and the other parties thereto set
forth in the Transaction Documents, and have undertaken no independent
verification of such facts.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as copies, whether certified or not, and the completeness of the corporate
minute books and other record books of the Company. For purposes of this
opinion, we have assumed compliance by you with all laws and regulations
relating to your authority to enter into the Transaction Documents and to effect
the transactions contemplated thereby, we have assumed that you have all
requisite power and authority and have taken all action necessary for you to
enter the Transaction Documents and to effect such transactions contemplated
thereby, and we have assumed that each of the Transaction Documents has been
duly authorized, executed and delivered by you, and constitutes the valid,
binding and enforceable obligation of you.
1
Any reference to "our knowledge" or to matters "known to us" or "of which
we have knowledge," or any variation thereof, shall mean the actual knowledge,
but not including any constructive or imputed notice of any information, of
attorneys in our firm who regularly perform services for the Company without any
independent investigation, except for inquiry of officers of the Company.
This opinion is based upon our knowledge of the law and facts as of the
date hereof and assumes no event will take place in the future which would
affect the opinions set forth herein. We assume no duty to communicate with you
with respect to any change in law or facts which comes to our attention
hereafter.
Our opinion in paragraph 1 below as to due incorporation, valid existence
and good standing of the Company is based solely on a certificate received from
the Secretary of State of the State of Delaware, and such opinion is limited
accordingly and is rendered on the date of such certificate.
All opinions herein contained with respect to the enforceability of
documents and instruments are qualified to the extent that: (a) the
availability of equitable remedies, including without limitation, specific
enforcement and injunctive relief, is subject to the discretion of the court
before which any proceedings therefor may be brought; and (b) the enforceability
of certain terms provided in the Transaction Documents may be limited by (i)
applicable bankruptcy, reorganization, arrangement, fraudulent conveyance or
transfer, insolvency, moratorium or similar laws affecting the enforcement of
creditors' rights generally as at the time in effect, (ii) general principles of
equity and the discretion of a court in granting equitable remedies (whether
enforceability is considered in a proceeding at law or in equity), or (iii)
public policy.
In addition, we express no opinion as to (i) waivers or provisions relating
to delay or omission of enforcement of remedies, (ii) provisions dealing with
the effect of invalidity or unenforceability of any provisions of the
Transaction Documents on the validity or enforceability of any other provision
thereof, (iii) the effect of the rules of law governing specific performance,
injunctive relief or other equitable remedies, (iv) compliance with, or non-
contravention of, state securities laws, (v) provisions relating to choice of
law, (vi) anti-trust laws or regulations, (vii) anti-fraud laws or regulations,
or (viii) the validity or enforceability of the indemnification and contribution
provisions of the Stock Purchase Agreement and the Registration Rights
Agreement. Furthermore, with respect to our opinions in paragraphs 2, 3, 4 and
8 below as to the Company's obligations under the Registration Rights Agreement,
we assume compliance by the Company at such time with the registration
requirements of the Securities Act.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.
2
2. The Company has all requisite corporate power to conduct its business
as it is now conducted, to execute and deliver the Transaction Documents, to
consummate the transactions contemplated thereby and to perform its obligations
thereunder.
3. Each of the Transaction Documents has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable against it in accordance with its terms.
4. The execution and delivery by the Company of the Transaction Documents
and the consummation by the Company of the transactions contemplated thereby do
not and will not conflict with, result in a violation of or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under (i) any provision of the Certificate of Incorporation or
Bylaws of the Company, (ii) any Delaware corporate or federal law or regulation,
(iii) any mortgage, indenture, lease, contract or other agreement or instrument
known to us to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries, properties or assets may be bound
which has been filed with the SEC, or (iv) any permit, concession, franchise,
license, judgment, order, decree or ruling known to us of any court or
governmental authority applicable to the Company or any of its subsidiaries,
properties or assets, except (A) in the case of (iii) and (iv), to the extent
the effect of any such conflict, violation, default, termination, cancellation,
acceleration or loss would not, individually or in the aggregate, have a
Material Adverse Effect, or impair, delay or restrict the Company's power to
perform its obligations with respect to the transactions contemplated by the
Transaction Documents, and (B) in the case of (ii), any filings, consents or
approvals required under the HSR Act that may be required with respect to the
issuance of the Warrant Shares.
5. The Shares, the Additional Shares (if any) and the Warrant Shares have
been duly and validly authorized for issuance and, when issued upon payment
therefor in accordance with the terms of the Stock Purchase Agreement and the
Warrant, respectively, will be duly authorized, validly issued, fully paid and
nonassessable. The Company has duly and validly reserved the Warrant Shares for
issuance upon exercise of the Warrant. Neither the issuance, sale nor delivery
of the Shares, the Additional Shares (if any), the Warrant or the Warrant Shares
is subject to any statutory or, to the best of our knowledge, other preemptive
right of any of the stockholders of the Company that has not been waived or
complied with.
6. Except (i) as disclosed in the Filed SEC Documents and (ii) stock
options issued and employee stock purchases made under the Company's stock
option, stock incentive and stock purchase plans described in the Filed SEC
Documents, to the best of our knowledge, (i) there is no commitment or
arrangement to issue, and there are no outstanding options, warrants or other
rights providing for the issuance of, any shares of capital stock of the
Company, or any security or instrument that by its terms is convertible into or
exercisable or exchangeable for capital stock of the Company, to any person, and
(ii) no person or entity has the right to require the registration under the
Securities Act of shares of Common Stock or other securities of the Company by
reason of the filing or effectiveness of the Registration Statement.
3
7. To the best of our knowledge, there is no litigation, adversarial
proceeding or governmental investigation pending or overtly threatened against
the Company that relates to any of the transactions contemplated by the
Transaction Documents.
8. Based in part on the representations of the Purchaser in Sections 4.3
through 4.8 of the Stock Purchase Agreement, no consent, approval, order or
authorization of, or registration, designation, declaration or filing with, any
Delaware corporate or federal governmental authority on the part of the Company
is required in connection with the valid execution and delivery of the
Transaction Documents or the consummation by the Company of the transactions
contemplated thereby, except for (a) the Company's filing with the SEC of (i) a
Form D pursuant to Regulation D promulgated by the SEC pursuant to the
Securities Act, and (ii) a registration statement on Form S-1 with respect to
the registration of the Shares and the Warrant Shares and (b) with respect to
the issuance of the Warrant Shares, any filings, consents or approvals required
under the HSR Act.
We are members of the bar of the Commonwealth of Massachusetts and have not
made an independent review of the laws of any state or jurisdiction other than
those of the Commonwealth of Massachusetts, the federal securities laws of the
United States of America, and the General Corporation Law of the State of
Delaware ("DGCL"). With respect to any and all opinions rendered herein, to the
extent such opinions would otherwise purport to opine on matters governed by
laws other than the laws of the Commonwealth of Massachusetts, the DGCL and the
federal securities laws of the United States of America, we have assumed with
your consent that such laws are identical in all respects to the laws of the
Commonwealth of Massachusetts. Accordingly, we express no opinion herein with
respect to the laws of any state or jurisdiction other than those of the
Commonwealth of Massachusetts, the federal securities laws of the United States
of America, and the DGCL. For the purposes of this opinion, we have assumed
that the facts and law governing the performance by the Company under the
Transaction Documents will be identical to the facts and law governing such
performance as of the date of this opinion.
The opinions herein expressed are solely for the benefit and information
of, and may be relied upon solely by you and no other person shall be entitled
to rely upon the opinions herein expressed. Except with our prior written
consent, the opinions herein expressed are not to be used, circulated, quoted or
otherwise referred to nor are they to be filed with any governmental agency or
any other person. The opinion is rendered solely for purposes of the
transaction contemplated by the Stock Purchase Agreement and may not be relied
upon for any other purpose.
Very truly yours,
XXXXX, XXXXXXX & XXXXXXXXX, LLP
4
EXHIBIT E
---------
CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT
-------------------------------------------
AGREEMENT dated as of February __, 2001, by and between SeaChange
International, Inc., a Delaware corporation, with its principal offices at 000
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), and Comcast SC
Investment, Inc., a Delaware corporation ("Recipient").
WHEREAS, the Company is the owner and/or holder of certain confidential
information (hereinafter the "Confidential Information"), identified in
paragraph (1), below; and
WHEREAS, the Company may be requested or required to disclose confidential
information to Recipient or its affiliates pursuant to Recipient's board
observer rights and due diligence rights; and
WHEREAS, the Company wishes to maintain in confidence the Confidential
Information and Recipient recognizes the necessity of maintaining the strictest
confidence with respect to said information.
In consideration of the mutual agreements and covenants herein, as well as
other valuable consideration received, the parties agree as follows:
1. "Confidential Information" consists of any trade secrets or otherwise
confidential information concerning the organization, products, technology,
business or finances of the Company or of any third party which the Company
is under an obligation to keep confidential, including but not limited to
proprietary information respecting inventions, products, designs, methods,
know-how, systems, processes, software programs, works of authorship,
financial records and data, customer lists, projects, plans and proposals
disclosed to Recipient by the Company, orally, visually or in tangible
form. Confidential Information shall not include any information that
Recipient can demonstrate was (a) publicly known at the time of disclosure
to it, or becomes publicly known through no act of Recipient; (b)
rightfully received from a third party without a duty of confidentiality
known to Recipient; (c) developed by it on a completely independent basis;
or (d) required to be disclosed by Recipient by law or through judicial or
governmental order, in which case (d) Recipient shall promptly notify the
Company and cooperate with the Company, at the Company's expense, in
contesting such order or in protecting the Company's rights prior to
disclosure.
2. During the period in which, and to the extent that, Recipient actually
exercises its board observer rights or due diligence rights and receives
Confidential Information pursuant thereto, for a period of two years from
the date of disclosure, Recipient shall maintain in confidence and not
disclose any Confidential Information, using the same degree of care,
1
but no less than reasonable care, as used to protect its own confidential
information of like nature.
3. Recipient may use the Confidential Information only for the permitted
purpose of evaluating Recipient's ownership, purchase or sale of the
Company's securities or of evaluating the possibility of a further business
relationship with Company (hereinafter the "Permitted Purpose"). Recipient
may disclose the Confidential Information only to its employees or its
other duly authorized representatives who need to know such information for
the effective performance of their duties and who are contractually or
otherwise bound to protect such information.
4. Confidential Information may not be reproduced, except as required for the
limited Permitted Purpose outlined above.
5. Recipient agrees not to remove any proprietary rights legend from, and upon
Company's reasonable request shall add such legend to, materials disclosing
or embodying Confidential Information.
6. In order to assist the Company in complying with Regulation FD under the
United States securities laws, Recipient acknowledges that the United
States securities laws prohibit persons having access to any material,
nonpublic information received from the Company from purchasing or selling
the Company's publicly traded securities or from communicating any such
information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such
securities. Recipient agrees to advise its directors, officers,
shareholders, employees and representatives of its advisors who receive
confidential information pursuant to paragraph (3) hereof accordingly.
7. Each provision of this Agreement shall be treated as a separate and
independent clause, and the enforceability of any one clause shall in no
way impair the enforceability of any other clauses herein. Moreover, if one
or more of the provisions herein contained shall for any reason be held
excessively broad so as to be unenforceable at law, the appropriate
judicial body shall construe such provision by limiting or reducing it or
them, so as to be enforceable to the maximum extent compatible with the
applicable law as it shall then appear.
8. Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of
such provision or any other provision hereof.
9. This Agreement and all aspects of the relationship between the parties
hereto shall be construed and enforced in accordance with and governed by
the internal laws of the Commonwealth of Massachusetts without regard to
its conflict of laws provisions. Any claims or legal actions by one party
against the other may be commenced and maintained in any state or federal
court located in Massachusetts, and both parties hereby submit to the non-
exclusive jurisdiction and venue of any such court.
2
10. Notwithstanding any of the foregoing, the Company acknowledges that (a)
Recipient and its affiliates engage in a wide variety of activities and
have investments in many other companies, (b) it is critical to Recipient
that Recipient and its affiliates be permitted to continue to develop their
current and future businesses and investment activities without any
restriction arising from an investment by Recipient or any of its
affiliates in the Company, the right of Recipient to designate a board
observer or any relationship, contractual or otherwise, between Recipient
or any of its affiliates and the Company or any of its affiliates, and (c)
from time to time, in connection with the foregoing activities of Recipient
and its current and future affiliates (the "Activities"), Recipient and its
affiliates may have information that may be useful to the Company (which
information may or may not be known by any board observer designated by
Recipient). The Company further acknowledges that (i) the Company does not
intend or desire that the relationship of Recipient and any of its
affiliates with the Company and any of its affiliates (A) interfere with or
impose conditions or restrictions on any of the Activities of Recipient or
any of its current or future affiliates, or (B) confer upon the Company any
right to participate in any of the Activities of Recipient or any of its
affiliates, and (ii) the Company intends and desires that (X) Recipient and
its affiliates shall be free to engage in the Activities in any capacity,
whether active or passive, without any obligation or liability to the
Company or to its shareholders, including, without any limitation, any
obligation to offer the Company a right to acquire, participate or have any
interest of any nature whatsoever in any of such Activities, and (Y)
Recipient, its affiliates and any board observer designated by Recipient
shall have no duty to disclose any information known to such person to the
Company; provided, however, that this paragraph (10) shall not relieve
Recipient, its affiliates or any board observer designated by Recipient of
its or his duty of confidentiality with respect to information pertaining
to the Company.
3
IN WITNESS WHEREOF, the parties have executed this Confidentiality and
Nondisclosure Agreement as of the date first above written.
SEACHANGE INTERNATIONAL, INC. COMCAST SC INVESTMENT, INC.
By: By:
------------------------------ ------------------------------
Title: Title:
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